Treasury Secretary Scott Bessent declared that America's long-running divide between higher- and lower-income households is effectively over, arguing wage growth at the bottom of the pay scale has begun to outpace gains for top earners. His remarks immediately collided with a broader body of economic data that suggests the picture remains far more complicated.
Bessent said this week he was 'sick of hearing about this K-shaped economy' and insisted the pattern of wealthy Americans pulling further ahead while lower-income households struggled no longer reflected economic reality. Instead, he argued the economy was becoming more 'C-shaped', with lower-paid workers beginning to close the gap.
The comments come as economic inequality, inflation and consumer finances remain central issues ahead of the US midterm elections. While some government wage measures show faster pay growth among lower-income full-time workers, broader datasets from the Atlanta Federal Reserve, Moody's Analytics and Bank of America continue to show wealth, spending and financial resilience concentrated among higher-income households.
Bessent Says Lower-Income Workers Are Catching Up
Speaking during CNBC's Squawk Box, Bessent argued recent labour market data showed a meaningful shift. 'I can say here definitively, the K-shaped economy is over,' he said. He dismissed concerns that inflation continues to weigh disproportionately on lower-income Americans and suggested public perceptions of the economy have lagged behind improving fundamentals.
Bessent also maintained that tax policies introduced under President Donald Trump's administration would increasingly benefit households across the income spectrum over coming months. His comments quickly attracted attention as searches for 'Scott Bessent economic gap comments' surged on Google Trends across the United States.
Independent Data Suggests a More Complex Picture
Although some Bureau of Labor Statistics figures cited by Bessent indicate stronger recent wage growth among lower-paid full-time employees, economists note that wages represent only one measure of economic wellbeing.
The Atlanta Fed's Wage Growth Tracker continues to show wage gains across income groups remain broadly similar, with higher earners still matching or slightly exceeding lower-income workers in several categories.
Other indicators paint an even more uneven picture. Bank of America Institute spending data has consistently shown higher-income households accounting for the strongest consumer spending growth, while Moody's Analytics has continued to describe wealth accumulation as heavily concentrated among affluent Americans despite recent wage improvements lower down the income ladder.
Those broader measures suggest the economic divergence that became known as the 'K-shaped economy' during and after the Covid-19 pandemic has narrowed in some areas without disappearing altogether.
Political Message Meets Economic Reality
Bessent's remarks also reflect the Trump administration's broader effort to present the economy as strengthening despite persistent concerns over living costs. Consumer sentiment has remained subdued in recent months, even as financial markets reached fresh highs and unemployment stayed historically low.
It was reported that the Treasury Department did not specify which wage dataset Bessent referenced when making his claim. Analysts note that measuring the economic gap depends heavily on which indicators are examined.
Wage growth can improve for lower-income workers while wealth inequality, household savings, home ownership and investment gains continue to favour higher-income households. That distinction has become increasingly important as policymakers debate whether rising pay alone is sufficient evidence that the income divide has materially narrowed.
Debate Over the 'K-Shaped Economy' Continues
The phrase 'K-shaped economy' emerged during the pandemic to describe sharply different recoveries across income groups, with higher earners benefiting from rising financial assets while many lower-income households struggled with inflation and higher borrowing costs. Bessent argued those conditions no longer define the US economy.
However, economists generally caution against declaring the trend finished based on wage growth alone, pointing instead to broader measures of household wealth, spending behaviour and financial resilience.
Rather than presenting a single narrative, current economic data shows an economy in transition, where some indicators suggest lower-income workers are gaining ground while others continue to show substantial differences between the fortunes of wealthy and lower-income Americans.
