K-Shaped Recovery: Sharper Insights

In recent years, the resilience of U.S. household consumption despite slowing disposable income growth, reflected in a declining savings rate, has given rise to several explanatory hypotheses. One of these is the “K-shaped recovery” thesis, according to which consumption growth in recent years has been driven exclusively by the wealthiest households.

Existing data sources, such as the Consumer Expenditure Survey and the Panel Study of Income Dynamics, estimate that the top income decile accounts for around 20% of total consumption. However, these sources lack granularity at the upper end of the income distribution and therefore tend to underestimate the contribution of high-income households. Other estimates, including Moody’s, put this share at close to 50%. So where does the truth lie?

The Federal Reserve has provided new insight into this question through its latest triennial Survey of Consumer Finances, which covers 2025 and was recently published. For the first time, the survey included questions on household spending, providing more detailed information on high-income households.

Our analysis

According to the survey, the top 10% of households by income account for 28% of total consumption. This share remains broadly unchanged when households are grouped by wealth rather than income.

As households were asked about their spending for the first time in this survey, it is not yet possible to assess how this distribution has changed over recent years or to confirm the K-shaped household-consumption growth thesis. However, the survey indicates that, over the previous year, similar shares of households in each income decile reported an improvement in their financial situation. At the same time, a much larger share of lower-income households reported that their situation had worsened, consistent with other data pointing to growing pressure on less well-off households.