All articles tagged with #k shaped economy
Bank of America data show lower-income wages rising faster than higher-income wages (about 4.7% vs. 3.5%), even as overall payroll growth cools to roughly 1.5%. The once-persistent K-shaped wage gap appears to be narrowing as more lower-paid workers switch jobs and see raises; some officials, noting these shifts, have suggested the K-shaped economy may be ending in favor of a trend where lower earners claw back ground.
Using a $15 artisanal ice cream pint as a lens, the piece argues the post-pandemic economy is bifurcated: inflation and rising living costs push some toward luxury, locally made treats while others tighten budgets, reflecting a K-shaped recovery and a surge in gig-based, small-batch businesses that tap into local communities.
BBC InDepth argues the 2026 World Cup, staged across the US, Canada and Mexico, doubles as a pricing experiment: tickets and hospitality are priced dynamically to maximize revenue, with events largely held in rented NFL-style stadiums rather than new builds. FIFA collects much of the upside while host cities and ordinary fans shoulder costs, a model that echoes a K-shaped economy and risks reducing accessibility even as it boosts development funds and global branding. The piece questions whether this extreme commercialisation can be sustained or simply alienate fans.
A New York Fed analysis using the Survey of Consumer Expectations finds rising food insecurity since 2020—disproportionately among lower‑income, less‑educated households and those with children—alongside a sharp drop in consumer optimism and job-finding prospects. Despite solid macro indicators, sentiment remains weak, reflecting a K‑shaped economy where the bottom half faces renewed financial strain. The study links higher insecurity to deteriorating outlooks, while acknowledging that inflation, cost of living, and policy changes (e.g., SNAP) also drive pessimism and that multiple factors influence consumer expectations even among those not reporting food insecurity.
Americans are increasingly trading up to premium goods and experiences—better groceries, travel, and higher-brand products—while the dream of owning a home and securing retirement wealth remains out of reach for many. The rise of an upper-middle class is shifting profits toward higher-quality retailers and airlines, with travel and experiences expanding while price-focused discount players shrink; economists warn the economy could flatten if inflation eases and AI investments help lower-income purchasing power, potentially converging the gulf between classes over time.
Asia now faces two economic realities: an AI/tech-driven boom and an energy crunch from Middle East tensions that raise oil prices, creating a K-shaped economy where tech hubs prosper while others struggle. Taiwan and Korea ride chip-driven profits, while 8.8 million people in the Asia-Pacific region risk falling into poverty due to energy shortages and inflation; central banks must balance growth with inflation amid geopolitics that could ripple into global trade.
McDonald's CEO Chris Kempczinski says the K-shaped economy is worsening: higher-income shoppers spend normally while lower-income consumers cut back amid inflation and higher gas prices, with consumer sentiment in 'heightened anxiety.' The company posted 3.8% growth in global same-store sales and $6.52 billion in revenue, and is balancing price-friendly value items with premium offerings as it searches for growth in a tougher environment; its stock has fallen about 7% year to date.
A New York Fed study finds that after the Iran war, gas prices jumped about 25% by the end of March (and ~50% since the war began). Lower-income households cut gas use but still spent 12% more on gas in March, while higher-income households increased gas spending by 19% with almost no reduction in consumption, signaling a widening K-shaped divide that could pull down broader inflation-adjusted spending.
A New York Fed analysis using Numerator EHIs shows that since 2023, retail spending growth has been a K-shaped pattern: high-income households (>$125,000) led nominal and real spending growth, while middle- and low-income groups lagged or contracted in real terms. The divergence widened after pandemic-era subsidies ended, and inflation hit lower-income groups harder due to income-specific price pressures. The study highlights macro risks from concentration of spending in a small segment and points to policy implications, with a companion post exploring the mechanisms behind this heterogeneity.
The New York Fed finds real retail spending has diverged by income since 2023, with high-income households driving most growth thanks to asset gains while low- and middle-income groups lag; spending has recently turned negative across all groups, underscoring vulnerability to a potential market downturn.
A NY Fed analysis shows the US economy remains in a K-shaped pattern: higher earners benefit from booming stock prices while lower earners face persistent inflation—driven in part by gas costs—and slower wage growth, limiting their asset gains and keeping many in a persistent “K freeze” into 2026.
The Iran war has sent oil and gasoline prices higher—Brent crude up over 40% to about $102/bbl and U.S. gas averages near $3.79/gal—driven by Strait of Hormuz disruptions; economists warn the surge worsens the K-shaped economy by acting like a regressive tax that hits lower- and middle-income households hardest and could curb overall consumer spending, with knock-on effects for diesel, jet fuel, trucking, food, and travel.
America is in a persistent K-shaped recovery: higher earners continue to spend on essentials and leisure while lower- and middle-income households cut back on groceries and face rising credit stress. Wage growth has shifted in favor of the top third since 2024, GDP gains have disproportionately benefited higher-income groups, and tax changes may widen the gap. Data show richer households increasing purchases of meat, produce, and beverages while lower earners trim discretionary items; recent grads face higher unemployment than the overall workforce, and total credit-card debt rose to about $1.28 trillion in late 2025 with delinquency highest among the lowest-income households.
Economist Peter Atwater warns that a persistent K-shaped recovery could create a caste-like divide in the US by widening gaps in asset ownership (homes and stocks) and opportunities for low-earning Americans; while he believes the split may eventually reverse if confidence rises and policy addresses the income gap.
American Express is shifting marketing dollars to its refreshed Platinum card with an $895 annual fee to attract high-spending customers, part of a broader strategy aligned with a K-shaped economy where the wealthy spend more while others pull back. The company reported 4Q results that missed consensus partly due to Platinum refresh costs, with new card accounts at 2.9 million at year-end (the lowest in five quarters). Luxury categories showed solid growth (luxury retailers +15%, business/class airfare +9%, luxury hotel +12%), while overall earnings per share came in at $3.53, a penny below expectations; shares fell about 3.5%.