K-Shaped Recovery: Wealth Disparity Drives Holiday Spending

Entering Printemps in downtown New York City feels like an escape. A slight smell of musk hangs in the air as shoppers weave around racks of coats and shelves of handbags and shoes. For the holidays, the store set up a small ice rink on its second floor where skaters perform on weekends.

Printemps, which opened its first New York outlet earlier this year, aims for shoppers to feel comfortable as if in their own chic French apartment, complete with a bar and roving champagne cart. The atmosphere makes a $600 black fur coat seem inexpensive, while $1,450 leather tabi boots are viewed as an investment.

A small fraction of Americans indulge in this luxury, while just across the street at Trinity Church, hundreds line up for free food and necessities. The stark contrast highlights the K-shaped recovery in the U.S. economy, where wealth disparity is driving holiday spending.

According to data from the Federal Reserve, Americans in the top 1% own nearly 50% of the stock market, while the bottom 50% own just 1.1%. Meanwhile, the S&P 500 has surged nearly 86% over the last five years, spurred by the recent AI boom.

Inflation has risen from 2.3% in April to 3% in September, and the unemployment rate has increased from 4% in January to 4.4% in September. The Yale Budget Lab estimates that price increases from tariffs will cost the average household $1,700.

This wealth gap has become a dilemma for the Trump administration, as recent approval ratings indicate growing dissatisfaction with the economy. The K-shaped economy, a term coined by economist Peter Atwater, describes a divide where the affluent thrive while the majority struggle with rising costs and stagnant wages.

The Robin Hood Foundation reports New York's poverty rate hit 25% this year, nearly double the national rate of 13%. Bank of America found that low-income household spending grew 0.7% over the last year, compared to a 2.7% growth for high-income earners.

Delta, Coca-Cola, and McDonald's executives have noted a growing gap in consumer behavior, with premium customers driving sales while low-income consumers face pressure. Julien, a Printemps shopper and custom stylist, noted that his business is thriving, stating, 'Rich people are still rich.'