Now Reading: Reich disputes Bessent, says US K-shaped economy alive
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Reich disputes Bessent, says US K-shaped economy alive
Treasury Secretary Scott Bessent declared the K-shaped economy dead, saying lower-income workers are finally regaining ground. Economist Robert Reich has pushed back forcefully, calling the claim 'hogwash'. He points to McDonald's earnings,…
The Story in Brief
Treasury Secretary Scott Bessent declared the K-shaped economy dead, saying lower-income workers are finally regaining ground. Economist Robert Reich has pushed back forcefully, calling the claim 'hogwash'. He points to McDonald's earnings, where visits from lower- and middle-income customers fell by double digits in the first quarter of 2025, as evidence that the divide between rich and poor remains deep.
Bessent cited Bureau of Labor Statistics data showing weekly earnings for the 25th percentile rose 5.5% year-on-year in the second quarter, while CPI climbed 3.9%. Other economists are split: Moody's Mark Zandi says the K-shape is 'firmly intact', while the National Retail Federation's Mark Matthews sees a persistent divide but notes lower-income spending has risen. Reich warns that stagnant wages and inflation are squeezing the 70% of US economy driven by consumer spending.
The Indian Opinion
The official line that the K-shaped economy is over sounds more like wishful thinking than reality. McDonald's sales figures and the cautious views of other economists suggest lower-income Americans are still running to stand still. The test will be the next round of consumer spending data: if demand from below $100,000 earners keeps dropping while the top 20% carry on, the 'C-economy' claim will look hollow. Until then, the burden of proof lies with the administration.
Source: livemint.com
This story was synthesised by AI from the source linked above.
