Despite stock market volatility and tariff uncertainty, the US consumer is still spending. But company commentary in recent earnings reports and Wall Street data points are reasons for concern, especially for lower-income households. 

"The lower-income consumer is under some pressure," David Tinsley, senior economist at Bank of America Institute, told Yahoo Finance on Monday. 

While BofA's latest research shows the share of households carrying a credit card balance has declined year over year, a growing number of lower-income households are becoming more reliant on credit to maintain spending levels. 

The firm's research also points to higher-income households' relatively stronger spending growth compared to those with lower incomes. "Higher income" refers to households significantly above the population average, earning over $150,000 per year, while lower income defines the bottom third of households, or those that earn around $60,000 or less. 

Another troubling sign: Wage growth among low-income earners in March reached its lowest level since April 2017.  

"When you look at wage growth by income, it’s the low-income consumer where wage growth seems to have slowed the most," said Tinsley. "Prices are rising, [but] their wages aren't rising as much. That's causing some pressure."

HAKINMHAN via Getty Images

Commentary on earnings calls also points to a tale of two consumers — one that remains solid and spending, and the other more cautious. 

"Last week, it became a bit more clear to us that there are two tales of the consumer going around, and that both may be correct — they are just capturing different perspectives," wrote Lori Calvasina, head of US equity research at RBC Capital Markets, on Monday. 

Her team noted that "consumer companies continue to have a more negative tone when talking about the consumer," while financial-related companies and telecom providers have noted a strong customer. 

Earlier this month, American Express posted better-than-expected results amid strong spending from its affluent customer base, which was not showing signs of decelerated spending.

The sentiment was echoed by Capital One CEO Richard Fairbank during the credit card company's quarterly call last week. 

"The US consumer remains a source of strength in the economy. That's true for almost any metric that we look at," said Fairbank. 

Verizon noted similar strength in the consumer. 

"When it comes to consumer behavior, in general, we haven't seen any major consumer shifts in behavior ... of course, we have a product of mobility and broadband that's so essential for our consumers," Verizon CEO Hans Vestberg said during the company's earnings call last week. 

ASSOCIATED PRESS

But consumer-facing companies ranging from PepsiCo (PEP) to Procter & Gamble (PG) have pointed to a pressured customer. 

"Consumers are feeling more challenged with their disposable income. And that obviously is different for different levels of income across the American consumer," PepsiCo CEO Ramon Laguarta told analysts following the company's earnings report on Thursday.

Procter & Gamble management highlighted a "pause from the consumer" during the consumer products company's earnings call. 

"That pause is reflected in retail traffic being down," P&G CFO Andre Schulten told analysts last week.

Even American Airlines (AAL) noted that while international and premium travel was strong last quarter, the carrier's domestic "main cabin" demand was weak. 

Southwest's (LUV) CEO Bob Jordan also said leisure travel demand was down as the airline moves forward with a plan to cater part of its seating to higher-paying premium travelers. 

"We were highly impacted on the demand side by the tariffs and the consumer confidence erosion," Jordan told Yahoo Finance. 

With consumers holding an average credit card balance of $6,380 per month, it's no wonder consumer sentiment has tumbled to its lowest level since 2022.

“Over 60% of Americans are living paycheck to paycheck," said Jeff Mandel, president of monetization at IDIQ, a firm that works with individuals on their personal finances and credit. “This is one of the scariest times that I think we’ve ever seen."

Bank of America's credit card research shows "nice-to-have" discretionary services, such as dining out, going to the movies, or travel and leisure spending, eased in March, with the biggest pullback among the low-income households. 

However, Wall Street doesn't appear too concerned yet. That's because signs of an economic slowdown have yet to fully emerge in labor market data. Economists expect that trend to continue with the release of the April jobs report on Friday.

"If that shoe drops, then that's when we would really start to get worried," said Bank of America Institute's Tinsley. 

Ines Ferre is a Senior Business Reporter for Yahoo Finance. Follow her on X at @ines_ferre.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance