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Even consumer product staples are subject to the K-shaped economy

Consumers are looking for ways to stretch toilet paper and toothpaste.

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”The chasm is getting a lot closer between middle income and low income. The lines are starting to blur,” said Ali Furman, who analyzes consumer markets at PwC.
”The chasm is getting a lot closer between middle income and low income. The lines are starting to blur,” said Ali Furman, who analyzes consumer markets at PwC.
Kevin Carter/Getty Images

The consumer products giant Procter & Gamble reported earnings today. The Cincinnati-based maker of Tide laundry detergent and Crest toothpaste had a solid quarter, with nearly $5 billion in profits.

There’s been a lot of talk about the K-shaped economy — wealthy households making up a larger and larger share of spending, lower income households falling behind. That’s playing out in the market for everyday household items too.

With sticky inflation and a worsening job market, high-income and low-income consumers want the same thing: To stretch their dollar as much as possible.

It’s just that richer households can stretch their dollar over one of those giant detergent containers with like 70,000 Tide pods in them.

“If you're a higher income consumer, you have the cash flow to be able to go to Costco and afford a $500 checkout bill, maybe that lasts you over two to three months,” said Peter Galbo, an analyst at Bank of America.

Galbo said more high-income households are buying in bulk, at Costco or Amazon or Sam’s Club. Meanwhile if you’re living paycheck to paycheck, you’re trying to put off the Target or Walmart or Dollar Store run for as long as possible.

“It could be you're using less liquid in each load of laundry. Maybe you're shoving more clothes in the washer,” Galbo said.

Consumer staple brands have been coming up with innovative ways to make sure none of their product gets wasted. Take paper towels:

“Where it used to be one size, now they're half sizes, right? And I think some even do quarter sizes. You know now, the consumer has more choice,” said Olivia Tong, an analyst at Raymond James.

And it’s not just the bottom of the income ladder that’s squeezing toothpaste to the last drop and searching for white label alternatives to brand names.

”The chasm is getting a lot closer between middle income and low income. The lines are starting to blur,” said Ali Furman, who analyzes consumer markets at PwC.

Even if you’re middle income, you probably can’t afford a house big enough to store stuff from Costco anyway.

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