Days before President Donald Trump was sworn in for his second term, he acknowledged the high prices Americans were seeing at the gas pump and grocery store, pledging to bring them down.<\/p>\n
\u201cIt\u2019s always hard to bring down prices when somebody else has screwed something up like [President Joe Biden] did,\u201d Trump said in a news conference in early January<\/a>. \u201cWe\u2019re going to have prices down. I think you\u2019re going to see some pretty drastic price reductions.\u201d<\/p>\n According to exit polls from the November 2024 election, Americans resonated<\/a> with Trump\u2019s messaging around prices. Exit polls<\/a> indicated a higher proportion of voters without college degrees and those making less than $100,000 per year cast their ballot for Trump, cementing a rightward shift for the working class that has been trending in that direction for about a decade.<\/p>\n But those patterns are shifting once more as emerging economic data shows that the K-shaped economy<\/a>, coined on Twitter<\/a> during the pandemic as a half-joking response to debates about whether the recovery would be \u201cU\u201d or \u201cV\u201d shaped, is real. One year into Trump 2.0, the notion is becoming reality of diverging fortunes for wealthy and poor Americans. It has tanked confidence in the economy\u2014and the president who promised to solve the affordability crisis in the U.S.\u00a0<\/p>\n While a wave of working-class voters flooded the Republican party ahead of the 2024 presidential election, that same group sent a loud message in the early November off-year elections, electing Democrats in every single race in which they were running. This included moderates Mikie Sherrill and Abigail Spanberger<\/a> in New Jersey and Virginia, respectively, and firebrand democratic socialist mayors in New York and Virginia: Zohran Mamdani<\/a>, and Katie Wilson. Their common theme: affordability<\/a>.<\/p>\n Economists have made it clear that something real is shifting: The rich are getting richer, and the poor are getting poorer. This week, Apollo chief economist Trosten Slok noted wage growth for the lowest-income Americans plummeted to its lowest<\/a> in about a decade, while wage growth for the highest-income group surpassed all other income levels, citing data<\/a> from the Federal Reserve Bank of Atlanta. Moody\u2019s Analytics found last month that for the second quarter of 2025, the top 10% of households made up nearly 50% of all consumer spending<\/a>. According to calculations by New York University economics professor Edward Nathan Wolff, the top 20% of America\u2019s wealthiest households<\/a> own nearly 93% of all stock.\u00a0<\/p>\n Comments from executives in third-quarter earnings made clear that the Fortune 500 see a \u201cbifurcated\u201d economy. Delta seemed almost surprised<\/a> at how its premium and business travel seats are due to eclipse the main cabin in 2026, a year ahead of schedule. While McDonald\u2019s CEO talked about a \u201cbifurcated consumer base,\u201d with traffic growth strong among higher-income consumers. By and large, fast-food companies boomed in the quarter<\/a> while higher-priced \u201cslop bowl\u201d chains such as Sweetgreen, Cava and Chipotle<\/a> have been struggling to arrest a decline in same-store sales as consumers trade down.<\/p>\n The housing market, only in recent memory a booming segment of the economy where many locked in huge equity gains at low mortgage rates, has become nearly frozen because of the \u201clock-in effect.\u201d It\u2019s simply unaffordable to sell your house and buy another one with mortgage rates above 6%. The first-time homebuyer age hit 40 years old<\/a> in 2025, according to the National Association of Realtors, revealing that only people with some degree of wealth accumulated over many years of adulthood can afford to make purchases in the housing sector. <\/p>\n \u201cWe\u2019ve probably made housing unaffordable for a whole generation of Americans,\u201d The Amherst Group CEO Sean Dobson said at the ResiDay<\/a> real-estate conference in New York in November, telling Fortune on the sidelines that people have done what they\u2019ve been told by getting an education and good jobs \u201cand then they didn\u2019t get what they were promised.\u201d<\/p>\n Trump\u2019s role in the K-shaped economy<\/p>\n Some of these indicators can be traced back to Trump, who himself rode affordability concerns<\/a> to a 2024 election victory that once seemed implausible. Pantheon Macroeconomics analysts Samuel Tombs and Oliver Allen said in a September research note that suppressed income growth was a result of Trump\u2019s tariff policies<\/a>, which had forced businesses to slash wages in order to preserve margins that took a hit from the import taxes. In the wake of the November elections <\/p>\n \u201cData show wage growth has slowed more in the trade and transportation sector, and to a lower level, than any other major sector since the end of last year. Fears workers would be able to secure larger wage increases in response to the tariffs look highly unlikely to be realized,\u201d the analysts wrote.<\/p>\n Peter Loge, a professor of media and public affairs at George Washington University, who served as senior advisor to the FDA commissioner under President Barack Obama, told Fortune that Trump\u2019s economic priorities can be ascertained by whom he surrounds himself with.<\/p>\n \u201cPresident Trump has installed very wealthy people with very senior positions in government, which isn\u2019t a bad thing, but it\u2019s limiting,\u201d Loge told Fortune, naming in particular Elon Musk, who served as head of the Department of Government Efficiency<\/a> in the administration\u2019s first months.