So allegedly we are in a K-shaped economy. Not sure that’s a new thing? The norm for years at least has been a “hollowing out of the middle” which seems to me to be the same thing? A top group is doing well and a bottom group is struggling more.
Question one is possibly an FQ one but safer here: where in the income and/or wealth percentiles is the bifurcation? Is the top of the K the top half? The top quintile? The top 5%? I don’t think it is the 1%ers only? Is that data out there somewhere? I can’t find it.
Two is welcoming the personal perspectives that a question like this is bound to get. We have people here across economic circumstances. Who have been in various economic circumstances. Does the current economy feel different than our long term income/wealth inequality trend?
Anxiety regarding the potential of the economy to collapse for those in the top of the K has to be acknowledged as well. Some of are shocked that Trump hasn’t induced such by now. Plus there is concern that the AI boom may minimally “correct” in a big way, if not bubble pop, turn out to be vapor … taking savings of many down with it. So maybe those on the top arm of the K are feeling insecure too.
I don’t know how to answer. I’m in the same low-wage job I was in this time last year, and it’s more or less recession-proof (I work in a drug rehab clinic). I own my house outright and have no debt save for about 48 more payments on my 2020 Kia Soul that I bought in March. Food prices are just … ugh. Other than that, I’m no better off and no worse off than I was this time last year (knock on wood).
I’m not sure exactly when the term was first coined, but it gained traction most recently following COVID. That recovery period was widely described as “K-shaped” because a few sectors rebounded strongly (most notably tech) while everything else lagged painfully for a while. That’s the factual basis for why the term gained currency recently.
This has also coincided with political polarization and broad social-media propaganda around the economy. We will never again see an economic recovery where there’s a consensus that most things are getting better for most people. The party in power will paint things as fantastic, the party out of power will portray them as dire. So now that this term has entered public consciousness, regardless of how the economy is actually doing, we’re going to call it a “K-shaped economy” from here on out.
I’m having trouble finding an exact cite, but I’ve read the statement it was the top 20-30% who are doing well in the K shaped economy.
The reason is because they have high skilled jobs and are still employed, and these people tend to own real estate and stocks whose values have skyrocketed.
However, the top 10% own 93% of the stocks, and the bottom 50% own 1% of stocks. So people in the 11th-30th percentile probably don’t own a lot of stocks, maybe 5%. But still, that could be a median value of a few hundred thousand in pensions and retirement accounts.
If the stock market is worth 65 trillion and they are looking at households (and not individuals) then even 5% of stocks would mean about 3.25 trillion in stocks held by 27 million households.
So I get the impression the educated class who own homes and stocks in retirement accounts are included in the K shaped recovery. Their home equity and stocks have grown by hundreds of thousands in the last few years.
This article says 20%, but I’ve also heard 20-30%.
A recent Moody’s report found that the top 20% of earners are responsible for America’s economic growth, said Fortune. Economists are worried. “We are losing the middle class,” said Ohio State University’s Lucia Dunn to the outlet.