US Economy Divided: B2B Sellers Enjoy Pricing Power While B2C Retailers Struggle

Richmond Federal Reserve President Thomas Barkin has highlighted a split in the US economy, where companies selling to other businesses can raise prices with ease while those selling directly to consumers face significant challenges.

The divergence between business-to-business and business-to-consumer pricing power is due to consumers pushing back against further price hikes after years of elevated inflation.

Barkin pointed out that higher-income households are less price-sensitive, allowing certain segments of the B2C market to tolerate incremental hikes while mass-market retailers struggle to protect their margins.

The Fed is closely watching this dynamic as service firms catering to wealthier consumers may have more room to absorb cost increases.