K-shaped Economy or Not? Evidence from a Payments Survey

RePEc Short ID: pro1343
ORCID iD: 0000-0003-2507-5714

Routh, Aditi; Shy, Oz

doi:10.29338/ph2026-03

Journal Article

K-shaped Economy or Not? Evidence from a Payments Survey

Abstract: Using transaction data from a payments survey in the United States, we analyze how consumers across income groups changed their spending between 2021 and 2025. We find that spending by consumers with high household income (fourth and fifth quintiles) grew substantially faster than spending by consumers with low household income (first to third quintiles), a pattern that holds across total spending, grocery spending, and spending on necessities. Both groups saw spending increases, but the gap in growth rates points to a widening of consumption inequality across the income distribution. Rather than the canonical K-shaped recovery—in which lower-income consumer spending declines while higher-income consumer spending expands—our findings point to a bifurcated recovery in which both groups' spending grew but at sharply divergent rates.

JEL Classification: D91; G41; E42;

https://doi.org/10.29338/ph2026-03