U.S. President Donald Trump takes part in a Christmas Eve dinner in the ballroom of his Mar-a-Lago club in Palm Beach, Florida, U.S., December 24, 2025. REUTERS/Jessica Koscielniak
The economy looks "bleak," as Americans spend down their savings — to the lowest rate in years, according to Axios. Lower-earning Americans are the hardest hit, and are increasingly strapped for cash.
"They're literally running out of money at the end of the month," Kraft Heinz CEO Steve Cahillane told Bloomberg last week. "We're seeing negative cash flows in the lower-income brackets where they're dipping into savings."
Some CEOs have "warned that their customers are struggling to deal with rising gas prices and higher inflation."
Indeed, lower-earning households opted to buy 7 percent less gas in March as prices skyrocketed, according to the Federal Reserve Bank of New York. "They likely took public transit a bit more and tried to carpool, Axios reported.
But even higher-earning Americans cut back on buying gas, although only "modestly."
McDonald's CEO Christopher Kempczinski is warning that higher gas prices are hitting lower-income Americans hardest.
The price of gas has increased roughly 45 percent from when Trump was sworn in as president last year. The national average hit $4.52 per gallon on Monday, per AAA, up from $3.13 the week he was inaugurated.
Some lower-income earners appear to be holding on to their savings, but they're being strategic.
Heather Long, chief economist at Navy Federal Credit Union, said on Friday that "they seem to be bracing for higher prices to remain in place for a while," Axios noted.
"Inflation is wiping out wage gains," Long warned on Friday on social media. This is the big Achilles Heel in the US economy."
"Wages are being eaten up by inflation due to the war in Iran," she added. "This is a big shift from the past several years when wages were growing well above inflation. Yes, workers have jobs, but this is a squeeze."
Overall, Axios noted, "economic woes may be confined to just the lowest earners. Higher-income shoppers are still driving growth at both McDonald's and Walmart, the companies said."
As it stands now, higher-income earners are keeping "the overall picture looking good, while underneath the headline numbers, it looks bleak."