{"id":589029,"date":"2026-08-10T15:55:09","date_gmt":"2026-08-10T15:55:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/589029\/"},"modified":"2026-08-10T15:55:09","modified_gmt":"2026-08-10T15:55:09","slug":"theres-a-big-problem-with-what-were-told-about-americas-economy","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/589029\/","title":{"rendered":"There\u2019s a big problem with what we\u2019re told about America\u2019s economy"},"content":{"rendered":"

\n A surprising trend has been showing up in Bank of America accounts over the past few months: The gap between America\u2019s wealthy and poor appears to be narrowing.\n <\/p>\n

\n That\u2019s counter to the narrative we\u2019ve been hearing for years: that America\u2019s rich are getting richer, leaving the less-well-off among us behind and the American Dream out of reach.\n <\/p>\n

\n That wealth gap, often called the \u201cK-shaped economy,\u201d has been blamed for many of the economy\u2019s ills, and a chief source of Americans\u2019 angst about their financial situations. On the other hand, it has also been credited for keeping the US economy humming, as wealthier Americans keep spending and businesses keep hiring.\n <\/p>\n

\n But what if that K-shaped narrative isn\u2019t true anymore?\n <\/p>\n

\n For the \u201cK\u201d theory to hold, income and spending growth for the rich needs to outpace the growth in paychecks and expenses for the poor. In other words, the upward- and downward-pointing lines of the \u201cK\u201d diverge.\n <\/p>\n

\n Instead, by some measures, those lines seem to be getting closer together.\n <\/p>\n

\n The difference in spending growth between higher- and lower-income Americans is the narrowest it has been in three years, according to<\/a> a June report from researchers at PNC. On Monday, PNC said there\u2019s even early evidence that the savings gap between upper- and lower-income households is starting to narrow.\n <\/p>\n

\n Spending growth for lower-income Americans also outpaced high-income Americans\u2019 in June, according to<\/a> Bank of America Institute. And the gap in discretionary spending growth shrank to its narrowest point in June since July 2025 \u2013 a particularly encouraging sign for the economy if folks across all income levels are confident enough to buy things they want but don\u2019t necessarily need.\n <\/p>\n

\"Shoppers<\/p>\n

\n That convergence in the \u201cK\u201d lines is true for paychecks, too. There was basically no difference in earnings growth between rich and poor last month, according to Bank of America.\n <\/p>\n

\n Larger tax refunds from President Donald Trump\u2019s One Big Beautiful Bill Act, consumer spending during the World Cup and a reasonably stable job market could all help explain why the K is narrowing in 2026. But these last few months of data also build on a trend we\u2019ve seen for years.\n <\/p>\n

\n The \u201cK\u201d has narrowed considerably since 2019, as pay for lower-income workers increased to keep pace with surging inflation. A large influx of pandemic-era government stimulus and social safety nets also supported lower-income workers, noted Joe Brusuelas, chief economist at RSM US.\n <\/p>\n

\n Over the past seven years, the net worth of America\u2019s poorest grew much faster than that of the upper middle class. And middle-class folks\u2019 wealth grew at a higher rate than the top 1%.\n <\/p>\n

\n By one measure, the \u201cK\u201d has even been narrowing since 1979.\n <\/p>\n

\n Over the past five decades, the percentage of Americans in the lower and middle classes shrank, while the contingent in the richest group and the upper middle class surged, according to Scott Winship, director of the Center on Opportunity and Social Mobility at the American Enterprise Institute, a center-right think tank.\n <\/p>\n

\n The middle class is hollowing out, but it\u2019s mostly because more folks are getting wealthier, not poorer, Winship argued.\n <\/p>\n

\n The imperfect \u201cK\u201d analogy has recently led some economists and business leaders to try their hand at other letters.\n <\/p>\n

\"A<\/p>\n

\n \u201cWe\u2019re seeing more of a \u2018C,\u2019\u201d argued Treasury Secretary Scott Bessent in an interview<\/a> on CNBC August 4. Those on the lower end of the economy are making more, he said.\n <\/p>\n

\n \u201cI got sick of hearing about this K-shaped economy,\u201d Bessent said. \u201cI can say here, definitively, the K-shaped economy is over.\u201d\n <\/p>\n

\n Hilton CEO Christopher Nassetta in June also suggested America\u2019s economy is \u201cC-shaped,\u201d noting people across all price points and income levels are increasing their spending on travel and staying at his hotels.\n <\/p>\n

\n So is the \u201cK\u201d dead?\n <\/p>\n

\n At this point in the year, \u201cthat K-shaped narrative probably doesn\u2019t hold as much,\u201d said Brian LeBlanc, senior economist at PNC.\n <\/p>\n

