Peter Atwater has been making the K-shaped economy argument for six years, and he says the thing that has changed is what the bottom of it feels: uncertainty then, powerlessness now.
The Treasury Secretary has been arguing the opposite — that the K is over and the economy is better described as a C. Atwater said he would like that to be true more than anyone, and that what he watches instead is how people live, which is not what a wage print or an inflation print shows.
"If you tell me how you feel about AI, I know where on the K you are. And because there's no middle, you're either very pro or very against."
Atwater was describing the split economy six years before this conversation, by his own count. He runs Financial Insights, teaches economics at the College of William & Mary and wrote The Confidence Map, a book on decision-making.
I listened to the full segment so you can skip it.
Here are the 9 arguments that matter.
👤 Guest: Peter Atwater, President of Financial Insights and Adjunct Lecturer of Economics at the College of William & Mary, author of The Confidence Map, Charting a Path from Chaos to Clarity
🎙️ Hosts: Carol Masser and Tim Stenovek, who co-host Bloomberg Businessweek Daily on Bloomberg Radio
📰 Published: 9 September 2026 on the Bloomberg Businessweek Daily podcast feed
🟣 Apple Podcasts | 🔗 Episode page | ⏱️ 44 min
Key Takeaways
The post-pandemic K was about uncertainty; Atwater says this one is about powerlessness
He reads the data center and camera protests as the first expression of it
How someone feels about AI now predicts where they sit on the K, with no middle position left
The bottom of the K has stopped splitting along party lines, which is why policymakers are starting to move
States are looking at repealing tax benefits for data centers
Eight weeks from the midterms, Atwater says neither party has a message on affordability
The top of the K is now sustaining the whole economy, and businesses have built themselves around it lasting
Some people currently on the upper arm of the K are going to fall off it as AI retooling reaches white-collar work
Younger Americans are putting spare cash into the stock market rather than a house, and reaching for leverage and options to get there faster
1. Espresso Machines and Oaks
Masser set the segment up with the posts she had been reading about the top of the K, which she said keep stopping her.
Share sales at OpenAI and Anthropic have minted hundreds of millionaires, in a story she cited about people with more money than they ever imagined and no idea how to spend it
The purchases she picked out were computer hardware and espresso machines
Another story she raised was headlined "The Latest Wealth Flags Big Trees," on wealthy property owners paying large sums for full-grown oaks
"They don't have the time or patience to watch them grow." — Tim Stenovek
A New York Post story said surging AI wealth is creating a mansion shortage in San Francisco, and Atwater had commented on it
Masser's reason for the segment was that guests keep coming on the show to dispute that the K-shaped economy exists, including the Treasury Secretary, who has downplayed the effect of inflation on lower-income Americans, declared the K a thing of the past and described a C-shaped economy instead
2. From Fear to Powerlessness
Atwater said the K is not an argument he wants to keep winning.
"There is probably no one, Carol, who would like the K-shaped economy to be done than me," he said, and gave the reason: "When I started talking about it six years ago, it was with fear because I know what happens when you have invincibility at one end of the economy and despair at the other."
His method is behavioral rather than statistical: he watches how people spend and how they live. "And this goes beyond this wage data point or that inflationary data point."
"And what we see day in and day out is one excess after another at the very top of the economy." — Peter Atwater
What is different now, he said, is that those at the bottom can see it
On the other side he listed high gas prices, rising food prices, and "I have children who are talking about affordability of a home"
The reframe is the center of his argument: "And what makes this moment to me so interesting is that if the post-pandemic K-shaped economy was about uncertainty, this is about powerlessness."
"And I'm seeing it now getting expressed in the pushback to data centers, the pushback to flock cameras, the sense that those above have control and those below are powerless is now resulting in a very purple bottom coming together to say, we've had enough." — Peter Atwater
That movement is starting in neighborhoods and locally, "as grassroots movements always do"
3. Why Data Centers Get Hit
Asked directly whether the data center backlash is part of this, Atwater said yes, and explained why that fight in particular.
The costs of a data center are specific and immediate to the people near one: "This is people saying, in my yard, in my town, for me, this is very personal, that real tangible costs are immediate, And they threaten my community. They threaten my job."
The benefit being offered against those costs is a long-term possibility rather than a present gain
"We have abstraction that is very appealing to those with confidence. And we have tangible costs that are deeply troubling to Main Street." — Peter Atwater
4. AI Defines the K
Masser asked whether AI is widening the K. Atwater rejected the verb.
