Ahead of Bessent Hearing, Warren Presses Trump Administration to Monitor and Address Risks Posed by K-Shaped Economy

Ahead of Bessent Hearing, Warren Presses Trump Administration to Monitor and Address Risks Posed by K-Shaped Economy

"High-income families are increasingly driving economic growth as low- and middle-income families squeezed by rising costs pull back on spending"

"The failure to develop an economy that strengthens and is strengthened by middle-class families creates significant long-term economic risks."

Text of Letter (PDF)

Washington, D.C. - U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, pressed Scott Bessent, Secretary Department of the Treasury, and Kevin Hassett, Director for the White House National Economic Council, to monitor and address the concerning K-shaped trends in the economy in which consumer spending is growing increasingly concentrated among the wealthy while everyone else struggles.

"I write with concern that you and President Trump are failing to take the steps needed to address a growing divide in our economy, in which the wealthiest households are wealthier than ever - but the rest of the country has been left behind and is struggling to get by. Growing wealth and income inequality is fueling a K-shaped economy in which high-income families are increasingly driving economic growth as low- and middle-income families - squeezed by rising costs - pull back on spending," wrote Senator Warren.

The Ranking Member detailed how the Administration's policies have deepened this divide: "President Trump's sweeping tariffs 'hit low- and moderate-income households particularly hard.' And the Congressional Budget Office estimates that the Republicans' so-called One Big Beautiful Bill will reduce average household incomes by more than $1,200 for the bottom 10 percent - while increasing them by over $13,000 for the top 10 percent."

Senate Warren laid out the implications of these trends: "The failure to develop an economy that strengthens and is strengthened by middle-class families creates significant long-term economic risks. When economic growth becomes concentrated at the top - dependent on a limited number of affluent consumers in a few key sectors - 'it makes the economy highly vulnerable if anything goes off the rails for those high-income, high-net worth households.'"

Senator Warren concluded by requesting that Secretary Bessent and Director Hassett provide any macroeconomic analysis they have conducted on the impacts of concentrated consumer spending, and requested that they conduct such analysis if they have not. Noting that Financial Stability Oversight Council's has created a new "household resilience working group," Warren questioned if it is monitoring the growing bifurcation in consumer spending across income groups. She also pressed them for analyses of the impact of the Trump Administration's policies exacerbating income inequality.

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