While the specific Bloomberg article featuring Richard Clarida on the K-shaped economy could not be retrieved, broader financial news from late July 2026 suggests a potential shift in the K-shaped economic trend. Reports from Bank of America Institute and PNC Financial Services indicate that the spending gap between lower-income and higher-income households has narrowed to its smallest level in three years. This marks a change from earlier periods where consumption growth was more divergent.
Wage growth data also supports this trend. In June 2026, after-tax wage growth for lower-income households accelerated to 4.1%, a notable increase from 2.9% in May. This nearly matched the 4.2% wage growth recorded by higher-income households. Middle-income workers saw gains of 3.4%. This narrowing wage gap is attributed to a robust labor market, stronger hiring activity, and increased job switching among lower-income employees.
Historically, the U.S. economy has shown K-shaped patterns, particularly in the recoveries from the 2001 and 2007-09 recessions, where real income for low-income households fell while high-income households experienced growth. However, the recovery from the COVID recession differed, with income rising for all groups, partly due to positive transfers to low-income households. More recently, data from 2021-23 showed consumption being K-shaped even when income was not, with modest K-shapes also visible in consumption after the 2001 and 2007-09 recessions.
Despite the overall positive trend toward convergence, some analyses still highlight disparities. For instance, since 2023, wealth has increased most for high-income households, while inflation has risen most for low-income households. This has contributed to real retail spending growing most for high-income households during that period. However, the most recent data points to a potential reversal of these divergences, suggesting that the K-shaped economy might be losing its pronounced shape in some key aspects like wages and consumer spending.
