It's getting tougher again at the bottom of the food chain.
Rising taxes and soaring gasoline prices have combined to slash spending power at the lower end of the economy, according to executives from fast food chains, discount retailers and other companies that cater to budget-conscious consumers.
"Unfortunately, the loss of so many middle-class jobs in this country makes it tough," said Gary Rodkin, chief executive of consumer packaged foods company ConAgra Foods, in an interview on Tuesday.
"We've got a pretty good pulse on that 80 percent of the population that's still challenged and I would say there's not marked improvement yet," he added.
The people with the least flexibility in their budgets are suffering the most from a series of blows: the Jan. 1 expiration of a 2 percent cut in payroll taxes, a delay in income tax refund payments, and a 30-cent increase in gasoline prices this year through last week.
Moody's Analytics estimates that the payroll tax increase will take 0.6 percentage points from U.S. GDP growth in 2013, mostly in the first quarter, said Scott Hoyt, the firm's director of consumer economics.
While economists say this is unlikely to derail U.S. economic growth this year - given the limited spending power of the poor - Rodkin and other executives at the Consumer Analyst Group of New York conference in Florida this week said there were clear signs of softness at the low end of their business.
Kraft Foods Group warned last week that fourth-quarter revenue would fall almost 11 percent after it failed to tailor its prices to meet demand at the lower end of the market, particularly in its packaged lunch meat business.
Wal-Mart shares closed down 2.1 percent on Friday after Bloomberg reported that the world's largest retailer suffered its worst sales start to any month in seven years in February, due to increased payroll taxes and delayed tax returns. Wal-Mart has not confirmed the veracity of those figures.
"We're careful not to let one Walmart memo cause us to change our strategy but it kind of reinforces what we're doing," Barry Calpino, a vice president of innovation at Kraft, told Reuters. "It shows that you as a marketer have to be thinking about all the different parts of the economy."
Tax refunds are a big source of spending for consumers who could not afford bigger-ticket items during the holiday shopping season.
"Between gas and this tax, it's a one-two punch to the consumer," said Steve Nevill, a managing director at AlixPartners. "People are going to trade down. You've basically taken money out of people's pockets."