In Depth with Dan: What is the 'K-shaped' economy?
I HAVE SOMETHING FOR YOU.
>> WE ARE IN THE MIDDLE OF A
WEIRD TIME OF YEAR THAT
WEEK-LONG STRETCH BETWEEN
CHRISTMAS AND NEW YEAR. SOME
CALL IT TWIX MISTER FARRELL
WEEK OR DEAD WEEK OR CRUMBLE
LIMBO. THESE ARE ALL TERRIBLE.
BORDERLINE DISTURBING NAMES.
AND AS A SOCIETY WE CAN DO
BETTER. BUT THE POINT IS THIS
TIME OF YEAR IS TYPICALLY
PRETTY LAID BACK. BUT NOT HERE
AT THE NEWS NOW. TONIGHT WE
HAVE A STORY THAT MIGHT WAKE UP
FROM THAT FOOD COMA. AND I'M
BETTING YOU'RE ALREADY PRETTY
FAMILIAR WITH IT. MAYBE YOU'VE
SEEN SOME OF THESE HEADLINES.
BLACK FRIDAY SET NEW ONLINE
SPENDING RECORDS RECORDS
SHOPPERS ONLINE SALES SURGE
AND FIRST, 1 TRILLION DOLLAR
HOLIDAY SHOPPING SEASON.
THE STORIES ARE EVERYWHERE
RIGHT NOW AND YOU MIGHT SEE
THEM AND THINK.
RECORD SPENDING. YOU SAY, WELL,
WE'RE NOT MAKE SURE I'M
SPENDING MORE ON GROCERIES AND
EVER. BUT BUT THIS YEAR, MY
FAMILY HAD TO CUT BACK ON THE
PLANE TICKETS IN THE CHRISTMAS
GIFTS. AND IF YOU'RE SAYING
THAT YOU'RE NOT ALONE, SHE
RIGHT ALONGSIDE THOSE HEADLINES
ABOUT RECORD SPENDING. YOU HAVE
OTHERS THAT SAY THINGS LIKE
THIS MAJORITY PLAN TO SPEND
LESS ON HOLIDAY GIFTS THIS
YEAR. ANOTHER HEADLINE
CONSUMERS ARE TAKING ON MORE
DEBT THIS HOLIDAY. SO HOW CAN
ALL OF THIS BE TRUE? AT THE
SAME TIME? WELL, I HAVE AN
ANSWER FOR YOU. AND IT'S JUST
ONE LETTER.
THEY'RE A BUNCH OF HEADLINES
ABOUT THIS, TOO, IS LOOKING
LIKE A K SHAPED HOLIDAY SEASON.
HERE'S WHY EVERYBODY IS TALKING
ABOUT A K SHAPED ECONOMY.
SO WHAT DOES WHAT DOES THAT
MEAN? THE THING EVERYBODY IS
TALKING ABOUT, WHAT IS IT A K
SHAPED ECONOMY WITH OKAY.
REFERS TO THE SHAPE OF THE
GRAPH. A GRAPH THAT ILLUSTRATES
HOW THE U.S. ECONOMY HAS
RECOVERED SINCE COVID THE 2
LINES, ONE REPRESENTING
INDUSTRIES LIKE TECH AND
SOFTWARE AND THE OTHER
REPRESENTING THINGS LIKE
HOSPITALITY AND FOOD SERVICES.
BOTH LINES DROPPED DURING COVID
BOTH OF THEM. BUT SINCE THEN,
THEY'VE REACTED DIFFERENTLY.
THE 2 LINES HAVE SPLIT GOING
IN DIFFERENT DIRECTIONS IN THE
SPORT. KIND OF LOOKS LIKE A
OKAY, A LITTLE BIT. BUT THOSE
LINES DON'T JUST REPRESENT
INDUSTRIES. DO THAT. THEY ALSO
REPRESENT PEOPLE. ONE GROUP
16 IN THE OTHER GROUP
STRUGGLING THE U.S. CHAMBER
OF COMMERCE TO PUT OUT THAT
CRAFT IN 2020. SO CLEARLY THEY
HAD A FEELING THIS COULD BECOME
PRETTY RELEVANT, THAT THIS
COULD HAPPEN THE WAY IT'S BEEN
HAPPENING. THE THING IS.
ECONOMIC RECOVERIES AND THEIR
GRAPHS. DON'T ALWAYS LOOK LIKE
THIS. IN FACT, THEY SOMETIMES
LOOK LIKE OTHER LETTERS, FOR
INSTANCE, AFTER A RECESSION IN
THE 1950'S, THE ECONOMY
REBOUNDED IN A V-SHAPE. THIS IS
KIND OF THE BEST POSSIBLE
SCENARIO. THIS IS A QUICK
DOWNTURN FOLLOWED BY A QUICK
RECOVERY RECESSION IN THE
1970'S SAW A U-SHAPED RECOVERY.
