If you sell mattresses for a living, you already know that the economy is not a single story. It is a collection of stories happening simultaneously — some encouraging, some troubling, and most of them misrepresented by the media. Dr. Chris Kuehl, economist and founder of Armada Corporate Intelligence, came to Sleep Summit 2025 with a mandate to cut through the noise and give mattress retailers a clear-eyed read on the forces shaping consumer spending.
The Forecaster's Confession
Kuehl opened with a confession that immediately endeared him to the room: he is a reformed Soviet specialist who pivoted to economics when the USSR collapsed mid-PhD. That background, he explained, gives him a useful lens for understanding command economies — and why competing against China requires a fundamentally different playbook than competing against any other market-based rival. "China has 440 steel mills," he told attendees. "They don't need 440 steel mills. They need the jobs provided by the 440 steel mills."
The point was not merely geopolitical — it was a warning that tariff-driven inflation would behave differently than traditional inflation, because the other side of the equation does not operate by the same rules. And Kuehl offered something rare: a clear explanation for why the inflation surge economists predicted at the start of the year did not materialize on schedule.
Why Tariff Inflation Arrived Late
Businesses, Kuehl argued, responded in three ways before passing costs to consumers. First, many foreign suppliers simply absorbed the tariff rather than lose U.S. market share. Second, companies scrambled to find alternative supply chains — Mexico, Vietnam, India — though those options narrowed as tariffs spread. Third, domestic companies accepted lower margins.
The hardest thing in the world is to get market share back. Once somebody has gone to a competitor, they're gone. They're not coming back.
— Dr. Chris Kuehl, Armada Corporate Intelligence
Only when all three of those buffers were exhausted did prices begin to climb — and that, Kuehl noted, is precisely what retailers started seeing in the months leading up to Sleep Summit. The macroeconomic picture he painted was more nuanced than the recession narrative dominating headlines. Third-quarter GDP was running at nearly 3 percent — a full point above the 25-year average — and unemployment sat at 4.3 percent against a historical norm of 6. "What? Why are you so depressed?" he asked the audience rhetorically.
The K-Shaped Recovery: Two Very Different Customers
The most actionable concept Kuehl introduced was the K-shaped recovery — a framework that should reshape how mattress retailers think about their customer base. In a K recovery, upper-income consumers (those earning $100,000 or more) continue spending as if nothing happened, often because their wealth is tied to financial markets that have performed well. Lower-income consumers are genuinely squeezed. The middle third — households earning between $50,000 and $100,000 — are caught in the middle, feeling inflation acutely without the cushion of significant assets.
Spending continues. Wealth tied to markets. The premium mattress buyer.
Feeling squeezed. Stretched by inflation. Needs value justification.
Genuinely constrained. Focus on entry-level and financing options.
65 percent of all the wealth in the United States is in the hands of boomers. I want to appeal to the Gen Z. Why? They don't have any money. Appeal to me. I'm the one that has money to burn.
— Dr. Chris Kuehl, Sleep Summit 2025
The Practical Takeaway for Mattress Retailers
For mattress retailers, the practical takeaway is straightforward: the consumer who is most likely to buy a premium mattress right now is the upper-income boomer who has noticed inflation but does not care, who made money in the markets, and who is sleeping on a mattress that is probably overdue for replacement. The consumer who is hardest to convert is the middle-income household that is genuinely stretched.
Understanding which customer is walking through your door — and calibrating your floor, your pitch, and your financing options accordingly — is the economic intelligence that separates retailers who thrive in a K-shaped environment from those who simply survive it. Kuehl's retail spending forecast model, built by a retired artillery lieutenant colonel using 27 variables, continued to show growth trending well above historical norms.
The message was clear: the industry is not in a recession. It is in a bifurcated market. And bifurcated markets reward retailers who know exactly which half they are serving.
Key Takeaways
The economy is growing — sentiment is not.
GDP ran nearly 3% in Q3, a full point above the 25-year average, yet consumer confidence lagged. Retailers who understand the data can sell with confidence.
Tariff inflation arrived late by design.
Foreign suppliers, importers, and manufacturers absorbed costs before passing them on. The inflation surge is real — it just took longer than economists predicted.
You have two very different customers.
The K-shaped recovery splits your floor traffic. Upper-income boomers are still spending freely. Middle-income households are stretched. Know which one just walked in.
Boomers hold 65% of U.S. wealth.
They are your most likely premium buyers right now. They made money in the markets, they feel inflation but don't care, and their mattress is overdue for replacement.
Bifurcated markets reward the prepared.
Retailers who calibrate their floor, pitch, and financing options to the actual customer in front of them will outperform those who treat every shopper the same.
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