Personal spending in the US is diverging into two distinct categories as strong growth at high-end stores contrasts with continuing difficulties for mass-market, low-price retailers.

Nearly a year after the US economy returned to growth, corporate earnings reports in recent months have provided consistent evidence of the differing fortunes. At high-end stores such as Neiman Marcus and Tiffany, shoppers are demonstrating confidence and spending with vigour. At the other end of the retail spectrum, consumers are cautious amid economic uncertainties, denting the earnings of companies as Walmart.

In the second quarter of 2010, personal consumption expenditure – the commerce department’s main measure of consumer spending – advanced at an annualised rate of 2 per cent in the US, matching the fourth quarter 2009 figure and improving upon the 1.9 per cent gain recorded in the first quarter of this year. However, these modest increases are much weaker than the rebound in consumer consumption experienced after previous recessions.