Scott Bessent Says The K-Shaped Economy Is Dead

Treasury Secretary Scott Bessent made a stunning declaration this week on CNBC's Squawk Box: the K-shaped economy the term used since the pandemic to describe how wealthy Americans have pulled far ahead of everyone else is officially over. In his own words, "I got sick of hearing about this K-shaped economy. I can say here definitively, the K-shaped economy is over." Bessent said the U.S. economy is now shifting to what he calls a "C-shaped" recovery, in which wage gains for the bottom 25% of earners are finally starting to outpace those of the top 25%. He pointed to a 2% real wage gain for the bottom quartile and to White House policies under the One Big Beautiful Bill Act, including no taxes on tips or overtime and expanded auto loan deductibility, as evidence that the gap is closing. The problem is that the underlying data has not caught up to that declaration. Moody's Analytics chief economist Mark Zandi wrote last month that the K-shaped economy remains "firmly intact," with the top 20% of earners households making more than $175,000 a year now accounting for nearly 60% of all consumer spending in the U.S. Their outlays grew 6.5% year-over-year in the first quarter of 2026, roughly 4% after inflation, while spending by the bottom 80% barely kept pace with prices. A Bank of America Institute analysis found that after-tax wage growth in April 2026 was 6% for high-income earners compared with just 1.5% for low-income earners, the largest gap since 2015. And the Atlanta Fed's wage growth tracker shows that at no point in 2026 has median wage growth for the bottom percentile of earners exceeded that of the top percentile. Even Lazard CEO Peter Orszag told CNBC that declaring the death of the K-shaped economy is "a bit premature." Meanwhile, annual inflation cooled to 3.5% in June from 4.2% in May, and while the S&P 500 sits near record highs, the Tax Policy Center reports that nearly 60% of the benefits from the 2025 tax law flow to households earning about $217,000 or more. The question everyone is asking: does the economy actually feel like a "C" or does it still look like a "K"? --- #ScottBessent #Economy #Kshaped 🌐 Find more market-moving insights at https://www.benzinga.com — your one-stop destination for the latest financial news, data, and expert analysis to stay ahead of the markets. 🖥️ Want the same tools the pros use—without the $10K Bloomberg terminal? Benzinga Edge gives you real-time portfolio alerts, weekly stock picks, and pro-grade research in one command center. 👉 https://bit.ly/4unSKiB ------------------------------------------------------------------------------------ 📲 Follow us on socials @benzinga 🔔 Subscribe To The Channel: https://www.youtube.com/@Benzinga ------------------------------------------------------------------------------------ ⚠️ Disclaimer: Investing in financial markets carries risk, and there are no guaranteed returns. All information is for educational purposes only and should not be taken as financial advice. Always do your own research and speak with a qualified financial advisor before making investment decisions. Only invest what you can afford to lose. Past performance does not guarantee future outcomes.