\n \u201cWe\u2019re not seeing lower-income households get worse off,\u201d he said. \u201cThere\u2019s still a relative gap. But it\u2019s not getting wider in absolute terms.\u201d\n <\/p>\n

\n Enter: a huge asterisk to the \u201cdead-K\u201d argument.\n <\/p>\n

\n Ask David Woodyard if poorer households are on more solid ground, and the answer will be brief: \u201cNo.\u201d\n <\/p>\n

\n Woodyard runs Catholic Charities Dallas, which served over 240,000 people in the last year. His organization provided around 9 million meals from summer 2024 to mid-2025. Since then, more than 15 million. About 60% of people who get food assistance come back at least once.\n <\/p>\n

\n \u201cWe\u2019re busier than ever, in a total sense,\u201d Woodyard said.\n <\/p>\n

\n Against this backdrop, the K has been widening as the cost of living soared and pandemic-era stimulus fizzled. It shows up clearly in the data if we shift our starting point to, say, 2023 instead of 2019, when many of the economy\u2019s biggest challenges weighed heaviest on low-income families.\n <\/p>\n

\n 2023 is around when spending on gas took on a K-shaped trajectory, signaling that wealthier Americans were willing to travel more than poorer folks. At the start of the Iran war, that gas-spending gulf widened significantly.\n <\/p>\n

\n Heather Black sees the bottom arm of the \u201cK\u201d getting even bigger, with more people struggling to cover the basics. Black is the vice president of the 211 System Strategy, a helpline supported by the United Way Worldwide that connects people to food aid, mental health services, transportation and more.\n <\/p>\n

\n In 2025, the 211 network made 6 million referrals for housing assistance, plus another 3 million for utilities. The trends are on a similar track this year, Black said.\n <\/p>\n

\"A<\/p>\n

\n Larger tax refunds this spring may have helped families catch up on bills for a month or two. But the one-time payment isn\u2019t enough to bend the \u201cK\u201d itself.\n <\/p>\n

\n \u201cMaybe we get caught up this one time on the overdue rent, but it\u2019s not a solution,\u201d Black said. \u201cIt\u2019s a Band-Aid.\u201d\n <\/p>\n

\n Consider, too, how fragile the economy is underneath those Band-Aids. The job market unexpectedly shed jobs<\/a> in July. If the slowing continues, it could lead to more stagnant wages, muted hiring or layoffs. Polls show folks are beyond fed up with Trump\u2019s economic record, tariffs and inflation. The war in Iran has jolted gas and diesel markets with little end in sight.\n <\/p>\n

\n Often, poorer households just can\u2019t absorb it all.\n <\/p>\n

\n Higher gas prices threw Javier Casillas\u2019 lower-income customers for a loop. The owner of Live Well Mattress & Furnishing Centres in Alamogordo, New Mexico said his store was profitable at the start of the year. But sales slowed significantly starting in March, and he\u2019s been in the red since.\n <\/p>\n

\n Casillas said he\u2019s still selling premium mattresses to wealthier shoppers. But his discounted merchandise, even at 80% off, sits idle. The clearance section now takes up half the store because he can\u2019t unload the cheaper inventory.\n <\/p>\n

\n Naming the economy can help define what\u2019s happening around us. Especially since the pandemic, the \u201cK\u201d captures the historic economic divides that increasingly define American life.\n <\/p>\n

\n But a single letter can\u2019t capture everyone\u2019s experience all of the time \u2013 let alone a $31 trillion economy that is the biggest and most diverse in the world.\n <\/p>\n

\n Despite all the negativity, Americans keep spending. Retail sales have risen for months. Consumer spending rose a healthy 3.2% in the second quarter. The economy\u2019s in relatively solid shape \u2013 in large part, thanks to people spending as if they feel good about the economy.\n <\/p>\n

\n But the wealth gap is real, and it\u2019s inherently unfair. Low-income Americans who can\u2019t afford to buy into the housing market and who lack a significant presence in the stock market are starting on their back foot.\n <\/p>\n

\n All of that can be true at the same time. That\u2019s why it is so important to try and understand every twist, bend and line of whatever letter gets tossed around next. A person\u2019s story may show up on the upturned bottom of the \u201cC,\u201d another\u2019s on the down-pointing leg of the \u201cK.\u201d The macro data may start to curve in a new direction before someone feels a shift in their daily life.\n <\/p>\n

\n Maybe the biggest problem with the \u201cK-shaped\u201d narrative, then, is that there\u2019s just one narrative at all.\n <\/p>\n","protected":false},"excerpt":{"rendered":"A surprising trend has been showing up in Bank of America accounts over the past few months: The…\n","protected":false},"author":2,"featured_media":589030,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,61,60],"class_list":["post-589029","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-ie","tag-ireland"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/589029","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=589029"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/589029\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/589030"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=589029"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=589029"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=589029"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}