The K-shaped narrative exaggerates the deterioration of the lower-end consumer — they are employed, paying their bills, and spending.
Citing data from Adam Parker, Bank of America, and the Philly Fed, Josh argues that lower-income wage growth has re-accelerated, credit card delinquencies are declining, and most households describe their finances as acceptable — the K-shape story is roughly half reality and half overstatement. ✦ AI generated
Josh · The Compound · 2026-07-20 · original ↗
starts at this moment · 43:11
“what are your thoughts?”
Lower income wage growth has recently reaccelerated. Bank of America's deposit account data showed that after tax wage growth for lower income households went from 2.9% in May to 4.1% in June. Credit performance at major banks is healthy. JPM, Bank of America, Wells Fargo all reported stable or declining card delinquencies and charge offs... The K shape, the bottom of the K, they maybe aren't keeping up in terms of net worths. They're not deteriorating is the point.
verbatim transcript · starts at 43:11
42:55stocks and I love that people love stocks. I love stocks. >> Uh yeah, thank God for that. I want to do a little bit of myth busting here. Our friend, friend of the show, Adam Parker, um did something about this like K-shaped narrative. I'm just going to quote him and I would love to get your take on what he's the point he's making. I think what he's saying I'll get to the
43:17the end and then I'll support it. I think he's saying is like yes of course there are halves and have nots in the current economy as there always are >> and it's true that there are some extremes um between like the upper end of the K and the lower but like also the lower end of the K it's not as bad as you think for a variety of reasons and we
43:40might be overestimating this idea and punishing certain stocks or certain categories of stocks um for for no good reason. So he's asking um the nar perhaps the narrative is more about the lower third not participating in balance sheet improvement as opposed to their own income statements. Um the narrative often jumps from the lower income consumers are frustrated and trading down then it jumps to lower income consumers are financially deteriorating.
44:14And that second part just might not be true. Um, and so here here are a couple of pieces of evidence that the lower end consumer is actually doing better than perceived by the people who continuously talk about Kshape. Number one, lower income wage growth has recently reacelerated. Bank of America's deposit account data showed that after tax wage growth for lower income households went from 2.9% in May to 4.1% in June. PNC also has
44:46data supporting that idea. Two, credit performance at major banks is healthy. JPM, Bank of America, Wells Fargo all reported stable is important or declining. Card delinquencies and charge offs while card spending and loan balances continued to grow. 90-day card delinquencies are the lowest they have been since September 2023. So yeah, the K shape, the the bottom of the K, they maybe aren't keeping up in terms of like their net worths.