On Friday, we will see how the world’s biggest economy finished 2025, when its fourth-quarter growth figures land. 

The Federal Reserve Bank of Atlanta's GDPNow model, which updates in real time as new indicators roll in, estimates that growth clocked in at a punchy 3.7% annualised pace. This would be slower than the previous quarter’s 4.4% pace, but still healthy. 

Wall Street economists are not quite buying it. They are expecting a more sluggish 2.5%. Caution isn’t totally unfounded. Retail sales, for example, unexpectedly stalled in December, hinting that consumers – who power two-thirds of the US economy – had eased off their credit cards as the year closed. 

But the bigger question here isn’t how much Americans are spending – it’s how many of them are shopping at all. Stock market gains have padded wealthier households’ portfolios, giving them the confidence to keep traveling, dining out, and splurging. But the majority of Americans, who rely more on wage growth than investment gains, don’t have that cushion. 

That disconnect is why talk about a “K-shaped economy” has grown louder. The term refers to an economy where the wealthy and invested are watching their financial trajectory rise, while everyone else sees theirs fall. It’s not just inequality in a general sense, but a divergence that gets worse over time – even when the economic data suggests that things are fine. 

The data backs this up. The richest 10% of Americans now account for 50% of all US consumer spending – the highest share in records going back to 1989 and well above the 37% seen three decades ago. On the flip side, lower-income households have been forced to pull back on basics, work more, and juggle steeper borrowing costs. They are also increasingly falling behind on their debts. Delinquency rates across mortgages, credit cards, and other household loans, for example, rose to 4.8% last quarter, the highest level since 2017, with lower-income and younger borrowers falling behind the fastest. 

That matters because a K-shaped setup changes how the economy behaves. Growth leans on a wealthy few, making it more fragile. If asset prices slip, spending can fall fast, risking a nasty string of consequences.