Treasury Secretary Says K-Shaped Economy Is Over—Experts Dispute the Claim

In an August CNBC interview, Treasury Secretary Scott Bessent declared that the United States has moved from a “K-shaped” to a “C-shaped” economy, citing Bureau of Labor Statistics data that the bottom quartile of wage earners posted a 5.5 % year-over-year increase versus a 1.5 % rise for the 75th percentile.

K-shaped economy is over, Treasury Secretary Bessent declares

The “K-shaped” label emerged in 2020 to describe a recovery where high-income households saw gains while lower-income households stagnated. Former Federal Reserve Chair Jerome Powell noted that consumer-facing firms reported “people tightening their belts,” reinforcing that narrative.

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• Wage growth: Bessent’s BLS figures (bottom-quartile +5.5 %, top-quartile +1.5 %) contrast with the Federal Reserve Bank of Atlanta’s tracker, which recorded June 2026 growth of 3.6 % for the bottom 25 % and 3.9 % for the top 25 %.

K-shaped economy is over, Treasury Secretary Bessent declares

• Spending: Bank of America and PNC reported modest convergence across income groups, but the National Retail Federation’s chief economist Mark Matthews warned the “K-shape persists.”

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• Credit-card debt: The New York Fed’s quarterly report showed total balances at $1.26 trillion, up $21 billion (1.7 %) from the prior quarter, with delinquency rates around 13 %.

Americans’ Credit Card Debt Climbs to $1.26 Trillion as K-Shaped Economy Widens Consumer Divide

• Wealth concentration: Market veteran Louis Navellier noted that the top 50 % of households hold all stock-market wealth.

Exclusive: Scott Bessent Says K-Shaped Economy Is Over, but Wall Street Veteran Says Wealth Divide Is Worsening: ‘50% of Americans Own No Stocks and Are Getting Left Behind’

Bessent emphasized lower-income wage gains as the primary metric of a “C-shaped” economy and referenced the One Big Beautiful Bill Act, which temporarily lowered overtime and senior Social Security taxes.

K-shaped economy is over, Treasury Secretary Bessent declares

Consumers are increasingly relying on revolving credit to meet essential expenses.

Americans’ Credit Card Debt Climbs to $1.26 Trillion as K-Shaped Economy Widens Consumer Divide

• Wage trends: Bessent’s claim of bottom-quartile wage growth exceeding top-quartile growth conflicts with the Atlanta Fed’s tracker, which shows the opposite.

K-shaped economy is over, Treasury Secretary Bessent declares

• Real purchasing power: Nominal wage figures do not account for inflation, which rose 3.9 % over the same period, eroding real gains.

K-shaped economy is over, Treasury Secretary Bessent declares

• Spending divergence: While some banks note a narrowing gap, analysts maintain that the K-shape persists, especially in discretionary spending.

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

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• “I think that declaring the death of a K-shaped economy is a little bit premature,” — Peter Orszag, CEO of Lazard

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The debate influences fiscal and monetary policy, from tax-relief measures to inflation-targeting strategies. If the K-shape endures, lower-income households may face continued credit stress and limited wealth-building opportunities, prompting calls for structural reforms. A genuine shift toward a C-shape could justify scaling back targeted relief programs. The divergent data underscore the need for more granular labor-market analysis before policymakers declare a definitive transition.

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