The U.S. economy is growing, but not evenly.
What began as an uneven rebound from the Covid pandemic has hardened into what many economists describe as a “K-shaped” economy, in which higher-income households pull ahead while lower-income households fall further behind. High interest rates, rising costs and the rapid growth of artificial intelligence could deepen those divides, economists warn.
“We are returning to a typical pattern of extremely high income inequality, and it now stands at a 60-year peak,” Beth Ann Bovino, chief economist at U.S. Bank, wrote in a recent report. “The worry is not just where we stand now, but also whether ongoing developments will worsen the situation.”
The net worth of the top 1 percent of households climbed to a record share of nearly 32 percent of the national total in the third quarter of 2025, according to data from the Federal Reserve, which started tracking household wealth in 1989. Spending patterns have also split: Households earning under $75,000 a year are spending less on discretionary categories like travel and experiences than they did in 2019, while those making more than $150,000 are spending more, according to Bank of America Institute.
Retail sales softened in December, data released on Tuesday showed, weighed down by a slight drop in purchases of vehicles and food.
More executives are acknowledging the divide and its effects on their business. Delta Air Lines said in October that ticket sales for premium seats were expected to outpace those in the main cabin. The Snack maker Mondelez said this month that consumers were “worried about overall affordability” and pulling back on snacking or shifting to value-store brands.
“They are fed up with the price increases — they don’t feel good about their personal economic outlook,” Dirk Van de Put, chief executive of Mondelez, said during an earnings call. “And as a consequence, snacking is being affected.”
Here is what some other companies have said about prices, spending and how the “K-shaped” economy is affecting their businesses:
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Chipotle: The fast-food chain is aiming to increase foot traffic and revenue amid weak comparable sales by focusing on higher-income consumers — a segment the company recently identified as its core audience, with 60 percent of customers from households earning above $100,000 on average.
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Clorox: The cleaning brand is adjusting pricing and product sizes to respond to pressure on all consumers but especially lower-income customers, Linda Rendle, the company’s chief executive, said on an earnings call this month. Clorox said that shoppers were trading down to smaller packages at dollar stores or buying in bulk at club stores.
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Yum! Brands: During its latest earnings call this month, Yum! Brands, which owns Taco Bell and KFC, reported transaction growth across all income levels, with particularly notable gains among higher-income consumers in the last quarter.
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PayPal: The online payment company announced that it would no longer commit to the specific 2027 outlook presented at last year’s investor day. Instead, it plans to provide forecasts one year at a time, citing the influence of “macro factors and a K-shaped economy,” Jamie Miller, the company’s interim chief executive, said in a conference call this month.
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McDonald’s: The fast-food chain revived its “Extra Value Meal” combos as traffic from lower-income customers declined while visits from higher-income customers rose double digits. Chris Kempczinski, its chief executive, described the trend as a “two-tier economy.”
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Coca-Cola: The beverage company said in October that sales growth had been driven by higher-income consumers buying premium brands, while middle- and lower-income shoppers remain under pressure and more focused on value.
Kailyn Rhone is a Times business reporter and the 2025 David Carr fellow.
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