Trump's America: The Widening K-Shaped Economy
In case you’re not familiar with the concept of the K-shaped economy, it’s an important idea that captures a lot about Trump’s America. Wealthy Americans are represented by the line of the K that angles sharply upward to the right, while the line of the K that dips downward represents non-rich Americans and the difficulties they face.
The economy’s K-shape has been growing worse in recent months, in large part because of Donald Trump’s policies. The wealthy people’s line is climbing further upward, while the line for the non-wealthy – the vast majority of Americans – has fallen further.
Viewed another way, the K-shaped economy is all about income and wealth inequality, and those are growing palpably worse under Trump.
For the country’s wealthy, things are going gangbusters as the S&P 500 and other stock indices keep hitting record highs, notwithstanding Trump’s costly, unsuccessful war against Iran. The richest 10% of Americans own 93% of all stock held by US households, and that means millions of average Americans aren’t feeling Wall Street’s rise – although they’re very much feeling inflation’s rise as it has climbed to nearly 4%, as hourly earnings fail to keep up with rising prices and as gas prices have jumped about 50% since Trump began bombing Iran. What’s more, workers’ hourly pay has risen by a mere 3% since 2019 (after adjusting for inflation), while corporate profits have jumped by 50%.
It’s a tale of two Americas. When some people look at the economy, they see a booming stock market, low unemployment, consumer spending chugging along and friends jetting off to overseas vacations. But those on the bottom end of the K see something very different: rising inflation, a sluggish job market, sky-high gas prices, problems with affordability and friends struggling to make ends meet. One big reason that consumer spending hasn’t tanked is that the richest, we’re-doing-just-fine 10% of Americans account for nearly half of all consumer spending.
The economy’s K shape is visible in many places. Airlines are adding more business class seats as the wealthy clamor for those higher-priced spots. But Spirit, the low-price airline that many non-rich Americans relied on, has gone belly up. Sales of private jets and fancy yachts have soared even as the Federal Reserve says that more Americans are going hungry than during the pandemic. McDonald’s CEO complained recently of a “two-tier economy”, with sales to lower-income Americans declining even as McD’s added premium, higher-end products, like the Big Arch burger, which costs between $7.50 and $13, depending on the location. While wealthy Americans fly to Greece and safaris in Africa, many average Americans are so squeezed by $4.26-a-gallon gas that they’re cutting back on travel and piling on record amounts of debt. US consumers have shelled out $52bn extra for gas due to the price increases, and as with Trump’s tariffs, soaring gas prices have squeezed non-rich Americans far more than wealthy ones. Americans in the bottom quarter by income (earning under $40,000 a year) spend approximately 4% of their income on average for gas, while households in the top fourth (earning $100,000 or more) spend less than 1%.
With the Iran war pushing up inflation and gas prices, most presidents would seek to show empathy by proclaiming: “I feel your pain.” But Trump did precisely the opposite, telling reporters that he doesn’t care about the economic pain Americans are feeling. “I don’t think about Americans’ financial situation,” Trump said, adding that he only cares about Iran not having a nuclear weapon. Just as Trump has belittled concerns about affordability by saying those concerns are a hoax and con job, he callously belittled Americans’ concerns about soaring gas prices. “This is peanuts,” he said about high gas prices.
Trump “flaunted his wealth, and people didn’t mind”, Barrett Marson, a Republican strategist, told the New York Times. “But now it’s sort of like: ‘Wow, you’re really not feeling our pain, you are adding to our pain, and on top of that, you don’t care about our pain.’”
With so many households just scraping by, it should be no surprise that Americans view this as a dark economic time. A May CBS/YouGov poll found that 67% of Americans disapprove of how Trump is handling the economy. The University of Michigan survey of consumer sentiment found in April that Americans are the most pessimistic they’ve been in the survey’s history.
Tragically, Trump is fiddling while many Americans are burning with anger about the state of the economy. Even as millions of hard-pressed Americans are traveling less and borrowing more, Trump is seeking to build a gilded ballroom and triumphal arch and make the Oval Office look like a room in Louis XIV’s Versailles.
Trump seems to see himself as a gilded president of, by and for the gilded class. Not only did he invite many of the world’s richest billionaires to his inauguration, he took 15 CEOs, many of them billionaires, on his trip to China. Those CEOs’ total wealth exceeded $1tn.
Many blue-collar Americans voted for Trump because they were convinced he would deliver to them, but those voters might not realize that Trump has taken many steps that have helped the rich and corporations while hurting average Americans. Trump’s “big, beautiful bill” included $1tn in tax cuts for the richest 1%, while it stuck it to people on the bottom with its $1.1tn cuts to Medicaid and food assistance. In a big favor to the country’s banks (and their shareholders), Trump has gutted the Consumer Financial Protection Board, which was created to protect average Americans from being cheated by predatory financial institutions.
Trump has given a huge present to crypto companies and crypto billionaires by ending nearly all enforcement against the scandal-plagued industry, which has ripped off tens of thousands of Americans. Even as millions of Americans struggle, the Trump family’s wealth, thanks to crypto and other investments, has soared by an estimated $4bn since Trump won a second term. Trump promised to chop energy prices in half, but he has instead pushed up electricity prices for many Americans by declaring war on cheap renewable energy sources such as solar and wind and by easing the way for AI companies to build electricity-devouring data centers.
As tens of millions of American struggle from paycheck to paycheck, Trump has done nothing to raise the $7.25-an-hour federal minimum wage. He has proposed denying minimum wage and overtime protections to more than 3 million homecare workers. He has chopped the minimum wage for workers employed by federal contractors, and with his many anti-union actions, he has weakened workers’ ability to bargain for higher wages.
Candidate Trump talked repeatedly about fighting for average Americans, but, under Second-Term Trump, the US economy has essentially gone from being a lower-case k to an upper-case, more unequal K. Our Trumpified economy favors the wealthy more than ever.
In this new Gilded Age, Trump and many billionaires think a K-shape is exactly how the world and economy should be, with the rich getting ever richer, and who cares about the little people. But for the vast majority of Americans, those on the bottom part of the K, the K-shaped economy is definitely not OK, and they should say that loud and clear.
