Bank of America said the U.S. K-shaped economy is converging as spending growth aligns across different income groups [1].
This shift suggests a narrowing of the economic divide that previously saw high-income and low-income households experience vastly different financial recoveries. If spending patterns continue to stabilize across the population, it could signal a more uniform economic environment for retailers and service providers.
The bank said this phenomenon is a "great convergence" across the two distinct economies that have existed within the United States [1], [2]. This convergence is driven by the fact that spending growth is now aligning more closely across various income brackets [1], [3].
For several years, the U.S. has been characterized by a K-shaped recovery. In that model, one segment of the population saw wealth and spending power increase—the upward arm of the K—while another segment faced stagnation or decline [2].
Bank of America said the reduction in this divergence is occurring because the growth in spending is no longer concentrated solely in the upper tiers of the economy [1], [2]. Instead, the spending trajectories of different income groups are moving toward a single point of alignment [3].
This trend indicates that the disparate economic experiences of the American public are beginning to merge. The alignment of spending growth suggests that the factors driving consumption are affecting a broader range of the population more equally than in previous periods [1], [2].
“Bank of America describes a 'great convergence' across America’s two economies.”
A K-shaped economy typically indicates deep systemic inequality where a crisis benefits the wealthy while harming the poor. The 'great convergence' suggests that the extreme disparity in consumption patterns is easing, which may indicate a more balanced distribution of economic resilience or a universal shift in how different income classes are responding to current inflationary and labor market pressures.
