Two grim realities are keeping the K-shaped economy alive

""We see that beginning in late 2022, low-income households consistently faced higher inflation than middle- and high-income households did. Specifically, the lowest-income households have experienced inflation above the national average, restraining their spending.""

""Oil shocks and disruptions to traffic through the Strait of Hormuz have erased recent progress on inflation, pushing it to its highest rate since May 2024 in March. Gas prices rose 18.9% year over year in March, the largest increase since August 2022.""

""Lower earners tend to allocate more of their spending toward gas than the top; Bureau of Labor Statistics data showed 3.5% of spending was on gas in 2024 for the lowest 10% of consumer units by income, compared to 1.9% for the highest 10%.""

The K-shaped economy is characterized by a disparity where lower earners are adversely affected by inflation while higher earners benefit from stock market gains. A Federal Reserve Bank of New York analysis reveals that since late 2022, low-income households have consistently faced higher inflation rates than their middle- and high-income counterparts. This inflation, particularly in gas prices, has restrained spending for the lowest-income households, which allocate a larger portion of their budget to gas compared to wealthier households. The economic recovery post-pandemic has not favored lower earners.

Read at www.businessinsider.com