Despite the consternation around the K-shaped economy, Goldman Sachs’ chief U.S. economist is of the opinion that rumors of consumers’ demise have been greatly exaggerated.
In the past year, particularly amid households clamoring for relief amid affordability challenges, many economists had speculated that a “K” shape was emerging in the data: High-earning households were continuing to thrive, while those on the lower end were diverging, with their fortunes steadily declining.
Goldman Sachs’ David Mericle suggests this reading has perhaps been exaggerated. But later in 2026, he believes, the phenomenon will be more identifiable.
In December, the Goldman team wrote that “price inflation faced by consumers of different income levels has been fairly similar over the past year” and that real income has evolved similarly across various points on the income spectrum. Weak spending at stores serving low-income households, the team added, has likely dramatically fallen because of changes to immigration policy, as opposed to remaining low-income households faring worse than the average.
