Can the Bulls Survive a "Let Them Eat Cake" Economy?

There has been increasing concern about the K-shaped economy. Fed Chair Powell specifically addressed this issue at the last post-FOMC press conference:

To start with the layoffs, you're right, you see a significant number of companies either announcing that they are not going to be doing much hiring, or actually doing layoffs, and much of the time they're talking about AI and what it can do. So, we're watching that very carefully…On the K-shaped economy thing, I would say the same thing, or similar thing. We are —- if you listen to the earnings calls or the reports of big, public, consumer-facing companies, many, many of them are saying that there’s a bifurcated economy there and that consumers at the lower end are struggling and buying less and shifting to lower cost products, but that at the top, people are spending at the higher income and wealth, and they’re — so much, much anecdotal data on that.

Investors are seeing a bifurcation in consumer sentiment. Sentiment of households with incomes over $100,000 are at or near a cycle high, while sentiment for households making below $100,000 are plunging in 2025.

This is setting up to be a “let them eat cake” economy. While the stock market isn’t the economy, can the bull market survive such a bifurcation if most U.S. consumers are struggling?
 

The full post can be found here.