K-shaped Economy or Not? Evidence from a Payments Survey
May 18, 2026
Summary
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.
View PaperPolicy Hub 2026-3
Key findings:
- 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) between 2021 and 2025.
- The gap in growth rates points to a widening of consumption inequality across the income distribution.
Center Affiliation: Center for Quantitative Economic Research
JEL classification: D91, G41, E42
Key words: K-shaped economy, spending levels by household income, changes in consumer spending over time
Digital Object Identifier (DOI): https://doi.org/10.29338/ph2026-03