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“The letter 'K' is a reminder of a truth about the economy: over the past four decades, the U.S. has become a nation that has seen the benefits of economic growth, productivity and innovation accruing to fewer and fewer people.”
https://ritholtz.com/2020/09/the-k-shaped-recovery
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https://ritholtz.com/2020/09/the-k-shaped-recovery
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“U” and “V” and “L” and “W” shaped recoveries are meh, my favorite is the “Nike Swoosh” recovery – which may very well be a letter somewhere in the Milky Way galaxy, but here on earth represents instead the triumph of brand marketing rather than an alphanumeric example.
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Describe 11th letter in the English alphabet to someone who's never seen it: It is distinguished by a bold vertical line, from the midpoint of which begins two rightward traversing lines, one slanting 45 degrees upwards from the horizontal, the other, 45 degrees downwards.
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This description of the economy captures the 2 separate paths of the recovery: the line heading upward symbolizes those parts of the economy that have benefited from pandemic: $AAPL $GOOG $MSFT $TGT $WMT $NFLX $DIS $MRNA $JNJ $MRK $PFE $AZNCF $WORK $ZM $AMZN $SHOP
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The line heading downward symbolizes, well, pretty much everyone else.
Once a nation of “Haves” and “Have Nots,” we are now a nation of “Haves,” “Have Nots,” and “Have Much More.” The last category has left the first two in the dust.
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Once a nation of “Haves” and “Have Nots,” we are now a nation of “Haves,” “Have Nots,” and “Have Much More.” The last category has left the first two in the dust.
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We see this reflected in how various S&P 500 Index sector funds have performed.
Consider the 3 best performing Select Sector SPDR Fund ETFs: Technology $XLK up 31.6%, Communications $XLC +18.4% & Consumer Discretionary $XLY +16.9%.
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Consider the 3 best performing Select Sector SPDR Fund ETFs: Technology $XLK up 31.6%, Communications $XLC +18.4% & Consumer Discretionary $XLY +16.9%.
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The 3 worst performing: Select Sector SPDR Fund broad sectors: Energy $XLE down 40.3%, Financials $XLF -18.7%, & Utilities $XLU -8.2%.
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The more important question facing economists, investors, policy makers – and in about 60 days, voters – is simply this: Have the past 40 years of income and wealth inequality become structural elements of our economy?
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Can this problem be fixed with modest tweaks to the tax laws and safety net (pre-existing condition coverage, Medicaid, etc.) Or, has something fundamentally broken in the American economy requiring substantial changes to address?
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We have discussed this repeatedly since the post-financial crisis recovery began in 2009. That recovery was very lumpy and unevenly distributed.
https://ritholtz.com/wages-in-america/
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https://ritholtz.com/wages-in-america/
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Key wage drivers were the industry you worked in, your geographic location and your level of education. If you were in the right sector near a successful city and had a STEM/graduate degree, you did quite well.
The rest of the labor force struggled.
Another "K" example
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The rest of the labor force struggled.
Another "K" example
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Its no wonder that so many people really really did not like the post 2008-09 recovery
https://www.bloomberg.com/opinion/articles/2015-11-16/why-so-many-people-hate-this-economic-recovery
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https://www.bloomberg.com/opinion/articles/2015-11-16/why-so-many-people-hate-this-economic-recovery
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Economically, there has never been a worse time to be high school dropout in America. Workers with more education simply have lower unemployment rates, according to the BLS. They also earn more money. This gulf is likely to widen even further in the future.
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I don't know the answer to this question. But I suspect it will be driving policy, economics and politics far beyond the current election
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Postscript: Special thanks to @IvanTheK, who first identified "K" as the best descriptor for the bifurcated recovery all the way back in April https://twitter.com/IvanTheK/status/1251104969480118273