"It's defining the K. If you tell me how you feel about AI, I know where on the K you are. And because there's no middle, you're either very pro or very against." — Peter Atwater
He said policymakers are now being forced to respond, and pointed to a story that day about states considering repealing tax benefits
The political shape of the response is what he finds significant: the pushback is bipartisan. "And this is significant because I think it reflects the fact that the bottom of the K is purple and they're finding ways where the common experience is now uniting them."
5. Nobody Owns Affordability
Asked what it costs to ignore the bottom leg of the K, Atwater said the country is already running that experiment.
"We're eight weeks from the midterms. And neither party has a coherent or compelling resonant message on affordability." — Peter Atwater
The daily experience he described is gas prices at levels people have not seen in a while, food costs rising, and "Many are starting to think about, do I need another job?"
His warning is that the passivity does not hold: "We're ignoring them, but they are not sitting here anymore willing to be powerless. And they're getting really tired of the blame game."
6. The Top Sustains Spending
Masser pushed on the counter-argument that the economy is very strong. Atwater did not dispute it for the top.
"There are two Americas. And so for those at the top, the economy is wonderful. And we shouldn't disparage that. We shouldn't feel bad about that. We should be thankful for that. I mean, today it is sustaining this economy. So we need that." — Peter Atwater
Against that he set the other side of the ledger: "But we also need to be mindful of how inflation is eroding the confidence of those below and just the sheer numbers of people."
The risk he named is corporate rather than social: "we are intensely dependent on them because the K has gone on so long that businesses have adapted to that as if that is going to be reality forever"
7. Who Falls Off the K Next
Asked what would shrink the K, Atwater answered in terms of visible progression rather than transfers.
"How do we restore skills for those at the bottom? How do we create a visible series of rungs that enable people to see that you can start at the bottom and work your way to a better job, a better position?" — Peter Atwater
The retooling is not confined to the bottom: "And we need to recognize that AI is going to require a massive retooling not only for those at the bottom, but for many, many more further up." The consequence he drew: "And so we need to be mindful of the risk that there are some on the arm of the K today who are going to fall from it."
Prompted by Masser on white-collar work, he said "There are white-collar jobs that are going to change"
8. College Has to Prove Jobs
Masser told the story of her father, who fought in the war, took a two-year associate's degree and had a career from it, and who wanted all his children to go to college — and asked whether that advice still holds.
Atwater said universities will have to show a direct return: "we're going to need to redefine what the college experience looks like," because there is a want for vocational training and a need to demonstrate that "a degree equals a job"
He set the opposite obligation beside it rather than against it
"At the same time, universities play a critical role in job creation in the future, the research that happens, the initiatives that can only be supported in an academic environment become the technologies of the future." — Peter Atwater
He said he is watching a lot of universities lose their focus on research, and that the two roles are not a choice: "You have to be both"
9. Young Money Skips Housing
Masser asked how the K-shaped economy changes where young people put their savings, and whether the response is nihilism and gambling or a scramble to save.
With rents where they are, Atwater said the spare money is going into the market instead of into a house: "And so there is a clear belief among younger Americans that the stock market is the only way to get ahead."
The speed is what determines the instrument
"And the only way you do it quickly is through leverage, is through options" — Peter Atwater
He contrasted that with the traditional case of saving for retirement over 40 years in a 60-40 portfolio, and said the fast route carries an enormous amount of relative risk
Bonus Insights
Atwater ended on what he is reading: Nir Eyal's book on beliefs. What he took from it: "And I love the idea of beliefs as what really takes us between how we feel and what we do. And that stories are the way we exchange beliefs."
Masser said she wants to build a segment around Atwater coming on with the authors he posts about
She disclosed that her daughter attended the College of William & Mary, where Atwater teaches, before asking him about the value of a degree
Atwater is usually a remote guest and was in the studio for this one
Atwater's bottom line is that the K has not closed, that AI is now the dividing line rather than an aggravating factor, and that the people at the bottom have stopped accepting the position.
Products, Companies & Tools Mentioned
OpenAI and Anthropic (Employee share sales at both have minted hundreds of millionaires, the story Masser used to open on the top of the K)
Books & Resources Mentioned
The Confidence Map, Charting a Path from Chaos to Clarity – Peter Atwater (His book on decision-making, which Masser said makes her stop and think every time it crosses her desk)
Nir Eyal's book on beliefs (Atwater had just finished it; he took from it that stories are how beliefs get exchanged, and that beliefs are what carry people from how they feel to what they do)
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