A growing chorus on Wall Street is warning that the US economy is becoming increasingly K-shaped, with higher-income households powering spending while lower-income consumers struggle with affordability. It mirrors what investors have seen in the stock market, where Big Tech continues to drive the major indexes even as other sectors lag behind.

The concern: How long can those two realities coexist before something breaks?

“I don’t think they’re going to coexist forever,” Bank of America senior US economist Aditya Bhave told Yahoo Finance during the firm’s 2026 outlook call this week. “Our view is that the bottom of the K will stabilize before the top of the K collapses. That’s underpinning our more optimistic view of the economy.”

BofA now expects 2.4% real GDP growth in 2026, an above-consensus call the bank sees as consistent with the economy avoiding recession.

Bhave admitted the timing “feels counterintuitive,” given the release of softer labor market data.

Private payrolls unexpectedly shed 32,000 jobs in November, with small businesses hit hardest, yet another sign of the Main Street divide.

Still, he said BofA’s view comes down to a simple decision: “The first question is, is there going to be a recession or not? And if our answer to that is no … you’re much more likely to grow above 2% than below, which is why we’re landing at 2.4%.”

Bhave emphasized that the “haves vs. have-nots” split is real but not necessarily destabilizing in the near term. Higher-income households spend significantly more on services, which dominate the US job market.

“One reason to be less pessimistic is the following: Who spends more on services — higher- or lower-income folks? It’s actually higher-income folks,” he said. “So if you take $1 of spending and you tell me that it was actually spent by a higher-income household … I’ll say that’s more likely to have been spent on services.”

That matters because “5 out of 6 jobs in the US are in services,” Bhave noted. More spending on discretionary services “could actually be more supportive for the labor market” and “increase the chances that the labor market will stabilize.”

Companies are seeing the same split in real time.

Macy’s (M) CEO Tony Spring told Yahoo Finance the retailer is benefitting from the K-shaped dynamic, especially through Bloomingdale’s, which saw 9% year-over-year sales growth in the third quarter.

Higher-income shoppers are still willing to splurge if they feel like the price is worth it, according to Spring, even as lower-income households pull back.