Political Fix Swamp Notes: Is the US economy really K-shaped?
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Jan 2, 2026 
Rob Armstrong, a U.S. financial commentator at the Financial Times, dives into the intriguing concept of the K-shaped economy, illustrating how some Americans thrive while others struggle. He analyzes corporate earnings that reflect varied consumer spending habits across income levels. Armstrong also cautions against oversimplifying economic narratives, discussing the complexities facing low earners. The conversation shifts to political repercussions, exploring how the administration responds to the pressing affordability crisis affecting millions.
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K-Shape Means Diverging Fortunes
- A K-shaped economy means widening outcomes where the wealthy pull further ahead of the poor.
- The pandemic amplified this divergence through asset gains for the wealthy and stagnation for lower earners.
Housing Boosts Wealthier Households
- Wealth holders benefited from a post-pandemic wealth effect, notably in U.S. housing prices.
- That boosted high earners while lower-income groups saw less of those asset gains.
Bottom Half Faces Labour And Policy Risks
- The labour market has cooled, hurting lower-paid workers who previously saw strong wage gains.
- Policy changes like higher premiums or Medicaid removals threaten the bottom half further.