{"id":39317,"date":"2026-08-11T21:09:36","date_gmt":"2026-08-11T16:09:36","guid":{"rendered":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/?p=39317"},"modified":"2026-08-11T21:09:36","modified_gmt":"2026-08-11T16:09:36","slug":"u-s-economys-k-shaped-gap-narrows","status":"publish","type":"post","link":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/?p=39317","title":{"rendered":"U.S. economy&#039;s K-shaped gap narrows"},"content":{"rendered":"<p><script>\r\n  atOptions = {\r\n    'key' : '644b717812d811d6a1c1fc5b6ccd6fa6',\r\n    'format' : 'iframe',\r\n    'height' : 90,\r\n    'width' : 728,\r\n    'params' : {}\r\n  };\r\n<\/script>\r\n<script src=\"https:\/\/www.highperformanceformat.com\/644b717812d811d6a1c1fc5b6ccd6fa6\/invoke.js\"><\/script>\r\n<br \/>\n<br \/><img decoding=\"async\" src=\"https:\/\/images.axios.com\/IFT76sQr6wXGZS-lzyre1fqmeW8=\/0x0:1920x1080\/1366x768\/2026\/08\/11\/1786461341904.jpg\" \/><\/p>\n<p>For years, America&#8217;s economy has been defined by a &#8220;K-shaped&#8221; gap: The rich kept spending at a rapid pace, while everyone else struggled to keep up. <\/p>\n<ul>\n<li>That divide is suddenly narrowing.<\/li>\n<\/ul>\n<p><strong>Why it matters: <\/strong>Economists warned that consumer spending growth was increasingly reliant on wealthy Americans, leaving the economy vulnerable to a stock market downturn or any other wealth shock.<\/p>\n<ul>\n<li>Importantly, the &#8220;K&#8221; appears to be closing from the bottom up, meaning that lower- and middle-income Americans are catching up, rather than affluent households pulling back.<\/li>\n<\/ul>\n<hr>\n<ul>\n<li>That could put consumer spending on a more resilient footing.<\/li>\n<\/ul>\n<p><strong>Zoom in: <\/strong>Bank of America is calling it the &#8220;great convergence.&#8221;<\/p>\n<ul>\n<li>The bank&#8217;s data shows spending and wage growth among its customers has converged across income groups since May. <\/li>\n<li>Spending growth among lower-income households hit 5.4% year over year, slightly exceeding the 4.9% rate among middle-income households. <\/li>\n<li>Lower-income Americans are also seeing stronger pay gains: After-tax wages rose 5.2% in July from the same period a year ago, surpassing the wage growth rate for higher-income households for the first time since December 2024.<\/li>\n<\/ul>\n<p><strong>The big picture: <\/strong>PNC said Monday that the gap between spending growth among its richest and poorest account holders shrank to just 0.1 percentage point in July, from a peak of 5 percentage points last year.<\/p>\n<ul>\n<li>The bank says the shrinking gap largely reflects an improving labor market: More lower-income households are working and collecting paychecks, giving them more room to spend.<\/li>\n<\/ul>\n<p><strong>&#8220;From our perspective, <\/strong>through all the various dimensions, there&#8217;s not like that much there in terms of support for the K-shape narrative,&#8221; JPMorgan Chase chief financial officer Jeremy Barnum told investors last month.<\/p>\n<p><strong>The intrigue: <\/strong>The White House is seizing on the shift. Treasury Secretary Scott Bessent <a href=\"https:\/\/www.cnbc.com\/2026\/08\/04\/cnbc-transcript-us-treasury-secretary-scott-bessent-speaks-with-cnbcs-squawk-box-today.html\" target=\"_blank\">told CNBC<\/a> last week that &#8220;the K-shaped economy is over,&#8221; arguing that lower-wage workers are finally catching up.<\/p>\n<ul>\n<li>Even if the transaction data shows the gap closing, declaring the &#8220;K&#8221; is over may ring hollow for Americans who still say they feel bad about the economy.<\/li>\n<li>Economic sentiment among lower-income Americans is improving, though it still lags those in the higher-income cohort by 12 points, according to the latest University of Michigan data.<\/li>\n<\/ul>\n<p><strong>And the very richest<\/strong> Americans appear to be the convergence exception.<\/p>\n<ul>\n<li>Spending growth among the top 5% continues to outpace everyone else, even as their wage growth has cooled, Bank of America says. <\/li>\n<\/ul>\n<script async=\"async\" data-cfasync=\"false\" src=\"https:\/\/pl30214220.effectivecpmnetwork.com\/9ab3d4df8a7e1a6171e16ddbf732cc19\/invoke.js\"><\/script>\r\n<div id=\"container-9ab3d4df8a7e1a6171e16ddbf732cc19\"><\/div>\r\n\n","protected":false},"excerpt":{"rendered":"<p>For years, America&#8217;s economy has been defined by a &#8220;K-shaped&#8221; gap: The rich kept spending at a rapid pace, while everyone else struggled to keep up. That divide is suddenly narrowing. Why it matters: Economists warned that consumer spending growth was increasingly reliant on wealthy Americans, leaving the economy vulnerable to a stock market downturn&#8230;<\/p>\n","protected":false},"author":1,"featured_media":39318,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.axios.com\/IFT76sQr6wXGZS-lzyre1fqmeW8=\/0x0:1920x1080\/1366x768\/2026\/08\/11\/1786461341904.jpg","fifu_image_alt":"","footnotes":""},"categories":[17],"tags":[],"class_list":["post-39317","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-political-news"],"brizy_media":[],"_links":{"self":[{"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=\/wp\/v2\/posts\/39317","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=39317"}],"version-history":[{"count":0,"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=\/wp\/v2\/posts\/39317\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=\/wp\/v2\/media\/39318"}],"wp:attachment":[{"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=39317"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=39317"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=39317"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}