Stock Market Gains Highlight K-Shaped Economy Amid Rising Inflation and Poverty in the US
The US economy exhibits a pronounced K-shaped recovery, where the wealthy benefit significantly from stock market gains and luxury spending, while many Americans face rising inflation and stagnant wages.
Over the past five years, the S&P 500 has increased by about 86%, driven notably by artificial intelligence-related gains. Wealth concentration in stocks remains extreme, with the top 1% owning nearly 50% of stocks, the top 10% holding 87.2%, and the bottom 50% owning only 1.1%.
Inflation has risen from 2.3% in April 2025 to 3.0% by September 2025, accompanied by an increase in unemployment from 4.0% to 4.4% during the same period. Additional pressures come from tariffs estimated by the Yale Budget Lab to add 1.2% to prices in the short run, costing the average household about $1,700.
Anti-poverty programs have been cut or tightened under the Trump administration, including stricter SNAP enrollment and reduced housing assistance. Concurrently, New York City’s poverty rate has reached 25%, while the national poverty rate stands at approximately 13%.
Spending patterns further illustrate economic divisions: low-income spending grew only 0.7% year over year compared to 2.7% for high-income consumers, with firms seeing revenue growth largely from premium products. Corporations reflect this split, as Delta reports growth from premium customers, Coca-Cola benefits from premium product sales, and McDonald's notes stress on middle- and low-income consumers, including some skipping meals.
The luxury Printemps storefront in Manhattan embodies this broader two-tier economy. Economic challenges and their management have impacted political sentiment, with mentions of President Trump’s handling of the economy contributing to reduced approval ratings amid a pocketbook-focused tour.
