K-shaped economy is 'alive and well,' expert says — what new research shows

the k-shaped economy is getting more extreme, according to new data from transunion. the credit bureau found that more borrowers are either superprime (credit score 780+) or subprime (below 600), with the middle shrinking. michele raneri, transunion's head of u.s. research, said the top of the k is "very strong" and "stable and resilient," while lower-income households "are struggling more than they did." on the bottom, consumers carry higher debt loads with rising debt-to-income ratios. the average credit card balance hit $6,519, up 2.3% year over year. the new york fed published a separate blog post friday showing that consumer spending is now driven mostly by households earning over $125,000 a year. that group spends a disproportionate share on luxury goods, high-end restaurants, and entertainment. the economy diverged noticeably in 2023, shortly after pandemic-era subsidies for low- and middle-income households expired. the new york fed researchers noted that reliance on a single segment of the economy has "important implications for spending growth and its fragility."