You’ve probably heard the term “K-shaped economy” tossed around lately. The idea is that today’s economy is splitting in two—working well for some people while leaving others behind.

Here’s the thing: that’s not a new theory. It’s simply how economies have always worked, to some extent.

In reality, there are only two kinds of economies we ever experience:

• Those that work for some, but not for everyone.
• And those that work for almost no one—think 1930, 1974, or 2008.

The idea that an economy should work equally well for everyone sounds nice, but it’s never been the case. Even in strong growth periods, some people fall behind for reasons ranging from industry shifts to life circumstances. That’s not a sign of a broken system—it’s a reflection of how complex and uneven progress tends to be.

Still, the narrative that “this time is different” has traction right now. And I think it deserves a closer look.

Is the Middle Class Really Shrinking?

It is—but maybe not for the reasons we’re told. Many middle-class households have actually moved up. In 1967, only about 5% of households earned more than $150,000 (adjusted for inflation). Today, over 30% do. Meanwhile, the share of lower-income households has dropped from 38% to 21%.

So yes, the middle class is smaller—but much of that’s because people are doing better, not worse.

What About the Top 1%?

It’s true that wealthy households have seen their dollar wealth rise faster, but the share of total U.S. wealth owned by the top 1% hasn’t really changed in 25 years—hovering around 28–29%. That’s remarkably stable.

And Inflation?

We’ve all lived through a few noisy years on that front. Yes, inflation ran hot in 2022, but it’s eased substantially since then—back under 3% (2.7% in 2025). Compared to the ultra-low inflation of the 2010s, it might feel high, but in historical context, it’s well within a normal and healthy range.

A Reality Check

None of this means that everyone’s thriving—far from it. There are still real challenges for families feeling squeezed by costs or housing pressures. But before we accept the idea that the system is collapsing, it’s worth pausing to ask: who benefits from constant bad news?

Media—on all sides—tend to amplify difficulty over progress because fear and frustration keep us engaged. The trouble is, that focus can obscure the good that’s happening quietly in the background.

As I see it, a more balanced outlook serves us better. Acknowledge the challenges—absolutely—but don’t lose sight of the broad resilience underneath.

This isn’t a perfect economy. It never will be. But it’s still a good one. And as investors, retirees, and planners, we should recognize that stability when we see it.

If this raises questions or you’d like to discuss how it all ties into your personal plan, feel free to reach out.

As always—stay the course.