Scott Bessent Claims K‑Shaped Economy Is Over—What the Data Actually Shows

Scott Bessent declares the K‑shaped economy dead, yet the numbers keep questioning the claim.

Is the “K‑Shape” Really Gone? — Bessent’s Assertion

Bessent, alongside the Treasury Secretary, told CNBC that “the K‑shaped economy is over,” arguing that low‑income consumers have finally caught up with their richer counterparts. However, the latest Atlanta Fed data still points to a pronounced income gap.

Tax Reform “One Big Beautiful Bill” – Anticipated Impact

The White House’s One Big Beautiful Bill Act promises an average 15% tax cut for earners between $15,000‑$80,000. By eliminating taxes on tips and overtime, the plan aims to boost a typical two‑child family’s after‑tax income by $7,600‑$10,900.

Wage Growth and Income Distribution – Real‑Time Figures

■The bottom 25% of workers reported a 2% real wage gain (cited by Bessent).

■According to the Atlanta Fed, the lowest wage quartile grew 3.6%, while the top quartile grew 3.9%.

■Moody’s chief economist Mark Zandi notes that spending by households earning $200,000+ rose 6.5% (about 4% in real terms), whereas the bottom 80% saw no real‑term increase.

Market Participants’ View of Economic Dynamics

■Bank of America economist Aditya Bhave observes that consumer spending (excluding gasoline) is no longer K‑shaped year‑over‑year, driven by stronger job growth, lower tax withholdings, and a dip in gas prices.

■Goldman Sachs and Morgan Stanley argue that the Iran war’s impact on gasoline prices has largely erased the windfall promised by the tax overhaul.

■BNP Paribas markets team highlights that equity gains remain concentrated among higher‑income individuals, whose marginal propensity to consume (MPC) is lower, yet they continue to power overall consumption.

Markets face an incomplete data picture to validate Bessent’s narrative. Dismantling the K‑shape will require more than tax cuts—it demands structural reforms that meaningfully reshape income distribution. Current indicators still show that high‑income groups drive growth while lower‑income households grapple with stagnant consumption, suggesting that liquidity flows remain skewed toward affluent assets in a risk‑off environment and that policymakers need bolder steps for a genuine “C‑shaped” recovery.