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U.S. economy's K-shaped gap narrows

axios.com · 5h · first reportShare

For years, America's economy has been defined by a "K-shaped" gap: The rich kept spending at a rapid pace, while everyone else struggled to keep up. That divide is suddenly narrowing. Why it matters: Economists warned that consumer spending growth was increasingly reliant on wealthy Americans, leaving the economy vulnerable to a stock market downturn or any other wealth shock. Importantly, the "K" appears to be closing from the bottom up, meaning that lower- and middle-income Americans are catching up, rather than affluent households pulling back. That could put consumer spending on a more resilient footing. Zoom in: Bank of America is calling it the "great convergence." The bank's data shows spending and wage growth among its customers has converged across income groups since May. Spending growth among lower-income households hit 5.4% year over year, slightly exceeding the 4.9% rate among middle-income households. Lower-income Americans are also seeing stronger pay gains: After-tax wa