<\/p>\n Loge said the installation of these wealthy figures, as well as the courtship of powerful tech CEOs like Larry Ellison and Sam Altman, illustrates priorities to serve these individuals. The president signed a law in July for a roughly $4 trillion package<\/a> of tax cuts, primarily benefiting companies and wealthy Americans. Those wealthy individuals, in turn, pour their money into the stock market, feeding the top half of the K, Loge noted.<\/p>\n These factors are on top of the administration\u2019s controversial decision to halt funding for SNAP benefits <\/a>during the government shutdown and require millions of low-income Americans to reapply for the benefits<\/a> in an effort to combat \u201cfraud,\u201d according to Agriculture Secretary Brooke Rollins<\/a>.<\/p>\n But to be sure, the K-shaped economy has existed for decades, economists say, and other economic factors have little to do with the president\u2019s policies. The \u201clow-hire, low-fire\u201d labor market of 2025, for example\u2014which has in particular battered lower-income, entry-level workers such as Gen Z<\/a>\u2014is more a result of businesses becoming more conservative in their hiring and firing practices following a pandemic-era labor shortage<\/a> and a hiring binge that may have gone too far during the so-called \u201cGreat Resignation.\u201d<\/p>\n Changing sentiments<\/p>\n Lower-income Americans are noting these changes, with consumer sentiment similarly diverging in a K-shape, something Peter Atwater, adjunct professor of economics at William & Mary, who popularized the term \u201cK-shaped economy\u201d<\/a>, believes is being overlooked in the K-shaped conversation. Last month, the bottom third of income levels felt much less confident about the U.S. economy compared to the top third, according to data<\/a> from the University of Michigan\u2019s Survey of Consumers.<\/p>\n \u201cWhat we have today is a small group of individuals who feel intense certainty paired with relentless power control\u2014and on the other, it is a sea of despair,\u201d he told Fortune. \u201cAnd that\u2019s the piece that never gets talked about.\u201d <\/p>\n Atwater\u2019s diagnosis rhymed with a Financial Times column<\/a> from Robert Armstrong, of Unhedged, who wrote this week that America has always been unequal, but what makes this moment K-shaped is a loss of faith in future earnings among the lower-income cohort. \u201cIt could be,\u201d he wrote, \u201cthat after five years of going nowhere, households in the bottom half of the wealth and income distributions have started to anticipate a bleaker future and are changing their spending habits accordingly.\u201d<\/p>\n Nose-diving confidence in the U.S. economy is reflected in the attitudes of Republicans and independents who voted for Trump. About 30% of Republicans believe Trump has fallen short of their expectations regarding the economy, according to a national NBC News poll<\/a> this month. Two-thirds of independents blamed Trump for increasing inflation, per an ABC News\/Washington Poll poll conducted in October. CNN polling data<\/a> meanwhile shows Trump\u2019s approval rating has reached its lowest level since he took office the second time.<\/p>\n \u201cPeople want to know that they can afford a medical bill if they get sick, their kids will have a better future than they do, or have a chance of a better future,\u201d Loge told Fortune. \u201cAnd if voters feel like things aren\u2019t working, they fire their politicians in charge to hire new ones.\u201d<\/p>\n \u201cVoters are pretty well saying, \u2018We don\u2019t think whatever the Republicans are doing is making stuff less expensive. We need life to be more affordable and less chaotic. It\u2019s pretty unavoidably chaotic. Now we\u2019re going to bring in new people to try a new thing,\u2019\u201d Loge said.<\/p>\n Trump has noted the changing political attitudes following the election, floating a raft of proposals aimed at easing consumers\u2019 pain, such as a 50-year mortgage<\/a> and $2,000 rebate checks<\/a> coming from tariff revenue. He said in a Fox News interview<\/a> earlier this month his party has not done enough to assure Americans about the state of the economy.<\/p>\n \u201cWe learned a lot,\u201d Trump said. \u201cRepublicans don\u2019t talk about it. They don\u2019t talk about the word affordability.\u201d<\/p>\n UBS Wealth Management\u2019s global chief economist, Paul Donovan, warned that \u201caffordability\u201d may prove to be an enduring, even intractable problem in both economic and political discourse. In his\u00a0weekly blog<\/a>, Donovan wrote that the concept is \u201csubtly different\u201d from both \u201cinflation\u201d and from the \u201ccost-of-living crisis.\u201d It\u2019s an anger about the feeling \u201cI can\u2019t afford that,\u201d he added, one that could be tricky to disprove.<\/p>\n \u201cPeople want things (generally \u2018better\u2019 things than they currently have) and are upset that they cannot afford those things,\u201d Donovan wrote. \u201cThis may make affordability a more enduring problem than in the past.\u201d He added that social media \u201cfuels resentment\u201d about affordability, as it presents \u201ccarefully curated, idealized lifestyles\u201d that are just out of reach to anyone with a smartphone.<\/p>\n Shifting political tides<\/p>\n Loge hesitated to make predictions about what this changing sentiment means for upcoming elections, particularly if Trump\u2019s tariffs are indeed successful, which could result in an outpouring of support for future Republican candidates. However, he suggested legacy or incumbent politicians from both major parties will have challenges getting elected. Atwater believes the desire\u2014and need\u2014for affordability transcends party lines.<\/p>\n \u201cWe, particularly those on the left and the right and the establishment, woefully underappreciate how purple the bottom is,\u201d he said. \u201cThe unified despair, the sheer desperation on both sides of the aisle, and that will continue to lead to an anti-establishment vote,\u201d he said.<\/p>\n