K-Shaped Economy Is Showing up at the Gas Pump: NY Fed
Lower-income households cut gas use 7% in March but still spent 12% more as higher earners kept driving and spending, New York Fed data shows.
- Economists traditionally described the U.S. economy as "K-shaped," but recent data suggests the landscape is shifting into an "E-shaped" divide, with middle-income households increasingly splintering into a vulnerable third tier.
- Soaring energy costs are accelerating this divergence, with national gas prices averaging $4.55 on Friday—up from under $3 before the Iran war—according to AAA data.
- Bank of America Institute data reveals that spending growth for middle-income households has widened to its largest gap compared to higher earners since mid-2022, with higher-income households seeing wage growth of about 5.6% versus 2% for middle-income earners.
- Consumers increasingly feel the strain, as the University of Michigan's Index of Consumer Sentiment fell to a four-year low. Joanne Hsu, director of the University of Michigan's Surveys of Consumers, noted Friday that households feel "buffeted by cost pressures."
- Financial insecurity defines this third tier, with families increasingly relying on credit, including "buy now, pay later" products. According to the Pew Research Center, middle-income households—roughly 52% of the population—face exposure to financial stress without buffers that top earners maintain.
29 Articles
29 Articles
Daily Journal
‘K-Shaped’ Economy Is Giving Way to an ‘E-Shaped’ Divide
The wealth gap in America is taking a new shape — and it’s no longer just a divide between the well-off and the financially vulnerable. In recent years, economists have described the economy as “K-shaped,” with higher-earning households continuing to…
NY Fed Highlights K-Shaped Economic Impact at Gas Pumps: A Deep Dive into Disparities
NewsFinale NewsFinale Journal (NewsNation) — With gas prices climbing due to the ongoing conflict in Iran, a stark contrast in consumer behavior is emerging. Lower-income Americans are being compelled to reduce their fuel consumption, while those with higher earnings seem largely unaffected at the pump. According to a recent study by the Federal Reserve Bank of New York, […] The post NY Fed Highlights K-Shaped Economic Impact at Gas Pumps: A Dee…
Coverage Details
Bias Distribution
- 61% of the sources are Center
Factuality
To view factuality data please Upgrade to Premium
