The Bifurcation Index (BFX) measures how differently wealthy and working Americans are experiencing the same economy - in a single number from 0 to 100.
Built from 33 U.S. government data series. No paid subscriptions. No black boxes. Every Friday after market close, the index updates automatically and the weekly report lands in your inbox.
In Q2 2025, the top 10% of Americans accounted for 49% of all consumer spending - up from 35% in the early 1990s. The aggregate data looks fine because the top of the distribution is pulling it up. The bottom half isn't in the same economy. The BFX is built to see both.
Fed Chair Powell called it the "K-shaped recovery" after COVID. One arm of the K goes up - asset prices, financial markets, luxury spending. The other arm goes down - food insecurity, credit card debt, consumer pessimism. Aggregate indicators average the two arms together and declare everything fine. The BFX doesn't average. It measures the distance between the arms - every week, back to 2008, in a single number calibrated to the pre-pandemic norm.
A score of 57.2 means the gap between wealthy and working Americans is moderately above the pre-pandemic historical average. Think of 50 as "normal" - the average divergence measured from 2008 through 2019. Above 50, the gap is wider than that norm. Below 50, it's narrower.
The index dropped 7.6 points over the past three months - down from 64.8 in December. A falling reading is not inherently good news. It means the gap is compressing, but the reason matters. This drop was driven almost entirely by the Sentiment pillar collapsing 29 points as financial conditions tightened and consumer confidence deteriorated following the U.S. military conflict with Iran in late February. The gap narrowed because Wall Street caught down to Main Street - not because lower-income households improved. Compression driven by stress at the top is very different from compression driven by gains at the bottom.
The BFX measures divergence across five domains of economic life. Each pillar is scored 0–100 on the same scale and weighted equally in the composite. 50 = the 2008–2019 pre-pandemic average for that pillar.
This pillar compares discretionary spending - restaurants, electronics, furniture - against necessity spending: groceries, pharmacies, discount stores. A higher reading means the top of the income distribution is pulling further ahead of the bottom in how much they're spending on non-essentials. At 80.6, that gap is near its widest on record. The Fed's March 2026 Beige Book described it directly: high-end spending held firm while lower-income consumers pulled back and shifted to cheaper alternatives. Upper-income households are carrying the "resilient consumer" narrative almost entirely.
This pillar tracks three measures: the wage gap between finance workers and hospitality workers, the unemployment gap between college graduates and high school dropouts, and the ratio of high-wage to low-wage job creation. A higher reading means those gaps are widening. At 39.4, the pillar is below the pre-pandemic norm - the 2021–2023 surge in service-sector wages compressed the pay gap between finance and hospitality. That's a real, accurate signal. What the pillar doesn't capture: the BLS reported that labor's share of GDP hit its lowest point in 78 years in 2025. Workers overall are getting a smaller slice of a larger pie.
This pillar measures three things: whether luxury homes are appreciating faster than entry-level homes (Case-Shiller tier spread across four major metros), the national homeownership rate, and whether shelter costs are rising faster than wages. A higher reading means housing wealth is concentrating upward - luxury appreciating faster, fewer people able to own, renters falling further behind. At 50.2, the tier spread is back at the historical norm after cooling under sustained rate pressure. The pillar moved down 2.8 points this quarter. The spread narrowing doesn't mean housing is affordable - just that the divergence isn't widening further right now.
This pillar combines four inputs: the NASDAQ vs. its own 10-year trend, revolving credit growth, the personal savings rate, and the credit card delinquency rate. A higher reading means asset values are elevated above trend while lower-income households are leaning on debt. The pillar dropped 7.4 points as markets sold off on tariff and geopolitical uncertainty in January–February - the Fed's top 10% felt that. But credit card delinquencies continued rising even as equities retreated. The bottom of the distribution is still under pressure regardless of what the market does.
This is the story behind the composite drop. This pillar measures the gap between financial conditions - how easy it is to borrow and invest - and how consumers actually feel about the economy. A higher reading means Wall Street and Main Street are diverging: loose conditions for asset holders, stress on the ground. At 90.1 in November, that gap was near extreme. Then the U.S. military conflict with Iran began February 28 - Michigan surveys after that date showed confidence decline that erased earlier gains - while financial conditions tightened sharply as markets sold off. Both sides of the gap moved together. The divergence compressed by 29 points.
Jan 2008 - Mar 2026 · All pre-March 14, 2026 readings are constructed backtest values
All pre-March 14, 2026 values are constructed backtest figures. Subject to look-ahead bias. Not indicative of future readings.
Eight association tests were run on the constructed historical series. Results are reported in full - including null findings and circular relationships. Selective disclosure would be incompatible with the credibility standards this index is designed to meet.
During COVID, the government sent direct cash payments to nearly all Americans - that temporarily narrowed the gap between rich and poor. Everyone was hurting at once. But when the economy reopened, markets recovered fast and asset prices soared - benefiting mostly wealthy households - while lower-income workers faced years of slow recovery. The index correctly identified both: compression during the shock, then widening as the recovery played out unevenly.
When the BFX is elevated, stocks tied to discretionary spending - restaurants, retail, travel - have tended to underperform compared to staples like grocery stores and pharmacies over the following quarter. The logic: a bifurcated economy means lower-income consumers are pulling back first, and they make up the customer base for those categories. The relationship fades completely at 12 months, which is what you'd expect if markets are gradually pricing it in.
When the five pillars point in different directions - say, spending is elevated while labor is compressed - different parts of the stock market also start diverging more than usual. Think of it as the index's internal tension showing up externally. This is the cleanest result in the test suite because it doesn't share any inputs with the external variable it's being compared against, so there's no risk of circular logic.
The BFX synthesizes 15 analytical components from the Federal Reserve (FRED), Bureau of Labor Statistics, and Bureau of Economic Analysis into a single comparable score anchored to the 2008–2019 pre-pandemic baseline.
Every FRED series ID, every transformation step, and every normalization parameter is documented publicly. Any researcher with a FRED API key can reproduce the full historical series to floating-point precision.
Three adversarial methodology audits were completed before live publication - institutional review, code-vs-paper verification, and final adversarial review. All critical findings were resolved. The full audit trail is in the methodology paper.
Every Friday after U.S. market close - the current BFX reading, what moved it, and what the data is telling you that the headlines aren't.