Treasury Secretary Declares End of K-Shaped Economy in the U.S.
Treasury Secretary Declares End of K-Shaped Economy in the U.S.
US · Published Aug 26, 2026
• U.S. Treasury Secretary Scott Bessent announced that the K-shaped economy, characterized by a widening economic divide, is over. Speaking on CNBC, Bessent described the current economic landscape as resembling a 'C' shape, where lower-income earners are beginning to catch up with higher-income groups. Recent data from the Bank of America Institute supports this claim, showing that lower-income households experienced a 5.2% annual growth in after-tax wages in July 2026, surpassing higher-income groups for the first time since
• However, economists caution that financial pressures, such as housing affordability and student loan repayments, continue to affect all income levels.

Impact & Risks

The shift from a K-shaped to a C-shaped economy could signal a more equitable distribution of economic gains. However, challenges remain, particularly for lower-income households facing rising housing costs and credit stress. A downturn in the stock market could disproportionately affect higher-income groups, potentially slowing overall consumer spending and economic growth.

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