The K-Shaped Consumer Economy: GLP-1s, AI and the Future of Consumer Spending
Full episode Description:
The K-shaped consumer is redefining the outlook for the U.S. economy. While overall spending remains resilient, growth is increasingly concentrated among higher-income households, creating widening gaps across income levels. As policy shifts, AI adoption, and healthcare innovations reshape behavior, the consumer landscape is becoming more uneven.
In this episode of The Bid, host Oscar Pulido is joined by Lisa Yang, Portfolio Manager and Co-Head of the Consumer Industry Group within BlackRock Fundamental Equities, to assess the state of the U.S. consumer heading into 2026. From wage growth and labor market dynamics to fiscal policy, tariffs, and immigration, Lisa explains how macro forces are influencing spending patterns — and why resilience is strongest at the high end. The conversation also explores structural shifts shaping stock market trends, including the rise of value-focused retailers, the impact of GLP-1 weight-loss drugs on food and apparel demand, and how AI-driven agentic commerce could transform retail media and brand discovery. As capital markets digest these changes, understanding the nuances of consumer behavior is critical for investors.
Key insights from this episode:
Why the U.S. consumer remains resilient — but increasingly K-shaped
How fiscal policy and tariffs could widen income-driven spending gaps
Why value retailers and discounters are outperforming
How GLP-1 drugs are reshaping grocery, apparel, and beauty categories
What agentic commerce means for retailers, brands, and advertising models
Why health and wellness remains a durable long-term consumer trend
Keywords: K-shaped consumer, U.S. consumer spending, AI in retail, GLP-1 drugs, capital markets, stock market trends, consumer investing, megaforces
Sources: Advance Monthly Sales for Retail and Food Services February 2026, United States Census Bureau; US Bureau of Economic Analysis (PCE data); FRED 2026, Bureau of Labor Statistics; Wage Growth Data, January 2026, Federal Reserve of Atlanta; Tax refunds per Morgan Stanley, Piper Sandler estimates; US food outlook 2026, Bernstein; GLP-1 Boom Accelerates Nationwide Shift in Size Curves, Putting $5 Billion in U.S. Apparel Retail Inventory at Risk, According to New Impact Analytics Study, Global Newswire, September 2025
Written Disclosures In Episode Description:
This content is for informational purposes only and is not an offer or a solicitation. Reliance upon information in this material is at the sole discretion of the listener. Reference to any company or investment strategy mentioned is for illustrative purposes only and not investment advice. For full disclosures, visit blackrock.com/corporate/compliance/bid-disclosures.
<<TRANSCRIPT>>
Oscar Pulido: American consumers remain one of the most important signals for the US economy. For the last few years, they've repeatedly defied expectations continuing to spend despite higher inflation and higher interest rates.
But as we move into 2026, that resilience is starting to look more uneven. Spending is holding up on the whole, but the consumer experience is increasingly k-shaped with widening gaps across income levels, evolving policy dynamics, and new forces. From artificial intelligence to healthcare innovations like GLP-1s, which are reshaping how and where people spend. So, what does this more nuanced consumer landscape mean for the economy and investors?
Welcome to The Bid where we break down what's happening in the markets and explore the forces changing the economy and finance. I'm Oscar Pulido.
In this episode, I'm joined by Lisa Yang. Portfolio manager and co-head of the consumer industry group within BlackRock Fundamental Equities. Lisa will help us assess the current health of the US consumer, the key trends, transforming consumer behavior, and what these shifts could mean for consumer facing companies and equity markets going forward. Lisa, thank you so much for joining us on The Bid.
Lisa Yang: Thank you so much for having me.
Oscar Pulido: So, Lisa, we last spoke in the summer of 2024 and since then a lot has changed in the economy. One thing that hasn't changed is the importance of the consumer, particularly in the US economy. In fact, we're increasingly using this term, the k-shaped economy, which I think refers to different outcomes and experiences that are being seen across income levels. So maybe we could start there, let's talk a little bit about the state of the US consumer today.
Lisa Yang: I've been investing in the consumer sector for about a decade now and if there's one thing I've learned, it's to never underestimate the power of the US consumer. I think the spending culture is deeply ingrained in American's DNA, and you see that resilience show up time and time again. So, we saw it through COVID, through record levels of inflation, through the spike in tariff rates, consumers continued to spend.
Retail sales are growing about 4%, that's in line with the pre-COVID trend line. Services spending, which is spending on entertainment and travel, that's growing about 5%. That's slightly above the pre-COVID trend line. And what's driving the strength is simple, it's labor and its income. The labor market remains healthy; the unemployment rate is below 4.5% and wages are growing about 4%. And so, consumers are getting paid and that is fueling the spending engine.
