Top Of The K-Shaped Economy Starting To Crack? | Danielle DiMartino Booth

June 30, 2026

AI Summary

5 min read

The top 10% of earners—the group that has powered the K-shaped recovery—are starting to lose confidence faster than anyone else. That is the signal Danielle DiMartino Booth, CEO of QI Research and former Dallas Fed insider, brings to this conversation. While headline economic data still looks passable, the cracks are spreading from the bottom of the K upward, and the mechanisms that have kept the averages afloat are showing strain.

The K-shaped economy is not a metaphor—it is a measurement problem

Booth begins by correcting a common misunderstanding about the labor market. The monthly nonfarm payrolls number that markets trade on is a survey. It gets checked against the Quarterly Census of Employment and Wages (QCEW), which requires more than 95% of U.S. employers to report headcount. That hard data showed net job losses in the first three quarters of 2025. Over the last 12 months, the economy lost roughly 600,000 full-time jobs. Many of the jobs created since then—leisure and hospitality roles tied to the World Cup—are part-time and temporary.

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What you'll learn

1 (01:01) **Top Earners' Confidence Is Cracking** - The K-shaped economy's top leg is showing unexpected weakness, with high-income consumer confidence falling fastest.
2 (04:08) **Hard Data Shows 2025 Was a Recession for Many** - QCEW data confirms net job losses in the first three quarters of 2025, with 600,000 full-time jobs lost in the last 12 months.
3 (06:34) **The K-Shaped Economy: Does the Top Leg Matter?** - The core question: if the bottom leg struggles, does it matter as long as the top leg props up the averages?
4 (07:32) **One Big Beautiful Bill: Defensive Spending, Not Investment** - Companies are spending on inventory and panic stocking, not on capital expenditures outside of AI.
5 (10:08) **Bankruptcy Cycle Accelerating** - Corporate bankruptcies are up 40% year-over-year, and consumer bankruptcies are now rising 10% year-over-year.
6 (12:27) **Consumer Credit and the Top Leg's Weakness** - Consumer credit is "haywire," but the key signal is that top-earner confidence is falling fastest.
7 (18:34) **Commercial Real Estate and the Yield Curve** - CRE distress is now "full blown" and bleeding into multi-family, while the yield curve is rapidly re-inverting.

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Show Notes

The continued challenging cost of living is still at the forefront of most Americans minds, but the stock market -- trading near record highs -- appears it couldn't care less.And the economy continues to chug along nicely, currently forecasted to grow at 2.5% in Q2. And even despite conusmers' stated concerns, retail sales remain resilient and even surprised to the upside last month.Are those worried about a consumer-driven slowdown, or perhaps even recession, too pessimistic?Or, is there greater danger lying beneath the surface data than most are aware of.To find out, we have the good fortune to speak today with Danielle DiMartino Booth, CEO & Chief Strategist for QI Research LLC and author of the book "Fed Up: An Insider's Take on Why the Federal Reserve is Bad for America"

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