Most people have seen news reports, social media posts and business charts that show a line moving up in good times, pointing down when business or employment numbers are bad, or bouncing back and forth between the two when the economy is confused.<\/p>\n
Economists, commentators and politicians can look at the charts and declare life is good and getting better, or bad and getting worse.<\/p>\n
Those easy-to-read graphs generally track an economic statistic from a single perspective, making no distinction between people doing well and people doing poorly. Everything and everybody are lumped together.<\/p>\n
Those charts show that the stock market is near record highs, gold also is near its record high and home values have never been higher. But none of that matters if you don\u2019t own any.<\/p>\n
Other charts show what economists call the K-shaped economy. The rich getting richer and the poor, well, they\u2019re getting less rich. The top line on the K-curve is headed up and the bottom line is headed down \u2014 and the gap between the two is getting wider.<\/p>\n
The two lines moving in the opposite direction became more obvious as the country pulled out of pandemic shutdowns several years ago, as home values and investments climbed in value and inflation climbed too. Inflation is much harder on households that spend the majority of their income on essentials, such as food, clothes, utilities and car repairs. Their line of the K headed down as they struggled, but without investment gains and home equity to cushion the cost.<\/p>\n
\u00a0The U.S. economy continues to look strong because consumer spending is up, at least for households in the upward line of the K. The top 10% of earners are responsible for about 50% of consumption,\u00a0according to Moody\u2019s Analytics. Which means the other 90% of the country is stretched thin to cover their 50% share of spending.<\/p>\n
The top 10% of income-earning households hold about 85% of the financial wealth in the economy, the chief U.S. economist at investment bank and wealth manager Morgan Stanley said last month. That\u2019s the healthy line of the K.<\/p>\n
The top 1% of U.S. households owned half of all corporate stock and mutual fund shares in the second quarter of 2025, according to the most recent Federal Reserve\u00a0data. In the reverse, the bottom 50% of households collectively held just 1% of that stock and mutual fund wealth.<\/p>\n
And if you don\u2019t have enough wealth to cover all your bills, you take on debt. In the July-September quarter, the average debt per credit card holder rose to $6,523, with half the country carrying a balance.<\/p>\n
The Federal Reserve Bank of New York reported last month that the share of credit card balances 90 days past due had climbed to 7.1%.<\/p>\n
\u201cConsumers at the lower end are struggling and buying less and shifting to lower-cost products, but that at the top, people are spending at the higher income and wealth,\u201d Federal Reserve Chairman Jerome Powell said a month ago.<\/p>\n
It\u2019s as if the economy is brewing two pots \u2014 caffeine-rich coffee for people who don\u2019t need to ask \u201chow much\u201d when they go shopping, and a weak decaf blend for everyone else.<\/p>\n
And when you see a chart of the average retail price of a pound of coffee beans in the U.S. \u2014about $4 in December 2019 versus $9 this fall \u2014 it\u2019s clear that an increasing number of people on the lower rung of the K-curve probably can\u2019t even afford their favorite K-cup of coffee. \u00a0<\/p>\n