Consumer credit metrics also look healthy, if you look at delinquency rates, that's been stable and that's simply a measure of are consumers paying back their loans. But under the hood, as to your point, Oscar, it's a very two speed consumer economy. Spending is disproportionately being driven by higher income households. this higher income household has seen their net worth increase with the stock market gains and home price appreciation. Their wage growth has also been very healthy, up mid-single digits, and that's been very stable.
The lower income household has experienced a very different economy. They've been the hardest hit by inflation, and that's inflation on basic necessities, food, housing, utilities. They're also the most interest rate sensitive. And so, when interest rates spiked after COVID, they saw their loan payments increase. So that combination has crowded out their ability to spend on more discretionary items. So, we've observed this weakness in the low-income consumer for several years now, but more recently it's also percolating into the middle-income cohort.
So, we're observing similar types of behavior, more value seeking, more down trading to discounter stores or private label. Beyond this two-speed consumer economy, there are also some other yellow flags that we're monitoring very closely. I mentioned it's a healthy labor market, but it is a stagnant labor market. Hiring rates are very low and for anyone who's looking out for looking for a job at the moment, they can certainly attest to that.
We're also watching for the impact of AI on the labor market. that impact has been pretty modest so far, but we are seeing more professional services firms lay off people, partly attributable to AI. And the last yellow flag is wage growth, for middle- and lower-income households. That's been steadily coming down, so it's still growing, but that rate of growth has been decelerating. So that's a key watch point for us.
So, if I were to summarize all of this, the US consumer remains really resilient, but that resilience is concentrated in the high end. So, the risk isn't that the consumer is going to roll over tomorrow, it's that spending is focused on a narrower base of people while the lower- and middle-income cohort is behaving much more defensively.
Oscar Pulido: And I know we're talking about the US consumer, but last I checked, I think the US consumer is about two thirds of GDP to the US economy, so it's a major driver of the US economy. And the US economy itself is a major driver of the global economy, so it's worth understanding the trends going on in this space.
When we think about this space, one of the things that is likely impacting the consumer and just consumption patterns is what's going on from a policy perspective. This could be government policies; we've heard a lot about trade policy and tariffs. I'm just curious, when you put all of these things together, how are they impacting the way the consumer is feeling?
Lisa Yang: 2026 is going to be a very dynamic year because of the influence of government policy on both consumers and consumer companies. And there's three big drivers of that.
The first is fiscal policy. That's the One Big Beautiful bill. This will, provide both a spending boost but also pull back on certain social services. So firstly, on the positive side, for spending this will boost tax refunds. Americans are likely to see an incremental a hundred billion dollars flow into their wallets. That's roughly a thousand dollars per tax filer. That's a huge cash infusion. And so, that should boost spending for certain categories like discretionary goods, restaurants, travel. But this benefit happens in a very short period of time. It's late February, March, April. And so, what you're going to see is spending spike and then come back down to normal. That's going to create a lot of volatility for consumer companies. In addition, this benefit skews up the income stack, so it really benefits middle and higher income households. On the negative side for spending this pulls back on social services, so we are going to see cuts to Medicaid and cuts to SNAP, which is the supplemental food program. That will put in incremental pressure, on that low-income household. So, to your point on the K- shaped economy, fiscal policy is going to further widen that K-shape this year.
The second big policy area is tariffs. Tariffs clearly had a very big impact in 2025, especially on import heavy companies, retailers, consumer goods who bring in a lot of their, goods from overseas. It also resulted in price increases in many categories. Clothing, footwear, furniture electronics. What's happening this year is the Supreme Court is challenging the legality of these tariffs. And this will create a lot of volatility for these businesses. They will need to figure out how to plan around sourcing and inventory planning and pricing. These companies may also be eligible for refunds on the tariffs that they paid in 2025. So, for big importers this could be a huge boon in terms of a nice financial tailwind.
The last big policy area is immigration. Population growth is very important for consumer spending and for broader economic growth. And in the last few years, immigration has actually been the primary driver of population growth in the U.S. Obviously, that reversed in 2025 with the crackdown in immigration. 2026 is likely to be another tough year for immigration policy. That is a drag on consumption, especially for lower growth categories where they're much more reliant on population as a demand driver, a sales driver. It also, overly impacts consumer companies that have exposure to immigrant populations and areas of the U.S.
Oscar Pulido: In terms of how this all comes together, it seems like there's a lot for companies to take into account. So, if you're a company, how do you adapt to this new environment?
Lisa Yang: Yeah, I think the name of the game has been value in a macro environment. Where consumers are increasingly more discerning, they're more price sensitive, especially that lower to middle income household.
