Is the K-Shaped Economy Narrative Fading?

Recent Bank of America and PNC data suggest the long-standing “K-shaped” divide between rich and poor may be narrowing. In June, the gap in discretionary-spending growth hit its tightest point since July 2025, and earnings growth for high- and low-income households was essentially equal, according to Bank of America. Treasury Secretary Scott Bessent, however, told CNBC on August 4 that the “K-shaped economy is over,” arguing the pattern has shifted toward a “C” shape.

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• Spending growth: Lower-income Americans’ spending outpaced that of higher-income households in June, and the difference in discretionary-spending growth was the narrowest in three years (PNC).

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• Earnings: Bank of America reported virtually no earnings gap between rich and poor for the month.

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• Savings: Early evidence points to a narrowing savings gap between income groups (PNC).

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• Consumer confidence: Retail sales have risen for months; consumer spending grew 3.2 % in Q2 2026.

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• Counter-vailing pressures: Higher gas prices since the Iran war and a July job-loss wave have revived cost-of-living stress for lower-income families, according to aid workers.

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Treasury Secretary Scott Bessent said the “K-shaped economy is over” and that the economy is now more “C-shaped,” reflecting broader income gains. PNC senior economist Brian LeBlanc noted that while the relative gap remains, it is not widening in absolute terms. Hilton CEO Christopher Nassetta echoed the sentiment, observing increased travel spending across price points.

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• “We’re seeing more of a ‘C,’” — Treasury Secretary Scott Bessent, argued treasury secretary

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• “I got sick of hearing about this K-shaped economy,” — Scott Bessent, argued treasury secretary

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• “We’re busier than ever, in a total sense,” — Ask David Woodyard

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• “Maybe we get caught up this one time on the overdue rent, but it’s not a solution,” — Heather Black

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