THE QUARTERLY PERSPECTIVE

Welcome to the "K-Shaped" Economy

State of the economy not the same across America?

Over the years, economic commentators have sought efficient ways to communicate complex concepts into simplified packages. Some may remember the debate, when coming out of the steep recession in 2009, on whether the eocnomy would experience a “V-shaped” vigorous bounceback recovery or a slower, slogging “U-shaped” recovery. In the same spirit, today’s commentators are now referring to a “K-shaped” economy. Usage of the term is climbing, with growing references from Federal Reserve leaders to business executives. Therefore, it is important for investors to understand the notions behind the “K-shaped” economy and what it means for moving forward.

The Emergence of the "K-Shaped" Economy

• In a figurative sense, the “K-shaped” economy is intended to represent the diverging experiences of different segments of the population, with some thriving while others are struggling. The upward sloping part of the “K” suggests, that for some Americans, the economy has been improving. This represents older Americans and higher income earners. Meanwhile, the downward sloping part of the “K” suggests the economy has been progressively getting harder for those that are either younger or lower income. The question, of course, is if we were all living in the same U.S. economy, how could there be such a divide? Let us explore where the divide is most obvious....click here to continue reading

About The Quarterly Perspective
The Quarterly Perspective is a periodic update addressing some of the biggest issues in the economy and markets. We provide key insights about fundamentals and where we stand in the U.S. business cycle.