Food insecurity worsens amid ‘K-shaped’ economic divide
The so-called K-shaped economy is now linked to a “notable increase in food insecurity,” according to a new report. blog post by the Federal Reserve Bank of New York.
Large segments of the population face high levels of financial distress, according to a post published Wednesday based on data from the Survey of Consumer Expectations.
Within this group, those most affected by long-term inflation are low- and middle-income households. Researchers found that a larger share of their spending was devoted to goods like housing, food and utilities, whose prices have risen since the pandemic, causing them to cut back on groceries.
The higher cost of living, as well as cuts to the Supplemental Nutrition Assistance Program (SNAP), “raise new concerns about food insecurity among those at the bottom of the K-shape,” New York Fed researchers wrote.
Researchers said households are struggling with the end of pandemic-era benefits, including expanded SNAP benefits formerly known as food stamps. More recently, President Donald Trump’s “big beautiful bill” tightened work requirements for SNAP benefits.
Nearly 14% of American households faced food insecurity in 2024, according to the latest data report By the US Department of Agriculture.
The New York Fed said food insecurity is likely linked to Americans feeling worse off while the economy overall has been growing at a solid pace since the Covid outbreak.
Consumer confidence has been on a downward trend following a series of recent financial shocks. University of Michigan Consumer ResearchIt reached all-time lows in May, a closely watched bellwether.
“Consumers were generally pessimistic about their financial situation and outlook,” New York Fed researchers wrote.
But New York Fed researchers also found “significant” differences among households that “support the concept of a ‘K-shaped’ economy.”
K shape rise
Stock market rallies and appreciation of home values are boosting higher-income households, which disproportionately own such assets, leaving lower-income households behind.
Now gas prices are also pushing the lower end of the K down. The national average gas price on Wednesday reached $4.46 per gallon, up nearly 40% from a year ago. AAA.
“The top of the K-shape reflects high and increasing levels of net worth, while the bottom of the K-shape represents a significant portion of the middle- and low-income population experiencing high levels of economic uncertainty and financial distress,” New York Fed researchers wrote.
The central bank’s monthly Consumer Expectations ResearchThe report, released May 7, also found that nearly a third of households expect to be in a worse financial situation a year from now.
