{"id":43482,"date":"2026-05-01T14:50:09","date_gmt":"2026-05-01T14:50:09","guid":{"rendered":"https:\/\/financialrush.com\/?p=43482"},"modified":"2026-05-01T14:50:09","modified_gmt":"2026-05-01T14:50:09","slug":"k-shaped-economy-is-alive-and-well-new-research-shows","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=43482","title":{"rendered":"K-shaped economy is ‘alive and well,’ new research shows"},"content":{"rendered":"

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The so-called\u00a0K-shaped economy<\/a> is becoming more pronounced, new data shows.<\/p>\n

In the aftermath of the Covid pandemic, the K has been used to illustrate Americans\u2019 diverging economic experiences<\/a>: Higher-income households are increasingly better off,\u00a0<\/strong>while lower-income households are falling further behind.<\/p>\n

A new report<\/a> by credit reporting bureau TransUnion found that while credit conditions have improved for a large segment of consumers, others are struggling in the face of higher costs and rising debt burdens.<\/p>\n

The K-shape is \u201calive and well,\u201d said Michele Raneri, TransUnion\u2019s vice president and head of U.S. research and consulting.<\/p>\n<\/div>\n

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Read more CNBC personal finance coverage<\/h2>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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Over the past several years, more borrowers have become either superprime, with a credit score of 780 or higher, or subprime, with a credit score below 600, according to TransUnion. The dynamic is creating an increasingly\u00a0bifurcated consumer economy<\/a>.<\/p>\n

\u201cThe top end of the K is very strong,\u201d Raneri said. \u201cSuperprime is stable and resilient,\u201d she said. \u201cWhen people get into that group, they don\u2019t flow in and out very much.\u201d<\/p>\n

On the bottom part of the K, lower-income households \u201care struggling more than they did,\u201d Raneri said. Consumers in this group are carrying higher debt loads with rising debt-to-income ratios, which are signs of potential financial strain, TransUnion found.<\/p>\n

\u201cEveryone has seen the effects of inflation somewhat equally \u2014 nobody escaped it,\u201d Raneri said. But when you factor in debt-to-income levels, \u201cthat\u2019s where you see that lower-income consumers are hit more,\u201d she added.<\/p>\n

Those struggling to make ends meet often turn to credit cards to bridge the gap. The average credit card balance per consumer now stands at $6,519, up 2.3% year over year, TransUnion also found.<\/p>\n<\/div>\n

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Now, consumer spending is driven mostly by high-income households \u2014 or those earning more than $125,000 a year, according to a new\u00a0blog post<\/a> published Friday by the Federal Reserve Bank of New York.<\/p>\n

The highest earners also spend a disproportionately large share of their consumption on luxury goods, high-end restaurants and entertainment relative to any other group.<\/p>\n<\/div>\n

The start of the K<\/h2>\n
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The economy noticeably diverged in 2023, the New York Fed researchers found, \u201cshortly after many of the pandemic-era subsidies for low- and middle-income households expired.\u201d<\/p>\n

Since then, low-income households have been hardest hit<\/a> by prolonged inflation<\/a> while wealth has risen fastest for those at the very top, the researchers found. <\/p>\n

Although consumer spending and credit card balances remain relatively healthy\u00a0overall, \u201creliance on a single segment of the economy has important implications for spending growth and its fragility, as well as for economic vulnerability and policy,\u201d the New York Fed researchers wrote.<\/p>\n

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Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"The so-called\u00a0K-shaped economy is becoming more pronounced, new data shows. In the aftermath of the Covid pandemic, the…\n","protected":false},"author":3,"featured_media":43483,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-43482","post","type-post","status-publish","format-standard","has-post-thumbnail","category-investing","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/43482","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=43482"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/43482\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/43483"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=43482"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=43482"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=43482"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}