And so, in this environment the winners in retail, as an example, have been the discounters. Costco offering bulk items at really low prices, Walmart with their everyday low price promise Aldi, which may not be a household name, but is a hard discount grocer. In, general merchandise, the big winners have been off price retailers, TJ Maxx, as an example. They sell products for a 25 to 50% discount versus, full price department stores. That's really appealing for consumers who still want brands, but they don't want to pay full price for those.
In the world of travel, cruising has been the big winner. So, cruising has always appealed to an older population. but post COVID. It's really started to attract younger generations, millennials, people who really value experiences and travel but our cash strapped and they're looking for a good deal. So cruising is roughly half the cost of a comparable land-based vacation. And that's helped to drive record booking volumes for that industry.
This focus on value has also driven some new trends. we've seen the rise of affordable luxury, which is indirect response to these traditional luxury companies which have just taken prices higher. Companies like, Ralph Lauren or a coach, they provide consumers with aspiration and quality, but at a much more attainable price point. This has also fueled the growth of entry level luxury categories. So, fragrances as a category has really taken off and that's because a consumer can buy into a luxury brand through fragrances without shelling out four figures, five figures for a leather handbag.
We also see in the beauty industry the emergence of dupes, copycats essentially of high-quality prestige items, but they sell for 75% price discount. So, the theme here is clear, value is winning.
On the flip side, the brands and companies that aren't doing it as well are seen as offering weak value. Traditional grocery stores, department stores, they're losing consumers to other retailers that are offering better value. Other brands are caught up in this ‘greed-flation’ narrative, which is the consumer perception that some brands took pricing too high, too fast post-COVID, the quick service restaurant industry is the poster child for this. Especially McDonald's. McDonald's used to be known as offering great value a cheap meal. but now consumers are paying $15-$20 for a meal there, that's causing a lot of customer frustration. So, the companies in this bucket, the laggards, they're responding and they're trying to bring consumers back by reintroducing affordability.
In summary, the post COVID environment has really emphasized the importance of value as a competitive advantage. And so, the winners are those who can optimize for price quality while maintaining a really cost competitive, cost structure and losers are being forced to reset pricing and rebuild customer trust.
Oscar Pulido: It sounds like the consumer's healthy, but the consumer's also becoming more discerning. Maybe we can talk about the pharmaceutical sector. Lisa. it'd be hard to not talk about GLP-1s, which have become quite a phenomenon and very mainstream as people use them, as a weight loss, mechanism. How are they changing consumer behavior and what are the companies that are most exposed to this trend?
Lisa Yang: Obesity drugs are bringing about one of the most profound structural shifts in consumption that I've seen. About 10 to 15% of the US adult population is currently using GLP-1 drugs. and I expect this penetration to only increase over time, and that's because we will get, lower prices, more health insurance coverage and new formats- pills instead of injectables.
The biggest change for consumption is happening on the plate. People who are using these drugs are cutting back on food spend, they're reducing caloric intake by 20 to 30%. But most importantly, they aren't just reducing their food consumption. They're changing what they eat. So, they're eating less of the unhealthy foods that they used to gravitate towards. A lot of people who are on these drugs develop aversions to these unhealthy foods. Instead, they're gravitating towards the perimeter of the grocery store- fresh foods, meats produce, protein forward products, like protein shakes, cottage cheese, yogurt.
This change in the grocery basket is being amplified at the household level. That's because GLP-1 usage skews female. And women are the primary decision makers when it comes to grocery. So, food spend sees a reduction but there are certain categories that see an uplift. one of those is clothing. Someone who goes on these drugs, they're losing 15 to 20% of their body weight on average. That requires a complete wardrobe refresh. One of the really interesting statistics I've seen around this is, in New York City, between the years of 2022 and 2024, the sales of women's tops that are sized small or smaller, have increased by about 12%, and at the same time, the sales of women's tops size large and larger have fallen by about 12%. So, you see this in the hard data.
Another industry that's benefited is beauty. What happens when you lose a lot of weight is something that's termed ‘Ozempic face’ which is a hollowing out of the cheekbones, that sagging of the skin and women, are turning to the cosmetics industry procedures, makeup, skincare, to address those issues. GLP-1 isn't just a pharma story, it's a much broader consumer story. It's really changing how people are consuming and as penetration of this drug increases, that effect is only going to multiply.
Oscar Pulido: Lisa, let's talk about AI, which I imagine has some impact on the consumer, or perhaps the impact is more on the companies who cater to the consumer. Where do you see AI playing into the consumer economy?
Lisa Yang: Yeah, AI is going to affect us in a few ways. It's changing how, we as consumers shop, and it's also changing how consumer companies market to us and develop their products.
