K-shaped Economy or Not? Evidence from a Payments Survey

Aditi Routh and Oz Shy
Additional contact information
Aditi Routh: https://www.kansascityfed.org/research-staff/aditi-routh/

Policy Hub, 2026, vol. 2026, issue 3, 12

Abstract: Using transaction data from a payments survey in the United States, we analyze how consumers across income groups changed their spending between 2021 and 2025. We find that spending by consumers with high household income (fourth and fifth quintiles) grew substantially faster than spending by consumers with low household income (first to third quintiles), a pattern that holds across total spending, grocery spending, and spending on necessities. Both groups saw spending increases, but the gap in growth rates points to a widening of consumption inequality across the income distribution. Rather than the canonical K-shaped recovery—in which lower-income consumer spending declines while higher-income consumer spending expands—our findings point to a bifurcated recovery in which both groups' spending grew but at sharply divergent rates.

Keywords: K-shaped economy; spending levels by household income; changes in consumer spending over time (search for similar items in EconPapers)
JEL-codes: D91 E42 G41 (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.atlantafed.org/-/media/Project/Atlanta ... -payments-survey.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:a00068:103745

DOI: 10.29338/ph2026-03

Access Statistics for this article

More articles in Policy Hub from Federal Reserve Bank of Atlanta Contact information at EDIRC.
Bibliographic data for series maintained by Robert Sarwark ().