So allegedly we are in a K-shaped economy. Not sure that’s a new thing? The norm for years at least has been a “hollowing out of the middle” which seems to me to be the same thing? A top group is doing well and a bottom group is struggling more.
Question one is possibly an FQ one but safer here: where in the income and/or wealth percentiles is the bifurcation? Is the top of the K the top half? The top quintile? The top 5%? I don’t think it is the 1%ers only? Is that data out there somewhere? I can’t find it.
Two is welcoming the personal perspectives that a question like this is bound to get. We have people here across economic circumstances. Who have been in various economic circumstances. Does the current economy feel different than our long term income/wealth inequality trend?
Anxiety regarding the potential of the economy to collapse for those in the top of the K has to be acknowledged as well. Some of are shocked that Trump hasn’t induced such by now. Plus there is concern that the AI boom may minimally “correct” in a big way, if not bubble pop, turn out to be vapor … taking savings of many down with it. So maybe those on the top arm of the K are feeling insecure too.
I don’t know how to answer. I’m in the same low-wage job I was in this time last year, and it’s more or less recession-proof (I work in a drug rehab clinic). I own my house outright and have no debt save for about 48 more payments on my 2020 Kia Soul that I bought in March. Food prices are just … ugh. Other than that, I’m no better off and no worse off than I was this time last year (knock on wood).
I’m not sure exactly when the term was first coined, but it gained traction most recently following COVID. That recovery period was widely described as “K-shaped” because a few sectors rebounded strongly (most notably tech) while everything else lagged painfully for a while. That’s the factual basis for why the term gained currency recently.
This has also coincided with political polarization and broad social-media propaganda around the economy. We will never again see an economic recovery where there’s a consensus that most things are getting better for most people. The party in power will paint things as fantastic, the party out of power will portray them as dire. So now that this term has entered public consciousness, regardless of how the economy is actually doing, we’re going to call it a “K-shaped economy” from here on out.
I’m having trouble finding an exact cite, but I’ve read the statement it was the top 20-30% who are doing well in the K shaped economy.
The reason is because they have high skilled jobs and are still employed, and these people tend to own real estate and stocks whose values have skyrocketed.
However, the top 10% own 93% of the stocks, and the bottom 50% own 1% of stocks. So people in the 11th-30th percentile probably don’t own a lot of stocks, maybe 5%. But still, that could be a median value of a few hundred thousand in pensions and retirement accounts.
If the stock market is worth 65 trillion and they are looking at households (and not individuals) then even 5% of stocks would mean about 3.25 trillion in stocks held by 27 million households.
So I get the impression the educated class who own homes and stocks in retirement accounts are included in the K shaped recovery. Their home equity and stocks have grown by hundreds of thousands in the last few years.
This article says 20%, but I’ve also heard 20-30%.
A recent Moody’s report found that the top 20% of earners are responsible for America’s economic growth, said Fortune. Economists are worried. “We are losing the middle class,” said Ohio State University’s Lucia Dunn to the outlet.
A key measure of wealth concentration called the Gini coefficient sits at 60-year highs, according to a report from U.S. Bankpublished earlier this month. That signaled a reversal of the drop to multidecade lows seen amid the rollout of pandemic-era economic stimulus, said Beth Ann Bovino, the bank’s chief economist.
The net worth of America’s top 1% hit a record share of nearly 32% in the third quarter of 2025, the Federal Reservereported. By comparison, the bottom 50% cumulatively held 2.5% of overall net wealth.
The portion of U.S. GDP heading to workers in the form of compensation tumbled to its lowest level in its more than 75-year history, per data tracked by the Bureau of Labor Statistics. That means the average nonfarm business worker is seeing an increasingly small slice of an economy that has largely boomed over the last 15 years.
FWIW, here is an example of a family who are in the upper arm of the K shaped recovery. Not the super rich, just the 20% who are in the upper arm.
Maybe they bought a home for $400,000 in 2015, and at that time they had $200,000 invested in index funds for their retirement. They put $10,000 a year into retirement accounts and reinvest their dividends. They never lost their jobs during Covid.
in 2026, their home is probably worth $650,000 but their retirement accounts are worth closer to $850,000.
So your total net worth went from $600,000 to 1.5 million in the last 10 years.
People with stable jobs, who bought homes before covid and had money invested in retirement accounts before covid are doing pretty well.
I just retired in December. I think my wife and I are doing pretty good. We will get a little social security but have not applied for it yet.
We are going to live off our investements. The company we worked for did a good job of handleing our retirement monies. We not have a financial advisor, and she is investing the money conservatively. What ever that means now-a-days.
That’s close to my situation. Single, but bought a home for $60K in 2005. Never made more than $70K, mostly quite a bit less, but retired with $450K. At the end of my working life, I was banking more than 50% of my pre-tax income. Plus a rental house I also bought for around $60K. Sold the rental 2 years ago for $260K. Now have $850K in investment accounts and my paid-off farm is worth about $600K. And I still spend less than $24K/yr.