New York Fed Data Shows K-Shaped Economy Persists
New York Fed data indicates the U.S. K-shaped economy, where higher earners prosper while lower earners struggle, continues. This contradicts recent statements from the Treasury Secretary.
Data released by the Federal Reserve Bank of New York (New York Fed) presents a mixed picture of the U.S. economic landscape. The report suggests the K-shaped economic trend, characterized by widening disparities between high and low earners, has not ended, contradicting recent declarations by Treasury Secretary Scott Bessent.
The New York Fed's Quarterly Report on Household Debt and Credit, along with an accompanying blog post on credit card delinquency, revealed that Americans owe a substantial $1.26 trillion on their credit cards. Balances continue to rise in 2026, with an increasing number of these debts becoming delinquent.
"To us it reflects this K-shaped economy," stated researchers from the New York Fed. They highlighted that many households are living paycheck to paycheck. This assertion directly contrasts with Treasury Secretary Bessent's recent claim that "the K-shaped economy is over."
While overall household debt saw a modest decrease and mortgage balances declined, the rise in credit card debt and associated delinquencies is a significant concern. The rate of credit card balances over 90 days past due has risen notably, reaching levels not seen since the Great Recession, reportedly influenced by high interest rates and persistent inflation.