Trump Admin Says US Has Entered New Kind of Economy—Economists Disagree

President Donald Trump's Treasury Secretary, Scott Bessent, has dismissed the notion of a "K-shaped" economy, stating that it has largely faded under his administration. He cited wage gains for lower-income workers and the benefits of his tax bill as evidence that the economic split between high and low earners has diminished. The economy now appears more akin to a "C", according to Bessent, with lower-income earners regaining purchasing power, similar to the early years of Trump's presidency.

However, many economists remain skeptical of this conclusion. They point to disparities in wage and wealth growth, as well as consumer spending, as proof that a significant divide still exists between different income tiers. Evidence from the New York Fed's May report suggests that retail spending has been primarily driven by households earning over $125,000 since early 2023, while low-income households have seen a decline in real spending.

Despite Bessent's stance, several business leaders and economists continue to argue for the persistence of a K-shaped economy.