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Fed's Powell: K-Shaped Economy Raises Sustainability Questions
11 Dec, 2025
Summary
- Fed Chair Powell confirmed a developing 'K-shaped economy' in the U.S.
- This economic trend shows wealth disparity between high and low earners.
- Powell expressed uncertainty regarding the sustainability of this trend.
Federal Reserve Chairman Jerome Powell acknowledged on Wednesday the emergence of a "K-shaped economy" within the United States, a phenomenon characterized by widening wealth disparity. This economic structure sees affluent individuals benefiting from inflated asset values in stocks and property, while those with lower incomes grapple with escalating costs for essential goods like food and energy.
During a press conference, Powell admitted that the "K-shaped economy" is a discernible trend evident in the Fed's data. He shared concerns about its long-term viability, noting that while consumption is predominantly driven by those with greater means, the struggles of lower-income households present a significant challenge.
Powell also highlighted potential distortions in recent labor market data due to a temporary government shutdown. He indicated that job creation figures might be overstated, suggesting a possible actual decline in monthly job numbers. Furthermore, surveys from both households and businesses point to a cooling labor market with decreasing demand for workers.
