K-shaped recovery

A K-shaped recovery (or economy) is emerging now for a few key reasons — it’s not just one factor, but a combination that’s leading to a very uneven recovery across sectors, people, and assets.

K-shaped recovery

• V-shape + L-shape : together the pattern diverges
• For example, tech, large-corporations, and asset-owners may bounce back quickly; meanwhile, hospitality, travel, small-business may have persistent losses.
• Higher-income worker vs lower income workers
• by region, by type of job, by income bracket
• policy & structural factors : stimulus, monetary and fiscal policy, technological change

  U.S. economy news

• real GDP annual rate of 3.8%, beating expectations
• corporate earnings are unusually strong
• marchine learning/AI infrastructure - significant growth driver
• consumer spending, labour market are holding up better than feared

  What’s concerning / risks

• underlying weakness - lower income households (softening spending, higher debt burdens)
• government shutdown is costing the economy - $15 billion per week
• slowing momentum
• K-shaped : wealthy households continue benefiting from asset gains, while broad-based strength is less visible.