{"id":4961,"date":"2026-08-05T12:41:38","date_gmt":"2026-08-05T12:41:38","guid":{"rendered":"https:\/\/crosscountrymovingteams.com\/?p=4961"},"modified":"2026-08-05T12:41:38","modified_gmt":"2026-08-05T12:41:38","slug":"scott-bessent-is-sick-of-hearing-about-the-k-shaped-economy-and-declares-its-over-but-the-data-would-beg-to-disagree","status":"publish","type":"post","link":"https:\/\/crosscountrymovingteams.com\/?p=4961","title":{"rendered":"Scott Bessent is \u2018sick of hearing about\u2019 the K-shaped economy and declares it\u2019s over\u2014but the data would beg to disagree"},"content":{"rendered":"
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Instead, Bessent said U.S. households are in a C-shaped economy \u201cwhere the lower end of wage earners are finally calling it back, just like they did in President Trump\u2019s first term.\u201d <\/p>\n

Read more Gen Z\u2019s anti-capitalist brand says one thing. Its spending data says something more interesting<\/a><\/p>\n

Bessent said the bottom 25% of workers have seen a 2% real wage gain. That\u2019s likely a reference to Treasury data for 2025 that showed blue-collar workers saw growth of 1.7% in the first five months of Trump\u2019s presidency.<\/p>\n

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The Treasury Secretary also pointed to White House policy under the One Big Beautiful Bill Act (such as no taxes on tips or overtime, as well as reduced taxes for seniors on Social Security) as having a meaningfully positive effect on household finances. The act, described by the White House as the biggest tax break in history, purported to give Americans earning between $15,000 and $80,000 an average tax cut of 15%. <\/p>\n

The bill also promised to increase tipped and overtime workers\u2019 take-home pay by $1,500 a year, and after-tax income for a typical two-child family by $7,600 to $10,900.<\/p>\n

Bank of America has also observed that some elements of the K-shaped economy are beginning to close. In a note last week, chief U.S. economist Aditya Bhave wrote that consumer spending (excluding gas) has ceased to be K-shaped on a year-over-year basis\u2014at least it had been for the previous fortnight.<\/p>\n

There are three reasons for this trend, Bhave wrote: stronger job growth and\/or lower tax withholding, June\u2019s drop in gas prices, and the fact that the gap really opened up in June last year, meaning the base effect was favourable for the gap to reduce.<\/p>\n

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\u201cWith everything that we\u2019re seeing in the media, it\u2019s difficult to discern\u201d economic upsides, Bessent added. <\/p>\n

Broader data is yet to agree<\/h2>\n

Nonetheless, the data does not yet fully support Bessent\u2019s theory. On the One Big Beautiful Bill Act, for example, both Goldman Sachs and Morgan Stanley have suggested that the Iran war\u2019s knock-on effect on gasoline prices has almost entirely canceled out the promised windfall.<\/p>\n

Read more Today\u2019s home equity loan and HELOC rates, August 5, 2026<\/a><\/p>\n

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Likewise, wage growth by income percentile data doesn\u2019t support the notion that the K-shaped economy has ended. The Federal Reserve Bank of Atlanta evaluates a 12-month moving average of wage growth by income quartile on an hourly basis. Its June update found the lowest quartile of wage distribution saw growth of 3.6%, while the top 25% of earners saw growth of 3.9%. <\/p>\n

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At no point in 2026, per the Atlanta Fed, has median wage growth for the bottom percentile of earners exceeded that of the top percentile. The quartile that has seen the most growth throughout 2026 has been the third. <\/p>\n

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Likewise, current drivers of wealth gains (notably, equities courtesy of the AI boom) are concentrated among higher earners. Joe Brusuelas, chief economist at RSM, wrote in June that 75 cents of every spent dollar generated by the equity rally flows through the top income quintile. \u201cIf we are counting on the stock market to sustain the consumer economy,\u00a0we are leaning on a channel that deepens the K-shape rather than offsets it,\u201d he said. \u201cWhen it comes to overall spending, no matter which estimate of spending concentration you use,\u00a0the wealth-effect channel is more skewed toward the top.\u201d<\/p>\n

In a note Thursday, BNP Paribas\u2019s markets team echoed: \u201cEquity holdings are concentrated among higher-income individuals, where the marginal propensity to consume (MPC) tends to be lower, but the overall gains have been much stronger.\u201d <\/p>\n

MPC measures the extra income a person spends rather than saves, and while this tends to be lower among higher earners (because their basic needs can be met by a smaller percentage of their income)\u2014that doesn\u2019t mean their consumption isn\u2019t what\u2019s powering the economy. <\/p>\n

\u201cThe K-shaped economy\u2014with the well-to-do thriving and everyone else lagging\u2014remains firmly intact,\u201d Moody\u2019s chief economist Mark Zandi wrote last month. Citing Fed data, he highlighted for the 12 months ending in the first quarter of 2026, outlays by earners of $200,000 a year or more grew an estimated 6.5%\u2014nearly 4% in real terms. Meanwhile, outlays by those in the bottom 80% were unchanged after inflation.<\/p>\n

Read more Billionaires have been flooding the midterms with cash, but one of the GOP\u2019s most reliable megadonors just went silent<\/a><\/p>\n

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Data suggests Treasury Secretary Scott Bessent’s theory that the K-shaped economy is “over” is not yet true.<\/p>\n","protected":false},"author":1,"featured_media":4960,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[58],"tags":[],"class_list":["post-4961","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-inflation"],"yoast_head":"\nScott Bessent is \u2018sick of hearing about\u2019 the K-shaped economy and declares it\u2019s over\u2014but the data would beg to disagree - Cross Country Moving Team<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/crosscountrymovingteams.com\/?p=4961\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Scott Bessent is \u2018sick of hearing about\u2019 the K-shaped economy and declares it\u2019s over\u2014but the data would beg to disagree - 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