Is the K-Shaped Economy Over? What the Data Says
Scott Bessent claims the K-shaped economy has ended, but the data doesn't support this view.
1What is the K-Shaped Economy?
The K-shaped economy refers to a situation where high-income individuals thrive economically while low-income individuals fall behind. Scott Bessent claims this situation has ended and the economy has transitioned to a C-shape. However, data does not support this claim. Income inequality persists, and high-income individuals remain in a better economic position.
2Bessent's Claims
Scott Bessent stated in a CNBC interview that the K-shaped economy has ended and the economy has transitioned to a C-shape. Bessent mentioned that the bottom 25% of earners saw a 2% real wage increase. He also claimed that policies like the One Big Beautiful Bill Act positively impacted household finances. However, these claims are not yet supported by data.
3One Big Beautiful Bill Act
The One Big Beautiful Bill Act was described by the White House as the biggest tax break in history. This law provides an average 15% tax cut for Americans earning between $15,000 and $80,000. It also promises to increase tipped and overtime workers' annual take-home pay by $1,500. However, institutions like Goldman Sachs and Morgan Stanley argue that the Iran war's impact on gas prices has nearly canceled out these promised benefits.
4Income Distribution Data
According to Federal Reserve data, in the first quarter of 2026, the bottom 25% of earners saw a 3.6% wage increase, while the top 25% saw a 3.9% increase. These figures indicate the K-shaped economy persists. Atlanta Fed data also shows the bottom percentile's wage growth never exceeded the top percentile's.
5Wealth Gains Distribution
RSM chief economist Joe Brusuelas noted that 75 cents of every dollar generated by the equity rally flows to the top 20% of earners. This shows wealth gains are concentrated among high-income individuals. BNP Paribas' market team also stated equity holdings are concentrated among higher-income individuals, deepening the K-shape.
6Consumer Spending
Moody's chief economist Mark Zandi cited Fed data showing that spending by individuals earning $200,000 or more grew by 6.5% in the first quarter of 2026, a nearly 4% real increase. Meanwhile, spending by the bottom 80% remained unchanged after inflation. These figures highlight spending inequality.
7Economic Indicators
Bank of America observed some K-shaped economy elements beginning to close. U.S. chief economist Aditya Bhave noted consumer spending (excluding gas) is no longer K-shaped on a year-over-year basis. Three factors contribute to this trend: stronger job growth, lower tax withholding, and June's drop in gas prices.
8Conclusion
Scott Bessent's claim that the K-shaped economy has ended is not yet supported by data. Income and wealth inequality persist, and high-income individuals remain economically better off. Economic indicators like equity rallies and consumer spending show the K-shaped economy continues. More data is needed to support Bessent's claims.
Original article: Fortune — K Şeklindeki Ekonomi Bitti mi? Veriler Ne Diyor?