Good news! Massive investments in artificial intelligence have made American households wealthier on average and will continue to do so for many years, if not the next decade. Bad news? In the medium term, these gains will only strengthen the K-shaped economy; there is still some way to go before the fortunes of low- and middle-income earners improve.
Innes McFee, chief executive of Oxford Economics, told the company’s Global Economic Outlook conference in London this week that artificial intelligence has led to more than 7% growth in household wealth for U.S. consumers. However, much of this “powerful boost” went into the pockets of high-income Americans.
The “wealth effect” created Huge spending on artificial intelligence McPhee later said that this would strengthen the K-shaped economy and that this could continue until 2035 as households feel wealthier and increase their spending. wealth In an exclusive interview. The K-shaped economy refers to the phenomenon in which the wealth of the rich continues to rise, while the wealth of low-income groups gradually declines.
In 2025, this idea of economic divergence is supported by research from others such as Moody’s Chief Economist Mark Zandi, who observed that the economy will almost It’s driven entirely by the sentiments of the “affluent class.”
While AI does have the potential to one day help close the inequality gap, living standards will continue to change.
Asked whether the AI boom will strengthen the K-shaped economy in the coming decades, McPhee responded: “Of course. Ultimately, AI is likely to be the driver of bringing these two groups closer together, but to see that you need to see low-level productivity gains. Productivity gains in low-level, low-skill jobs have to happen because that means… real wage increases, which is ultimately what drives living standards.”
He added that unification might not happen in the next five or even 10 years, “eventually it might bring things together, but at the same time, it’s unlikely that AI will do anything for the K-shaped economy through wealth effects, through investment and all those things.”
Echoes of the K-Shaped Economy Go Back Decades: The Fed Begins Monitor the distribution of household wealth In the third quarter of 2010, total wealth was reported to be $60.76 trillion. Among them, the richest 0.1% own US$6.53 trillion, and the richest 99% to 99.9% own US$10.75 trillion. By comparison, the bottom 50% only shared $330 billion.
Fast forward to the third quarter of 2025, and the wealth of the bottom 50% has increased by 1,189% to $4.25 trillion, although it still lags far behind the wealth of the top 0.1% about 15 years ago. The wealth of the top 0.1% increased by 281% to $24.89 trillion, almost six times the wealth held by the bottom 50% merged.
“Hollowing out” middle-skilled jobs
Modeling suggests that AI adoption in enterprises is likely to follow an S-curve, starting slowly, then increasing rapidly, and eventually leveling off. According to the Oxford Economics model, AI will never be fully integrated into businesses because it cannot be used to replace physical trade jobs.
as a Penn Wharton Budget Model Report Based on observations last year, AI adoption will plateau in the early 2030s as remaining opportunities to effectively use other AI tools decrease.
Trade jobs are protected from AI (indeed, the potential benefits of data centers represent Like plumbers and electricians) does mean that certain characters will be “hollowed out” in the coming years, McPhee said.
“We saw this after the financial crisis for different reasons,” McPhee told CNN wealth. “You’re going to see a lot of job growth at the low end and top of the distribution, but in the middle, job growth may even be shrinking. That’s primarily because those middle-skill jobs can largely replace tasks with things like artificial intelligence. You need critical analysis, you need the ability to question things, and those tend to be at the top of the distribution. The middle tends to be filled with people who are just learning those skills.”