Bank of America reports US K-shaped economy is converging as lower-income spending catches up

For the past year-plus, the US economy has operated like a two-speed machine. Wealthier Americans kept spending with abandon while lower-income households pulled back, creating a K-shaped split. Bank of America now says that split is closing. The bank’s research arm, the Bank of America Institute, published its August 2026 Consumer Checkpoint report with a title that does most of the heavy lifting: “The Great Convergence.” The core finding is that lower- and middle-income households are experiencing faster spending growth than their higher-income peers, reversing a trend that had persisted for more than a year. The numbers behind the narrowing Bank of America’s analysis draws on its massive trove of actual credit and debit card transaction data. In July 2026, overall card spending grew 5.0% year-over-year, down from the 6.3% growth recorded in June. Strip out gasoline purchases and spending growth came in at 4.3% year-over-year for July. The top 5% of earners continue to outspend at elevated rates, buoyed by strong balance sheets and rising asset prices. But the gap between that top tier and everyone else is no longer widening, and the distance between the middle and the bottom has...