For years, the US economic recovery looked like the letter K: one arm shooting upward for the wealthy, the other sliding down for everyone else. That split appears to be closing, with new data showing lower-income households are finally gaining ground on their higher-earning counterparts in both wages and spending.<\/p>\n
Bank of America Institute data shows after-tax wage growth for lower-income workers reached 4.1% in June 2026. Higher-income brackets came in at 4.2%. A gap of one-tenth of a percentage point is, for all practical purposes, a rounding error.<\/p>\n
The spending story tells the same tale<\/p>\n
In June 2026, lower-income household spending actually outpaced higher-income household spending. The gap in discretionary spending between income levels hit its narrowest point since July 2025.<\/p>\n
PNC\u2019s research tells a similar story. When you strip out gasoline purchases, which can distort the picture because fuel costs eat a proportionally larger share of lower-income budgets, the spending gap between upper and lower-income households is becoming noticeably less pronounced. PNC also flagged early signs that the savings gap between income groups is starting to close.<\/p>\n
From K-shaped to C-shaped<\/p>\n
Treasury Secretary Scott Bessent has suggested the economy is shifting away from the K-shaped model toward what some are calling a \u201cC-shaped\u201d outcome, a more blended recovery where different income groups move in roughly the same direction.<\/p>\n
Pay gains for lower-income workers have broadly kept pace with inflation since 2019, a stretch that includes the worst inflationary spike in four decades.<\/p>\n
The wealth gap remains the elephant in the room<\/p>\n
Wages and spending are converging. Wealth is not.<\/p>\n
The distinction matters enormously. Wages measure what you earn this month. Wealth measures what you\u2019ve accumulated over a lifetime, and it\u2019s overwhelmingly driven by two asset classes: stocks and housing. Both surged in value over the past several years, disproportionately benefiting households that already owned them.<\/p>\n
A lower-income worker whose after-tax pay grew 4.1% is doing better than they were a year ago. But if they don\u2019t own a home or hold any equities, they missed the wealth-building engine that pushed upper-income net worth to record levels.<\/p>\n