IDEAS home Printed from https://ideas.repec.org/p/fip/fednls/103158.html

Tracking the K‑Shaped Economy: Who’s Driving Spending?

Author

Abstract

Aggregate real consumer spending has risen solidly since 2023. However, it is less clear how widely shared this improvement has been across all segments of society. This is important because systematic heterogeneity may mask the dependence of aggregate growth on a relatively small group of households and thus conceal macroeconomic risks. In this post, we use consumer spending data recently added to the Economic Heterogeneity Indicators (EHIs) and find that retail spending growth has been driven by high-income households—those earning more than $125,000 per year. In the popular press, the phenomenon of higher-income households growing at a faster rate than lower-income households has been referred to as the K-shaped economy. We find that consumption has exhibited a K-shaped economy since 2023, although not in the pre-COVID period or during the post-COVID recovery.

Suggested Citation

  • Rajashri Chakrabarti & Thu Pham & Beckett Pierce & Maxim L. Pinkovskiy, 2026. "Tracking the K‑Shaped Economy: Who’s Driving Spending?," Liberty Street Economics 20260501a, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:103158
    DOI: 10.59576/lse.20260501a
    Note: Editors’ Note: The title of the second chart in this post has been corrected. May 1, 10:40 am.
    as

    Download full text from publisher

    File URL: https://libertystreeteconomics.newyorkfed.org/2026/05/tracking-the-k-shaped-economy-whos-driving-spending/
    File Function: Full text
    Download Restriction: no
    File URL: https://libertystreeteconomics.newyorkfed.org/wp-content/uploads/sites/2/2026/04/LSE-2026-Tracking-Kshaped-Economy-Whos-Driving-Spending_data.xlsx
    File Function: Chart Data
    Download Restriction: no
    File URL: https://libkey.io/10.59576/lse.20260501a?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H0 - Public Economics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fednls:103158. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gabriella Bucciarelli (email available below). General contact details of provider: https://edirc.repec.org/data/frbnyus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.