Bank of America Sees 'Great Convergence' as K-Shaped Economy Gap Narrows

3-line summary

• Bank of America's newest consumer data shows a 'great convergence,' with spending growth across lower-, middle- and higher-income households moving at roughly the same rate, converging near 5% year over year in discretionary categories, according to a Yahoo Finance report on a BofA webinar featuring economists Aditya Bhave and David Tinsley.
• For most of 2025 and early 2026, after-tax wage growth for lower-income households was stuck at 1% to 1.5%; over the past two to three months, BofA said that rate accelerated toward 5%, roughly aligning with growth for other income groups, with lower-income card spending also growing near 5%.
• The top 5% of households remain an exception, with spending growth still running nearly 1.5 percentage points faster than the rest; Bhave said 'the K is converging for now, but I wouldn't be completely shocked if it starts to open out again.'

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