So, let's talk first about how we shop. Agentic commerce is probably the biggest force impacting the consumer sector. So we're moving from this traditional model where we go online or go on an app, we search, scroll, compare, and then check out, to interacting with an AI agent where we're telling the agent these are my preferences, these are my constraints, this is what I'm looking for, and that AI agent is surfacing the products that we should be buying. That's a very different shopping journey from what we're used to, and it has ramifications for both retailers and for brands.
From a retailer perspective, it likely means less time on that retailer's platform, and that matters because those retailers are monetizing our eyeballs, they are constantly advertising to us when we search for something. The first X number of results are sponsored products. So, the big question here is what happens to those? Retail media dollars as more people shift from the traditional way of shopping online to using AI agents? brands will have fewer direct consumer touch points. brands right now are used to optimizing for this digital shelf. Now they're going to have to figure out how to optimize for the AI agent's recommendation set.
The second area of AI impact is around marketing. Marketing is really crucial for consumer. companies. GenAI allows consumer companies to produce content at scale. And it does so really cheaply and really, fast. It also allows hyper-personalization so, instead of advertising to a customer segment, advertising specifically to the individual based on their characteristics.
This has benefits, but it also has a downside in that, content at scale creates a lot of noise on the internet. So, brands and companies will really need to figure out how to navigate and surface their advertisements, in that, space when everything's getting more crowded.
So, AI will help these companies keep up with this really fast pace. So, AI is going to affect us in a few different ways. and I think there will be clear winners and losers from this. winners will be able to leverage AI to further build their competitive moat. and I think that favors companies that one, have their own data. So, proprietary data on customers or proprietary R&D knowledge that they can then leverage AI with. It'll also favor retailers who have really strong infrastructure and logistics, who can deliver to customers what they're looking for consistently and in a high-quality way. And lastly, it will favor brands that are truly unique, truly differentiated, and that have strong repeat purchase rates.
Oscar Pulido: So, in your seat as a consumer research analyst, which means. You're looking at individual companies that are benefiting from all the different trends that, consumers are undergoing right now. You mentioned trade policy, labor market policy, we've talked about AI. What other trends are you watching day to day?
Lisa Yang: Two of the big ones we've touched on already, but I think will remain extremely important. That's GLP-1s and, agentic commerce. For GLP-1s, the consumption patterns will continue to evolve and the questions here are how does consumer behavior change as they move from injectables to oral pills? How does consumer behavior change the longer someone stays on the drug? And more importantly, which companies can successfully adapt their products and marketing to that new user base. For agentic commerce, it's what's the impact to retailer traffic retailer media, dollars? How does it impact brands and brand discovery? Beyond that, there are two other really interesting, trends that I'm monitoring very closely.
First is the broader health and wellness trend. This has been going on for a really long time but has accelerated post COVID and that's been driven obviously by the health scare that was COVID, but also by GLP-1s and the changes that the FDA is making. And so, this has pretty wide implications. You see it in biohacking becoming more mainstream, which is the practice of people changing, what they consume, what they do to optimize for human performance. So, that's helped to drive the growth of the vitamins and supplements category.
You also see it in wearables. Aura rings have become very popular as a way for people to monitor their own health and quantify their own health. You also see it in lower alcohol consumption. So, as consumers have become more aware of the health risks associated with it and you also see this in ingredient to transparency. People want to understand what's in the food that I'm eating, what's in the clothes I'm putting on my body, what's in the skincare I'm putting on my face. And there's an increased desire to avoid, synthetic materials, artificial ingredients, artificial colors.
So, the big takeaway is I think this health and wellness movement will continue. it really has legs and there's wide implications for a lot of different consumer categories.
Oscar Pulido: We started the conversation with the comments that the consumer's healthy and never bet against the US consumer that we seem to have a consumer culture in the US economy. I think what you've done though is you've taken us beneath the surface and helped us understand that there's a lot of nuance going on within the consumer economy.
We'll have to keep a close eye on this space, Lisa, and we'll surely call you back at some point to see where we are in the cycle. Thank you for sharing all these insights and thank you for doing it here on The Bid.
Lisa Yang: Thank you so much for having me.
Oscar Pulido: Thanks for listening to this episode of The Bid. Next week, Alex Brazier joins me to talk about emerging market investing trends. Don't forget to subscribe to The Bid wherever you get your podcasts,
<<SPOKEN DISCLOSURES>>
This content is for informational purposes only and is not an offer or a solicitation. Reliance upon information in this material is at the sole discretion of the listener. Reference to the names of each company mentioned is merely for explaining the investment strategy and should not be construed as investment advice or recommendation. For full disclosures, visit blackrock.com/corporate/compliance/bid-disclosures.
MKTG0326-5228699-EXP0327
