You’re living in a “K-shaped” economy. Here’s how that affects you. – CBS News

Report on U.S. Economic Disparities and Their Impact on Sustainable Development Goals

Introduction: The “K-Shaped” Economic Trajectory and SDG 10

The current economic landscape in the United States is characterized by a “K-shaped” divergence, reflecting a significant and widening gap in the financial well-being of different socioeconomic groups. This trend directly challenges the core objectives of Sustainable Development Goal 10 (Reduced Inequalities). The upward trajectory of the “K” signifies the prosperity of high-income individuals, while the downward trajectory illustrates the increasing financial strain on low- and middle-income populations. This bifurcation, intensifying since the pandemic, undermines efforts to create an equitable economic system for all.

Consumer Spending Disparities and Implications for Inclusive Growth (SDG 8 & SDG 10)

An analysis of consumer spending, which constitutes over two-thirds of U.S. economic activity, reveals a growing concentration of purchasing power that is inconsistent with the principles of SDG 8 (Decent Work and Economic Growth) and SDG 10. Inclusive growth is hampered when a disproportionate share of economic activity is driven by a small, affluent segment of the population.

• Concentration of Spending: In the second quarter of 2025, the top 10% of income earners were responsible for nearly 50% of all consumer spending, the highest share on record.
• Divergent Growth Rates: Data from September indicates that spending by lower-income households grew by only 0.6% year-over-year, compared to a 2.6% growth rate for higher-income consumers.
• Luxury Market Strength: Spending on U.S. luxury fashion increased by 8% year-over-year in October, further evidencing the robust financial health of wealthier households.

Wealth and Income Inequality: A Challenge to SDG 1 and SDG 10

The mechanisms of wealth and income generation are exacerbating economic divides, creating significant obstacles to achieving SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities). The benefits of financial market growth and wage increases are not being distributed equitably across the population.

1. Asset Ownership and Wealth Accumulation

   The performance of financial markets disproportionately benefits the wealthiest Americans, who hold the vast majority of such assets.

   • Stock ownership is heavily concentrated, with 87% of stockholders belonging to households with incomes of $100,000 or more.
   • The top 1% of income earners own nearly half of all corporate securities and mutual funds.
   • This unequal distribution of asset ownership means that stock market gains do little to improve the financial stability of lower-income individuals who live paycheck to paycheck, thereby widening the wealth gap targeted by SDG 10.

2. Disparities in Wage Growth

   Recent trends in wage growth further illustrate the economic divergence, impacting progress toward SDG 8’s goal of fair wages for all.

   • For higher-income households, the rate of wage growth reached 4% year-over-year in September.
   • In contrast, annualized pay growth for lower-income households fell to 0.9% as of August, the lowest level recorded since 2016.
   • This stagnation of wages for the less affluent, especially when coupled with inflation, erodes purchasing power and increases the risk of poverty, directly impeding the progress of SDG 1.

Financial Pressures on Lower-Income Households and Setbacks for SDG 1

Lower-income households face a confluence of financial challenges that undermine their economic security and hinder the advancement of SDG 1 (No Poverty). These pressures limit their ability to build wealth and achieve financial stability.

• Persistent Inflation: Rising prices for essential goods like groceries and gas disproportionately affect households with lower, stagnant wages.
• Accumulating Debt: Surging credit card debt, student loans, and mortgage obligations consume a significant portion of income.
• Housing Costs: Prohibitively expensive housing further strains household budgets, a challenge related to SDG 11 (Sustainable Cities and Communities).
• Labor Market Vulnerability: Individuals in lower-income brackets are more acutely affected by a slowing job market, facing greater difficulty in finding new employment after a job loss.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article on the “K-shaped” economy in the U.S. directly connects to several Sustainable Development Goals (SDGs) that focus on economic well-being, equality, and sustainable growth. The primary SDGs addressed are:

• SDG 1: No Poverty: The article highlights the “multiple financial strains facing low- and middle-income people, from stubborn inflation and prohibitively expensive homes to surging credit card debt and high health insurance costs.” These factors increase economic vulnerability and can push households into poverty or make it harder to escape.
• SDG 8: Decent Work and Economic Growth: The discussion on wage growth disparities, where pay for lower-income households is stagnating while it rises for higher-income earners, relates directly to the quality of work and its economic rewards. The article also mentions a “slowing job market,” which affects the ability of people, particularly in lower-income brackets, to find and maintain decent work.
• SDG 10: Reduced Inequalities: This is the central theme of the article. The entire concept of a “K-shaped” economy describes the “divergent fortunes of wealthier consumers compared with people lower down the ladder.” The article provides extensive evidence of a “growing gap between the wealthy and the well-to-do and everyone else,” which is the core focus of SDG 10.

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the issues discussed, several specific SDG targets can be identified:

1. Under SDG 1 (No Poverty):
   • Target 1.2: By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions. The article’s description of lower-income households facing a “toxic stew of inflation, credit card debt, student loans and mortgage loans” points to the conditions that entrench poverty and make achieving this target more challenging.
2. Under SDG 8 (Decent Work and Economic Growth):
   • Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men… and equal pay for work of equal value. The significant disparity in wage growth, with annualized pay for lower-income households falling to 0.9% while rising to 4% for higher-income households, directly contradicts the principle of fair and equitable pay growth, which is essential for decent work.
3. Under SDG 10 (Reduced Inequalities):
   • Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average. The article explicitly shows the opposite is happening, stating that “annualized pay growth for lower-income households as of August fell to 0.9%, the lowest since the financial giant started tracking the data in 2016.” This is in stark contrast to the higher wage growth for top earners.
   • Target 10.2: By 2030, empower and promote the social, economic and political inclusion of all, irrespective of… economic or other status. The “K-shaped” recovery illustrates a pattern of economic exclusion, where the benefits of economic activity, such as stock market gains and spending power, are disproportionately concentrated among the wealthy, leaving lower-income groups behind.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Yes, the article provides several quantitative and qualitative indicators that can be used to measure progress towards these targets:

• Indicator for Target 10.1 (Income Growth of the Bottom 40%): The article provides direct data points that serve as indicators.
  • The specific wage growth rates for different income groups: “Annualized pay growth for lower-income households as of August fell to 0.9%,” compared to a “rate of wage growth for higher-income households in September [that] rose to 4% year-over-year.” This directly measures whether the income of the bottom segment of the population is growing sustainably.
• Indicators for Target 10.2 (Economic Inclusion) and overall inequality: The article mentions several metrics that reflect the distribution of wealth and economic participation.
  • Share of consumer spending by income group: The fact that “the top 10% of income earners accounted for almost half of all spending” is a clear indicator of economic concentration.
  • Distribution of asset ownership: The article states that the “top 1% of income earners… own nearly half of corporate securities and mutual funds.” This is a direct measure of wealth inequality.
  • Household debt levels: The mention of “surging credit card debt” for low- and middle-income people is an indicator of financial distress and economic exclusion.
• Indicator for Target 8.5 (Decent Work):
  • Labor market accessibility: The observation that those who lose a job are “having a harder and harder time getting back into the labor market” is a qualitative indicator of the health and accessibility of the job market for lower-income individuals.

4. Summary Table of SDGs, Targets, and Indicators

Source: cbsnews.com