Here's why everyone's talking about a K-shaped' economy

"From corporate executives to Wall Street analysts to Federal Reserve officials, references to the K-shaped economy are rapidly proliferating. So what does it mean? Simply put, the upper part of the K refers to higher-income Americans seeing their incomes and wealth rise while the bottom part points to lower-income households struggling with weaker income gains and steep prices. A big reason the term is popping up so often is that it helps explain an unusually muddy and convoluted period for the U.S. economy."

"Growth appears solid, yet hiring is sluggish and the unemployment rate has ticked up. Overall consumer spending is still rising, but Americans are less confident. AI-related data center construction is soaring while factories are laying off workers and home sales are weak. And the stock market still hovers near record highs even as wage growth is slowing. It also captures ongoing concerns around affordability, which is much more of a concern for middle and lower-income households."

Higher-income Americans have seen incomes and asset values rise while lower-income households face weaker income gains and steep price increases. Economic indicators show solid aggregate growth alongside sluggish hiring and a slight uptick in unemployment. Consumer spending continues to grow but consumer confidence has fallen. Certain sectors such as AI-related data center construction are expanding rapidly, while manufacturing and housing are weakening and layoffs persist. The stock market remains near record highs despite slowing wage growth. Persistent inflation and affordability pressures are concentrated among middle- and lower-income households, intensifying political and policy concerns.

Read at www.mercurynews.com