Economists contradict President Donald Trump’s Treasury Secretary Scott Bessent after he insists ‘the K-shaped economy is over’

President Donald Trump’s Treasury Secretary Scott Bessent has pushed back against concerns that his economic agenda continues to leave lower-income Americans behind, declaring that the long-discussed “K-shaped economy is over.” His remarks, made during a recent CNBC interview, drew swift responses from several prominent economists who argued that the evidence does not yet support that conclusion, pointing to persistent disparities in consumer spending, wealth and economic confidence.

Scott Bessent says he is ‘sick of hearing about this K-shaped economy’

Speaking to CNBC on Tuesday, August 4, Bessent rejected the long-running argument that affluent Americans continue to pull further ahead while lower-income households continue to struggle. “I can say here definitively, the K-shaped economy is over,” he said, adding that he is “sick of hearing about this K-shaped economy.” Bessent further argued that wage growth for lower-income workers and the long-term effects of Trump’s signature tax legislation have begun reshaping the economy. Rather than a “K,” he said the economy now resembles a “C” in which “the lower end of wage earners are finally calling it back, just like they did in President Trump’s first term.”

His comments echoed those made by Hilton CEO Christopher Nassetta in April, when he said improving occupancy trends pointed to stronger performance in lower- and mid-priced hotels. Nassetta said demand was shifting away from luxury properties toward “a more balanced convergence demand shape, or what I have been calling a C-shaped economy.”

Economic data continues to show a ‘K-shaped pattern’

According to reports, the available data suggests that the U.S. economy still reflects a K-shaped pattern, with higher-income households driving much of the nation’s economic activity. A May report from the New York Federal Reserve found that retail spending growth since early 2023 has been sustained primarily by households earning more than $125,000 annually, while lower-income households experienced declining real spending for much of that period.

The Fed has also noted that wage growth has fluctuated across low-income groups. In a separate analysis, it said, “Although the lowest wage quartile has experienced the lowest wage growth in the past year, we see that this has not always been the case. In fact, in some periods of 2023 and 2024, this group experienced the highest growth out of all the quartiles.”

Economists contradict Scott Bessent’s assessment

Economists responding to Bessent’s remarks argued that recent improvements have not eliminated broader economic disparities. Former Federal Reserve Chair Jerome Powell said in December 2025 that the K-shaped economy is “clearly a thing” reflected in economic data. “If you listen to the earnings reports for consumer-facing companies that tend to deal with low- and moderate-income people, they’ll all say that we’re seeing people tightening their belts, changing products that they buy, buying less, and that sort of thing,” Powell said at the time.

Peter Orszag, CEO of financial advisory firm Lazard, also challenged Bessent’s conclusion, telling CNBC on Tuesday that “declaring the death of a K-shaped economy is a little bit premature.” He also acknowledged there are “encouraging signs” and noted that weak consumer confidence suggests the overall picture remains “still mixed.”

‘The K-shaped economy remains firmly intact’

Other economists have also argued that income inequality continues to shape consumer behavior. In late June, Moody’s Analytics chief economist Mark Zandi wrote on LinkedIn, “The K-shaped economy remains firmly intact.” He argued that Federal Reserve data showing a widening spending gap between the top 20% of earners and the remaining 80% made an “overwhelming case that the economy is K-shaped and becoming increasingly so.”

While Bessent contends that the Trump administration’s policies are narrowing the economic rift, economists say it will take sustained improvements across wages, spending and household finances before it can be said that the K-shaped economy has ended.