economy
K-shaped economy is 'alive and well,' expert says
The so-called K-shaped economy is becoming more clearly defined, new reports show.
TL;DR
- The K-shaped economy, illustrating diverging economic experiences, is becoming more pronounced.
- High-income households are becoming wealthier, while lower-income households are falling further behind.
- TransUnion data shows a split between 'superprime' (score 780+) and 'subprime' (score below 600) borrowers.
- Lower-income consumers are carrying higher debt loads and rising debt-to-income ratios.
- Inflation affects everyone, but lower-income consumers are hit harder due to existing debt levels.
- Average credit card balances have increased to $6,519.
- Consumer spending is now primarily driven by households earning over $125,000 annually.
- High earners spend a disproportionate amount on luxury goods and entertainment.
- Economic divergence became noticeable in 2023 after pandemic-era subsidies expired.
- Reliance on high-income spending makes the economy potentially fragile and vulnerable.