Trump Admin Says US Has Entered New Kind of Economy—Economists Disagree
Summary
President Trump’s Treasury Secretary Scott Bessent said the U.S. economy is no longer "K-shaped," meaning lower-income workers are starting to see better wage gains. However, many economists disagree and say the gap between rich and poor in the economy is still large.Key Facts
- Scott Bessent said the K-shaped economy is over and the economy now looks like a "C," where lower wage earners are improving.
- The K-shaped economy describes a split where wealthy households grow richer while poorer households struggle with slow income growth and rising prices.
- A New York Fed report showed that since early 2023, higher-income households have kept retail spending up, while low-income households have spent less.
- Some periods in 2023 and 2024 saw the lowest wage earners getting relatively higher wage growth compared to other groups.
- Hilton CEO Christopher Nassetta also described the economy as "C-shaped" based on hotel occupancy trends shifting to more middle and lower-priced customers.
- Federal Reserve Chair Jerome Powell stated in December that the K-shaped economy is real and that low- and moderate-income people are cutting back on spending.
- Financial experts like Peter Orszag and Moody’s chief economist Mark Zandi say the K-shaped economy still exists and the economic divide remains significant.
- The debate highlights different views on whether recent economic policies are helping lower-income Americans catch up to higher earners.
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