K-shaped economy: How income gaps are shaping midterm voter sentiment

A disconnect between macroeconomic data and consumer sentiment is influencing the upcoming midterm elections.

Alessandro Rebucci, an economics professor at Johns Hopkins Carey Business School, noted that voters judge the economy based on their personal cost of living rather than aggregate statistics. While the overall economic data appears strong, the distribution of that growth determines how many voters perceive their financial situation. This divergence is increasingly described as a K-shaped economy. The term refers to a graph showing a widening gap between the financial performance of high-income earners and asset owners versus middle and lower-income groups.

Rebucci explained that the wealthiest households spend significantly more than lower-income groups. This difference is visible not only in absolute dollar amounts but also as a share of total income and wealth. President Donald Trump has campaigned on the strength of the current economy, stating it is the greatest the country has ever seen. He made this claim during a rally in Las Vegas on August 5. However, recent consumer surveys suggest that many voters do not share this optimism regarding their own economic standing.

The trend of the ruling party asserting economic strength is a common feature of election cycles. Despite the current tension, Rebucci argued that Americans have long coexisted with economic inequality. He stated that the goal is not to eliminate inequality entirely but to adjust the system so individuals can live better within it. He emphasized that many people need to perceive they have a chance to reach the top 10 percent or top 1 percent of earners.

Voters will go to the polls in November to select members of Congress. The economic arguments presented by candidates will continue to contrast broad growth figures with individual household experiences. Campaigns from both parties are expected to address these divergent views in the final weeks of the race.