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You’ve heard about the K-shaped economy — the idea that affluent households’ financial fortunes are on an upward trajectory, while the middle class and lower-income consumers are trending down — what does it mean in practical terms?
The up and down slopes of the K are a useful proxy for the divergence of different types of consumers. But let’s look at what it means for the economy. The gap in spending power has been growing: The highest-earning 20% of households accounted for half of all consumer spending in 1995. Now it's about 60% of all spending.
