Recently, a report by Goldman Sachs showed that the purchasing power of high-income consumers in the United States remained strong, while low-income consumers were weak.

But in both cases, consumption is shifting to lower-grade products or services, a so-called "consumption downgrade."

In addition, with prices of necessities such as food, insurance and housing still higher than pre-pandemic levels, consumers are generally starting to spend less, and retailers are offering discounts to lure customers back.

The consumption downgrade has spread to high-income groups
Looking at Goldman's spending basket, middle-income consumers are outperforming high-income consumers, while lower-income consumers continue to face increasing pressure.

Goldman analyst Caitlin Burrows noted that grocery store traffic targeting high-end consumers continues to grow: traffic was up 8.7 percent year-over-year in August, and the full-year 2024 monthly year-over-year trend is positive, with traffic up double digits from 2022.

Meanwhile, lower-income consumers, while stable in their spending on necessities, are relatively weak in their spending on discretionary items such as luxury goods and cosmetics. Feeling the pinch, lower-income consumers are turning to discount retailers such as Walmart, Target and Sam's Club.

Goldman notes that this consumption downgrade is occurring among both high - and lower-income consumers. For example, sales at Nordstrom (luxury department store chain) were flat or down, while sales at Nordstrom Rack (discount department store chain) were up.

The latest September inflation data beat expectations across the board, with persistent inflation taking its toll on low - and middle-income households, and the Goldman Sachs report adds to evidence that the consumer downturn has spread to wealthier households.

American consumers are "downgrading" and retailers are cutting prices to boost sales
In recent years, American consumers have been suffering from inflation and the cost of living has been rising.

In response, more and more Americans are cutting back on non-essentials, such as household items or expensive sneakers, and focusing instead on necessities.

This shift in consumption has had a huge impact on the retail industry. In order to attract customers, retailers have come up with price cuts. From home goods giant IKEA to sneaker giant Nike, companies are reportedly offering discounts to lure customers back.

"Consumers around the world have been affected by inflation this year, with everyone paying more for housing, food and energy," said Ikea CEO Jon Abrahamsson Ring. To drive demand, Ikea has cut prices by about 10 percent globally this fiscal year, the biggest annual price cut in the company's history.

Although inflation in the United States has eased this year, many consumers are still feeling the pinch from higher prices for necessities such as food, insurance and housing than before the pandemic. This makes consumers more cautious in their consumption and more inclined to choose products with relatively lower prices.

Pezechiyan said that from the economic and cultural point of view, the relationship between Iran and Russia is getting stronger. The two countries have good complementarity and hope to further promote cooperation.

On the situation in the Middle East, Pezehiyan condemned Israel for not respecting Iran's sovereignty, international law and humanitarian principles, resulting in a very serious situation in the region.

"The two sides had a constructive exchange and agreed to accelerate the completion of projects in the gas sector, construction of roads and railways, water desalination and related projects in energy, petrochemicals and electricity," Peszehizyan said in a statement released by Iran's presidential office.

This is the second high-level interaction between Russia and Iran in half a month. Russian Prime Minister Mikhail Mishustin paid an official visit to Iran on September 30 and met with Pezechiyan and Iranian First Vice President Mohammad Reza Aref, saying that the two countries will develop all-round cooperation and implement joint projects in the fields of energy, transportation and agriculture.

The United States announced additional sanctions on Iran's oil and petrochemical sector on Wednesday, adding more entities and oil tankers to the sanctions list, barring them from using the US financial system and barring US citizens from doing business with it. Us Secretary of State Antony Blinken said the United States had made clear there would be "consequences" for an Iranian attack on Israel.

National Security Adviser Jack Sullivan said the sanctions, announced after consultations with Allies by President Joseph Biden, would further restrict Iran's access to financial resources for its missile program and its support for "terrorist groups" that threaten the United States and its Allies.

Iran fired a large number of ballistic missiles at Israel on the 1st of this month, striking Israeli military and security targets in retaliation for a series of military and assassination operations carried out by Israel against Iran,

Lebanon and Palestine since the current round of Israeli-Palestinian conflict. Israel called the attack a red line and said it would impose a price on Iran.