Some six-figure earners are ‘on thin ice’ in the K-shaped economy
Economists have frequently described the U.S. economy as “K-shaped” in recent years; where higher-income households experience stronger gains in wealth and spending, while lower-income families face greater financial pressure.
Although financial insecurity is often associated with low-income households, in February 2026 a Analysis by consulting firm Kearney suggests that many high-income earners also remain vulnerable. The report, based on federal economic data and consumer surveys, examines factors such as income, debt levels, savings, investments and family support to assess how exposed consumers are to economic shocks.
“You may have a good income, but there can be many factors that leave you exposed,” Katie Thomas, president of the Kearney Consumer Institute and author of the report, told CNBC Make It.
A household earning $200,000 a year may seem financially comfortable, but if most of that income goes toward a large mortgage, child care, debt payments and other fixed expenses, there may be little flexibility if something goes wrong, according to the research. In some cases, this household may be more financially at risk than a household that earns much less but is living within its means.
Many high-income earners say they feel this pressure; Nearly a third of six-figure earners say they are “strained, struggling, or drowning” financially. 2025 Harris Poll research. This dynamic helps explain the disconnect between high income and financial stress, and why a high salary doesn’t always guarantee financial security.
Financial risk can occur at both ends of K
According to Kearney’s analysis, the upper arm of the K starts around $160,000 in annual income, where many households appear financially secure on paper. That’s roughly in line with estimates from Moody’s Analytics, which pegs the peak of the K-shaped economy at household income of $175,000 or more.
High-income households also play a large role in the broader economy. The top 20% of earners accounted for nearly 60% of all consumer spending in 2025, according to an analysis of Federal Reserve data by Moody’s Analytics.
But Thomas says some of these high-income earners are also among the most financially exposed: “To assume that the top of the K is permanently insulated is not a safe assumption.”
Kearney’s report describes some households in this group as “on thin ice.” These are people with high incomes but also high costs, such as large mortgages, debt payments, and expensive living costs. If a large portion of their income is already committed, even relatively minor disruptions (job loss, high interest rates, or unexpected expenses) can quickly put a strain on their finances.
At the other end of the spectrum, fragility is simpler, Thomas says. Households earning $30,000 or less a year often face financial pressure as rising prices, borrowing costs and job instability leave little room for unexpected expenses.
Why might cash flow be more important than revenue?
Some financial advisors say financial stability often depends on cash flow, or how much room a household has left in its budget after paying basic expenses.
“We work with many high-income households that look comfortable on paper, but when you really look at cash flow, things can be tighter than expected,” says Joon Um. certified financial planner With Secure Tax and Accounting in Beverly Hills, California. “The biggest problem we see is high fixed costs; housing is often the biggest.”
Mortgages, property taxes, insurance and maintenance can eat up a large portion of income, especially in expensive housing markets like Los Angeles or New York. Add in child care, car payments, and other recurring expenses, and a large portion of a household’s income can become tied up in monthly obligations.
Um says another common problem is low liquidity; This means that some households have strong incomes and valuable assets but hold relatively little cash for unexpected emergencies.
If revenue drops or something unexpected happens, there may not be much of a cushion. Um says in such cases, where expenses and fixed costs rise with income, a high salary can mask a fragile financial situation.
“Although inflation has slowed, prices are still rising and many households are experiencing this pressure on their daily expenses,” says Justin Rice. a CFP With Personal Wealth Strategies in Hamilton, New Jersey.
Rice says she often sees this happen in high-income households with high fixed expenses: “Financial stress is not determined by income alone.”
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