Is the US Economy K-Shaped? Evidence From the Past Three Decades

Kyle DeMaria, John Jones, Joseph Mengedoth and Urvi Neelakantan

Richmond Fed Economic Brief, 2025, vol. 26, issue 23

Abstract: We examine whether the U.S. economy has exhibited "K-shaped" behavior — outcomes for low-income and high-income households moving in opposite directions — over the past three decades. The U.S. economy has not been persistently K-shaped, though income growth showed K-shaped patterns during the recoveries from the 2001 and 2007-09 recessions. Even though income growth has not always been K-shaped, growth rates have been substantially larger for high-income households than for low-income households over the 30-year period we examined. Measured consumption growth has been less divergent than income growth across income groups. Consumption is K-shaped over the 2021-23 period even though income is not.

Keywords: Business cycles; economic growth (search for similar items in EconPapers)
Date: 2025
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