Business
Here’s where the economy is starting to show ‘K-shaped’ bifurcation
Coke beverages are displayed in a 7-eleven convenient store on July 17, 2025 in Austin, Texas.
Brandon Bell | Getty Images
Amid recession fears, a government shutdown and tariff uncertainty, consumers are increasingly diverging in their spending.
Wealthier Americans are engaging their purchasing power, while lower-income Americans are starting to pull back — commonly described as a “K-shaped” economy. Friday’s consumer price index report shed more light on the pressures facing large swaths of the country.
The CPI report, which measures price changes across a range of goods and services, was delayed due to the government shutdown, originally scheduled to be released nine days prior. The report came in cooler-than-expected, showing a 0.3% increase on the month. That put the annual inflation rate at 3% and signals a likely rate cut by the Federal Reserve next week.
A subset of the CPI report also helps determine the Social Security Administration’s cost-of-living adjustment, which the agency said Friday will be 2.8% in 2026.
Lower- and middle-income consumers have been hit hardest by rising costs on daily essentials like groceries and gas. Meanwhile, wealthier investors have benefited from stock market rallies and rising home values. Recent data from JPMorgan’s Cost of Living Survey found that income bracket was a large factor in Americans’ varying views of the current state of the economy.
Here’s where bifurcation is beginning to take hold:
Food and beverage
Coca-Cola, often viewed as a bellwether for the financial health of consumer, has been seeing the divergence across its business.
Pricier products that are more exposed to high-income consumers, like Topo Chico sparkling water and Fairlife protein shakes, are fueling the company’s sales growth, CEO James Quincey told CNBC’s “Squawk on the Street” Tuesday.
At the same time, Coke is seeing higher demand at both dollar stores that cater to low-income consumers looking for deals and higher-end outlets that skew toward wealthier consumers, like fast-casual restaurants and amusement parks.
McDonald’s CEO Chris Kempczinski told CNBC’s “Squawk Box” in early September that the burger chain’s expansion of its value menu was in response to a divided consumer landscape, or what he called a “two-tier economy.”
While Kempczinski said the company is seeing upper-income consumers performing well, its lower- and middle-income diners are “a different story.”
“Traffic for lower-income consumers is down double digits, and it’s because people are either choosing to skip a meal… or they’re choosing to just eat at home,” he said last month.
A similar dynamic is playing out at Chipotle, according to Chief Financial Officer Adam Rymer.
“There are certain cohorts of the consumer, definitely on the lower-income side, that are feeling pressure right now. That’s something that we’ll have to take into consideration when looking at price going forward,” Rymer told Reuters in July.
On Friday, Procter & Gamble said the company is seeing K-shaped shopping behaviors among its consumers, with wealthier shoppers buying bigger pack sizes from club retailers and lower-income shoppers exhausting their pantry inventory before returning to the stores.
“The consumer environment is not great, but stable,” CFO Andre Schulten said on a call with reporters.
Autos and airfare
Last month, the average price for a new vehicle surpassed $50,000 for the first time ever, according to Cox Automotive’s Kelley Blue Book.
The record pricing comes as auto loan defaults and repossessions are on the rise, particularly for those with FICO scores below 620.
“Today’s auto market is being driven by wealthier households who have access to capital, good loan rates and are propping up the higher end of the market,” said Cox Automotive executive analyst Erin Keating in a statement last week.
And though airlines have been piloting premium offerings for years, the higher-cost tickets have gained momentum in recent months.
Delta Air Lines said earlier this month that revenue from its premium offerings is expected to surpass the coach cabin next year, with CEO Ed Bastian saying he’s not seeing any signs of slowdown in the roomier, more expensive seats.
Hospitality
Still, though there are signs of a “K-shaped” economy, some argue it’s not here to stay.
Hilton CEO Christopher Nassetta told CNBC last month that he’s seeing a bifurcation, but he doesn’t expect that pattern to last much longer, partly because he sees inflation and interest rates decreasing.
“My own belief is that as we look into the fourth quarter and particularly into next year, we’re going to see a very big shift in those dynamics, meaning, I don’t think you’re going to continue to have this bifurcation,” Nassetta said. “That’s not to say I think the high end is going to get worse or bad, I just think the middle and the low end is going to move up.”
On Wednesday, the hotel chain reported a drop in revenue for affordable brands like Hampton by Hilton and Homewood Suites by Hilton.
Meanwhile, Nassetta told investors on an earnings call that revenue from luxury offerings performed exceedingly well and remains a focus for Hilton moving forward.
— CNBC’s Amelia Lucas, Michael Wayland, Alex Harring, Luke Fountain and Leslie Josephs contributed to this report.
Business
New Income Tax Act 2025 to come into effect from April 1, key reliefs announced in Budget 2026
New Delhi: Finance Minister Nirmala Sitharaman on Sunday said that the Income Tax Act 2025 will come into effect from April 1, 2026, and the I-T forms have been redesigned such that ordinary citizens can comply without difficulty for ease of living.
The new measures include exemption on insurance interest awards, nil deduction certificates for small taxpayers, and extension of the ITR filing deadline for non-audit cases to August 31.
Individuals with ITR 1 and ITR 2 will continue to file I-T returns till July 31.
