Bessent Declares End of K-Shaped Economy as Wage Growth Surpasses Inflation

Treasury Secretary Scott Bessent is confident that the US economy has entered a new phase, where wage growth outpaces inflation. He points to Treasury data showing a 2% real wage gain for workers in the bottom 25% of earners by 2025 metrics.

According to the Atlanta Fed Wage Growth Tracker, the lowest income quartile saw 3.6% growth as of June 2026, while the top income quartile reported a 12-month moving average of 3.9%. Average hourly earnings rose 3.5% year-over-year through March 2026, translating to a real wage increase of 0.3% after adjusting for inflation.

Bessent declares this trend marks the end of the K-shaped economy, where high earners surged ahead while lower-income workers treaded water. This shift is significant because it could influence the Federal Reserve's monetary policy decisions.

With higher wages fueling services inflation, the Fed has less incentive to cut rates. Historically, rate cuts have been a catalyst for risk assets like Bitcoin and altcoins.