Economic Overview - The Federal Reserve's Beige Book indicates a "K-shaped" economy where high-income Americans are faring better while low- and middle-income Americans are struggling [3][9] - Overall economic activity showed improvement in December compared to November, despite slow hiring and persistent inflation [4] Consumer Behavior - Low- and middle-income consumers are increasingly switching to generic products, reducing protein intake, cutting back on travel, and facing difficulties in paying bills [2][9] - Higher-income consumers are spending more on luxury goods, travel, and experiences, contrasting with the spending pullback among lower-income households [6][10] Regional Insights - In the Philadelphia region, concerns were raised about household incomes not being sufficient for maintaining spending or managing debt, with affordability issues growing for low- and middle-income households [8] - Reports from various districts indicate that lower-income families are budgeting more tightly and seeking bargains, particularly during the holiday season [10] Spending Trends - Retailers catering to middle- and lower-income consumers are experiencing significant challenges, while those targeting higher-income customers report increased sales [7][6] - Demand for quick service restaurants remains solid overall, but low-income households are shifting towards eating at home and purchasing fewer protein-rich options due to tight budgets [10]