“In July 2024, I announced a comprehensive review of the Income Tax Act 1961. This was completed in record time, and the Income Tax Act 2025 will come into effect from April 1, 2026. The forms have been redesigned such that ordinary citizens can comply without difficulty, for) ease of living,” she said while presenting the Budget 2026-27
In a move that directly eases cash-flow pressure on individuals making overseas payments, the Union Budget announced lower tax collection at source across key categories.
“I propose to reduce the TCS rate on the sale of overseas tour programme packages from the current 5 per cent and 20 per cent to 2 per cent without any stipulation of amount. I propose to reduce the TCS rate for pursuing education and for medical purposes from 5 per cent to 2 per cent,” said Sitharaman.
She clarified withholding on services, adding that “supply of manpower services is proposed to be specifically brought within the ambit of payment contractors for the purpose of TDS to avoid ambiguity”.
“Thus, TDS on these services will be at the rate of either 1 per cent or 2 per cent only,” she mentioned during her Budget speech.
The Budget also proposes a tax holiday for foreign cloud companies using data centres in India till 2047.
Business
Budget 2026 Live Updates: TCS On Overseas Tour Packages Slashed To 2%; TDS On Education LRS Eased
Union Budget 2026 Live Updates: Union Budget 2026 Live Updates: Finance Minister Nirmala Sitharaman is presenting the Union Budget 2026-27 in Parliament, her record ninth budget speech. During her Budget Speech, the FM will detail budgetary allocations and revenue projections for the upcoming financial year 2026-27. Sitharaman is notably dressed in a Kanjeevaram Silk saree, a nod to the traditional weaving sector in poll-bound Tamil Nadu.
The budget comes at a time when there is geopolitical turmoil, economic volatility and trade war. Different sectors are looking to get some support with new measures and relaxations ahead of the budget, especially export-oriented industries, which have borne the brunt of the higher US tariffs being imposed last year by the Trump administration.
On January 29, 2026, Sitharaman tabled the Economic Survey 2025-26, a comprehensive snapshot of the country’s macro-economic situation, in Parliament, setting the stage for the budget and showing the government’s roadmap. The survey projected that India’s economy is expected to grow 6.8%-7.2% in FY27, underscoring resilience even as global economic uncertainty persists.
Budget 2026 Expectations
Expectations across key sectors are taking shape as stakeholders look to the Budget for support that sustains growth, strengthens jobs and eases financial pressures:
Taxpayers & Households: Many taxpayers want practical improvements to the income tax structure that preserve simplicity while supporting long-term financial planning — including broader deductions for home loan interest and diversified retirement savings options.
New Tax Regime vs Old Tax Regime | New Income Tax Rules | Income Tax 2026
Businesses & Industry: With industrial output and investment showing resilience, firms are looking for policies that bolster capital formation, ease compliance, and expand infrastructure spending — especially in manufacturing and technology-driven sectors that promise jobs and exports.
Startups & Innovation: The startup ecosystem expects incentives around employee stock options and capital access, along with regulatory tweaks that encourage risk capital and talent retention without increasing compliance burdens.
Also See: Stock Market Updates Today
The Budget speech will be broadcast live here and on all other news channels. You can also catch all the updates about Budget 2026 on News18.com. News18 will provide detailed live blog updates on the Budget speech, and political, industry, and market reactions.
We are providing a full, detailed coverage of the union budget 2026 here, with a lot of insights, experts’ views and analyses. Stay tuned with us to get latest updates.
Also Read: Budget 2026 Live Streaming
Here are the Live Updates of Union Budget 2026:
New Delhi: The Cabinet on Sunday approved the Union Budget 2026-27 during a meeting in Parliament chaired by Prime Minister Narendra Modi. A meeting of the Union Cabinet was held at Sansad Bhawan at 10 a.m., and after the Cabinet’s approval, Finance Minister Nirmala Sitharaman proceeded to Parliament to present the Budget.
Earlier, FM Sitharaman met President Droupadi Murmu and offered her a copy of the digital budget. The President also offered ‘dahi-cheeni’ (curd and sugar) to Sitharaman when she arrived at the Rashtrapati Bhavan. The Finance Minister was seen carrying her trademark ‘bahi-khata’, a tablet wrapped in a red-coloured cloth bearing a golden-coloured national emblem on it.
Minister of State for Finance Pankaj Chaudhary, Chief Economic Advisor Dr V. Anantha Nageswaran, Central Board of Direct Taxes (CBDT) Chairman Ravi Agrawal and other officials were seen accompanying the Finance Minister. Sitharaman was set to present her ninth consecutive Union Budget in the Lok Sabha. In 2021, she switched to using a digital tablet to carry the Budget papers, further promoting a modern and eco-friendly approach.
The ‘bahi-khata’ is a red pouch that holds the digital tablet containing the Budget documents. This year, Sitharaman opted for a deep maroon Kanjeevaram saree from Tamil Nadu. The saree featured a deep maroon base with a contrasting border and subtle gold detailing, paired with a yellow blouse.
The Budget is likely to strike a deft balance of sustaining growth momentum and maintaining fiscal consolidation. It also needs to address near-term challenges emanating from unprecedented geopolitical flux, said economists. According to economists, the budget is likely to focus more on capital expenditure, especially in sectors deemed to be strategically important owing to prevailing geopolitical compulsions.
While the FY26 Budget was more tilted towards stimulating middle-class consumption with tax reliefs, the FY27 Budget’s approach to stimulating consumption will be selective, they added.
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