The US economy’s K-shape is relatively recent
The K-shaped nature of the US economy is widely recognised: liquidity among lower-income households has been depleted (as seen in Flow of Funds data), delinquencies on credit cards, mortgages and auto loans have risen (primarily among lower-income borrowers), and an increasing share of consumption appears to be driven by wealth effects, which accrue disproportionately to higher-income households. One useful resource for tracking these dynamics is realtimeinequality.org, maintained by researchers at the University of California, Berkeley and the Paris School of Economics, which provides timely data on income and wealth growth across the distribution.
What stands out from this data is that the K-shaped dynamic appears to be a relatively recent development. Over the period from 2015 to 2025, average annual real disposable income growth for the bottom 50% outpaced that of both the top 10% and the middle 40% (see chart below left). Since early 2024, however, this pattern has reversed: pandemic transfers faded, the labour market cooled (and with it the relatively high wage growth of lower-income earners), working hours slowed (lower incomes depend heavily on hours worked) and upper incomes benefited from capital income. From January 2025 to March 2026, real disposable income for the bottom half of the distribution declined by 1.5%, while incomes for the middle 40% (+0.7%) and top 10% (+3.3%) continued to grow. The divergence is even more pronounced when looking at wealth (see chart below right), underscoring the increasingly bifurcated nature of recent economic outcomes.