WireAugust 5, 2026 at 7:31 PM
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WASHINGTON — Treasury Secretary Scott Bessent this week dismissed the long-standing “K-shaped” economic recovery label, asserting that American workers are now living in a “C-shaped” economy where outcomes for the wealthy and working class are converging. The declaration, made on CNBC, comes as the administration pushes an economic nationalist agenda centered on domestic industry and worker prosperity.
“I got sick of hearing about this K-shaped economy,” Bessent said. “I can say here, definitively, the K-shaped economy is over.” He pointed to 5.5% year-over-year wage growth for the lowest quartile of full-time workers, moderating rent inflation, and proposed tax policies like exempting tips from taxation as evidence of compression in economic inequality.
Despite Bessent’s confidence, consumer spending data paints a different picture. A study from the Federal Reserve Bank of Atlanta examining data through early 2025 shows that the top 40% of earners continue to power the bulk of expenditure growth. Spending among the highest earners has consistently outpaced that of the lowest quintile since 2021. This persistent divergence undercuts the claim that the nation has moved past a K-shaped recovery, where one arm rises while the other falls.
The administration’s focus on full-time worker wages also excludes part-time and hourly employees, a segment where earnings growth for the bottom tier has been the slowest since late 2024. Housing costs, while seeing slowed inflation rates, continue to climb in absolute terms, straining budgets for lower-income renters and homeowners.
“High income, high wealth consumers are doing just fine. They have no issue buying first-class airfares even when they have doubled over the past few months.” — Elizabeth Pancotti, Groundwork Collaborative
The debate over economic letters masks a fundamental challenge for American economic nationalism: ensuring that policies prioritizing domestic workers translate into broadly shared prosperity, not just headline wage numbers. While corporate mentions of a “K-shaped” dynamic have declined, references to a “C-shaped” economy remain virtually absent from earnings calls, suggesting business leaders see little structural change. For the American worker, the data indicates a slight softening of the K’s edges, not its elimination.