Economists are questioning the K-shaped economy narrative

"The narrative of K-shaped growth appears to be exaggerated, downplaying risks of a fragile expansion. The richest 20% of households have accounted for a steady 40% of total consumer spending for the past 25 years - unchanged in 2025, even as asset prices boomed. Poorer households' share of spending has held steady, too: The bottom 20% account for roughly 9% of spending."

"Spending categories dominated by rich households grew no faster than those of other income groups. Indeed, the wealthy's share of a category was a remarkably poor predictor of its growth. Spending on apparel surged 6%, while auto sales, in which the top 20% account for two-thirds of all spending, rose just 2%, below the overall average."

"Spending in categories where lower-income households account for the largest share grew the most above their long-run trend last year. This striking finding challenges the K-shaped growth narrative and suggests economic expansion may be more broadly distributed than commonly believed."

The K-shaped growth narrative, which suggests wealthy Americans are driving economic expansion while lower-income households lag, appears overstated. Data shows the richest 20% of households have consistently accounted for 40% of total consumer spending over the past 25 years, with no significant change in 2025 despite asset price increases. The bottom 20% maintain roughly 9% of spending. Spending categories dominated by wealthy households grew no faster than those of other income groups, with the wealthy's consumption share being a poor predictor of category growth. Notably, spending categories where lower-income households account for the largest share grew most above their long-run trends in 2024. This challenges assumptions about economic resilience and may mask underlying fragility.

Read at Axios