Green shoots are appearing in the spending patterns of lower-income earners, with their consumption tracking up in recent days on goods and services excluding gas. The trend could signal the beginning of the end of the so-called a ‘K-shaped’ economy in which the spending and fortunes of upper-income earners rise, while those of lower earners fall.
Bank of America says card data over the past week is showing rays of optimism that the lopsided K-shaped economy is on its way out: the gap in spending between upper and lower income earners has closed significantly. Wealthier households’ consumption is holding at the same level established in March this year, while poorer consumers are beginning to spend more.
The second-largest bank in the U.S. said the K-shaped economy has been persistent in its data since late 2024 and early 2025, but recent headlines may have helped alleviate fears about the trajectory of the economy.