(NewsNation) — Wealthier Americans are still powering much of the country’s spending, a sign that the so-called K-shaped economy remains “firmly intact,” according to Mark Zandi, chief economist at Moody’s Analytics.
In a post Sunday, Zandi pointed to updated estimates for the first quarter of 2026 showing that Americans in the top 20% of earners — households making more than $175,000 a year — are responsible for nearly 60% of personal outlays, a share he described as “astounding.”
Personal outlays go beyond everyday consumer purchases. The measure also includes interest payments on installment debt, such as auto loans, as well as transfers like charitable donations.
Zandi’s figures underscore that divide. Outlays among the top 20% rose 6.5% over the past year, beating inflation. By comparison, spending and related outlays among the bottom 80% increased just 2.6%, failing to keep pace with rising prices.
“No wonder most Americans are upset with their financial situations and the broader economy,” Zandi wrote.
The phrase “K-shaped economy” refers to the diverging paths represented by the letter K: higher-income households continue to climb, while many lower- and middle-income Americans face tougher financial pressure.
The concept has gained traction because it helps explain a disconnect in the economic picture: headline indicators may look solid, even as many households say they are still struggling to make ends meet.
Corporate America has noticed the divide. Airlines, for example, have leaned into premium offerings as higher-income travelers continue to spend, while McDonald’s executives continue to cite pressure among lower-income consumers.
The K-shaped pattern has also shown up at the gas pump, with lower-income Americans cutting back amid the war in Iran while wealthier households made few changes to their fuel spending.
Moody’s analysis suggests the overall spending gap between the top 20% and the bottom 80% isn’t new but has widened in recent years.
In the mid-1990s, the groups accounted for roughly equal shares of consumer spending, but over time, higher earners have accounted for a larger portion.
Zandi acknowledged that his estimates have faced some methodological criticism and may “overstate the case,” but argued the latest figures still show the economy is “K-shaped and becoming increasingly so.”
A growing reliance on high earners is a concern because it leaves the economy highly dependent on a “small group of the well-to-do,” whose spending is influenced by “how their stock portfolios are performing,” Zandi wrote earlier this year.
That could make the economy more exposed during stock market downturns if wealthy households decide to pull back.
