K-shaped economy is dead in US? Robert Reich points to McDonald's earnings — ‘Even CEOs are admitting...’
Robert Reich pushed back against Bessent’s view, saying that the idea that the K-shaped economy is “dead” wrong.
Treasury Secretary Scott Bessent believes the US economy has moved past the K-shaped divide, but economist Robert Reich disputes this notion, highlighting McDonald's earnings and consumer behavior. Bessent cited the Bureau of Labour Statistics data showing a 5.5% increase in weekly earnings for full-time workers in the second quarter.
He claimed the lower-wage earners are gaining from faster wage growth, including policies like eliminating taxes on tips. However, Reich argues the K-shaped economy is still very much alive, pointing to McDonald's decline in visits from lower- and middle-income customers in the first quarter of 2025 due to affordability issues. He emphasizes that 70% of the US economy depends on consumer spending, and stagnant wages and inflation are weakening the buying power of lower-income households.
Reich asserts that the economy is a "two-tier system," with consumers earning over $100,000 in a stronger position compared to middle- and lower-income consumers facing greater pressure.
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