K-shaped economy widens as wealthy gain, working Americans feel inflation squeeze

The U.S. economy is deepening its K-shaped divide under President Donald Trump’s second term, with wealthy Americans benefiting from a booming stock market while working- and middle-class households struggle with rising inflation, stagnant wages, and soaring gas prices, according to economic data and analysts.

The term “K-shaped economy” describes a recovery in which the top tier of earners sees rising wealth and spending power — represented by the upward stroke of the letter K — while the broad rest of the population sees falling fortunes, traced by the downward stroke. Labor journalist Steven Greenhouse, writing in The Guardian, argued that the pattern has grown more pronounced in recent months, in large part because of Trump’s policies.

“Viewed another way, the K-shaped economy is all about income and wealth inequality, and those are growing palpably worse under Trump,” Greenhouse wrote.

The richest 10% of Americans own 93% of all stock held by U.S. households, Greenhouse reported, citing Federal Reserve data. That means the S&P 500’s repeated record highs largely benefit a narrow slice of the population. Meanwhile, inflation has climbed to nearly 4%, Greenhouse wrote, with hourly earnings failing to keep pace with rising prices. Gas prices have jumped about 50% since Trump began the military campaign against Iran, he added.

Workers’ hourly pay has risen by 3% since 2019 after adjusting for inflation, while corporate profits have jumped 50%, according to figures Greenhouse cited.

Consumer sentiment registered at its lowest level in the survey’s history: the University of Michigan’s index stood at 49.8 in April 2026, according to FRED data. A May CBS/YouGov poll found that 67% of Americans disapprove of how Trump is handling the economy.

The divide shows up in daily life, Greenhouse wrote. Airlines are adding more business-class seats for wealthy travelers, while Spirit Airlines, a low-cost carrier relied on by lower-income travelers, has gone bankrupt. Sales of private jets and yachts have soared, even as the Federal Reserve reports that more Americans are going hungry than during the pandemic.

McDonald’s CEO recently described a “two-tier economy,” with sales to lower-income Americans declining even as the chain added premium products like the Big Arch burger priced between $7.50 and $13. While wealthy Americans travel abroad, many average households are so squeezed by gas prices — national average $4.26 a gallon according to figures cited by Greenhouse — that they are cutting back on travel and piling on record amounts of debt.

U.S. consumers have spent $52 billion extra on gas due to price increases, Greenhouse wrote. The burden falls disproportionately on lower-income households: Americans in the bottom quarter by income — those earning under $40,000 a year — spend approximately 4% of their income on gas, while households in the top fourth earning $100,000 or more spend less than 1%.

When asked about the economic pain Americans are experiencing, Trump told reporters he does not think about Americans’ financial situation. “I don’t think about Americans’ financial situation,” Trump said, according to Greenhouse’s account, adding that he only cares about Iran not having a nuclear weapon. Trump referred to high gas prices as “peanuts,” Greenhouse reported.

Barrett Marson, a Republican strategist, told the New York Times that Trump “flaunted his wealth, and people didn’t mind.” Marson added: “But now it’s sort of like: ‘Wow, you’re really not feeling our pain, you are adding to our pain, and on top of that, you don’t care about our pain.’”

Greenhouse pointed to a series of Trump administration actions he said have widened the divide. Trump’s 2017 tax law included $1 trillion in tax cuts concentrated among the richest 1%, while it authorized $1.1 trillion in cuts to Medicaid and food assistance, Greenhouse wrote. The administration has gutted the Consumer Financial Protection Bureau, which was created to protect consumers from predatory financial practicesagus and has slashed enforcement against the cryptocurrency industry, Greenhouse said.

Trump has taken 15 CEOs — many of them billionaires — on a trip to China, Greenhouse wrote; their combined wealth exceeded $1 trillion. The Trump family’s wealth, fueled by crypto and other investments, has surged by an estimated $4 billion since Trump won a second term, he reported.

Trump promised to cut energy prices in half, Greenhouse noted, but instead pushed up electricity prices by discouraging renewable energy sources and easing the way for AI companies to build electricity-consuming data centers.

The federal minimum wage remains at $7.25 per hour, Greenhouse pointed out, and Trump has proposed denying minimum-wage and overtime protections to more than 3 million homecare workers and cut the minimum wage for federal contractors. The administration has taken numerous anti-union actions, weakening workers’ ability to bargain for higher pay, Greenhouse wrote.

“Though Candidate Trump talked repeatedly about fighting for average Americans,” Greenhouse concluded, “under Second-Term Trump, the US economy has essentially gone from being a lower-case k to an upper-case, more unequal K.”

As MSI previously reported, the K-shaped divergence has been widening throughout Trump’s second term, with data showing the wealthiest households accelerating their spending while lower-income families face increasing financial strain.