THE ECONOMY WAS DOWN IN THE
DUMPS FOR A LITTLE WHILE, BUT
THEN EVENTUALLY RECOVERED IN
THE 1980'S OVER UW A RECESSION
TO A BRIEF REBOUND AND THEN
ANOTHER DOWNTURN BEFORE A MORE
LONG-TERM RECOVERY. NOW, THE
WORST CASE SCENARIOS, WHAT
HAPPENED DURING THE GREAT
DEPRESSION, THE ECONOMY TANKED
AND THEN A FLATLINE THAT GRAPH.
IT'S CALLED AN EL SHAPE.
AMERICA LITERALLY TOOK AN OUT.
WE SEE THOSE GRASS HAVE
SOMETHING IN COMMON RIGHT?
THEY ONLY HAVE ONE LINE, THE
DIFFERENT SECTORS OF THE
ECONOMY. ALL GENERALLY MOVING
IN THE SAME DIRECTION UP AND
DOWN. BUT REMEMBER THE K SHAPE
HAS 2 LINES, DOESN'T IT?
HERE IS AGAIN, ONE LINE GOING
UP, ONE LINE GOING DOWN AND
UPPER ARM AND A LOWER ARE
DIFFERENT PEOPLE AND DIFFERENT
PARTS OF THE ECONOMY HEADED IN
DIFFERENT DIRECTIONS. THE UPPER
ARM REPRESENTS THE TOP EARNERS.
THE PEOPLE WITH THE BIG BOX,
BIG SALARIES, LOTS OF ASSETS,
THINGS LIKE STOCK PORTFOLIOS
AND REAL ESTATE WITH VALUES
THAT HAVE EXPLODED IN MANY
CASES IN THE PAST 5 YEARS.
THE TOP EARNERS ARE ALSO THE
TOP SPENDERS. KEEPING THE
OVERALL ECONOMY AFLOAT. NOW
THAT LOWER ARM REPRESENTS
EVERYONE ELSE WITH WAGES THAT
DIDN'T QUITE KEEP UP WITH
INFLATION WITH HOMES THAT THEY
RENT AND INVESTMENTS THAT ARE
TIED UP IN RETIREMENT FUNDS.
FOR MANY IN THIS GROUP, MORE
SPENDING MEANS MORE DEBT,
PUTTING THE OVERALL ECONOMY AT
RISK ALONG WITH IT. HERE'S HOW
NC STATE ECONOMIST MIKE WALDEN
PUTS IT.
>> THOSE ARE THE 2 BIGGEST
CONCERNS. ONCE I HAVE SORT OF
THE ASCENSION UNPLEASANTNESS
PEOPLE, THE FEELING THAT, HEY,
EVERYONE, SOMEONE ELSE CAN HAVE
ON NOT. WE DON'T WANT THAT FOR
FOR SOCIETY. AND THEN THE
SECOND BAD THING COULD BE IS
SLOWING SLOWING ECONOMIC
GROWTH. MAYBE NOT A RECESSION.
AND JUST LIKE SLOWING DOWN WHEN
THE ECONOMY SLOWS DOWN AND THAT
DOES AFFECT RICHER. PEOPLE.
SO IT'S PRETTY MUCH BAD FOR
EVERYONE. SO HOW DO WE FIX
THIS? WHAT WE DO? HOW DO WE HOW
DO WE PUSH THAT LOWER ARM OF
THE K CLOSER TO THE UPPER ARM?
WHILE THE SAYS COMPANIES NEED
TO DO SOMETHING THEY NEED.
>> TO GROW NOT TO BE CONFUSED
BECAUSE RIGHT NOW UNEMPLOYMENT
NUMBERS. IF YOU'VE BEEN PAYING
ATTENTION NATIONWIDE ARE
HISTORICALLY LOW, RIGHT?
BUT THOSE NUMBERS DON'T TELL
THE WHOLE STORY. WHILE
COMPANIES ARE NOT COLLAPSING,
THEY ARE HESITATING, RELUCTANT
TO INVEST IN GROWTH AND WE HAVE
SEEN WE'VE SEEN THIS IN NEWS
STORIES. 2, WE'VE SEEN THE
HIRING FREEZE, FEWER NEW
POSITIONS, OPENING UP HOURS,
GETTING CUT COLLEGE GRADUATES
AND YOU TALK TO ANY OF THEM
TRYING TO GET A JOB. THEY'RE
STRUGGLING TO GET NEW JOBS NOW
AT RATES SIMILAR TO THE GREAT
RECESSION. SOME BIG REASONS
FOR THIS HIGHER INTEREST RATES
FOR ONE INFLATION TARIFFS AND
AI.
>> WHENEVER BUSINESSES FACE
A LOT OF UNCERTAINTY WHERE THEY
DO THEY THEY TRY TO STAND.
PAT ARE NOT GOING TO TAKE ON
BIG INVESTMENTS ARE PROBABLY
NOT GOING TO HIRE. TRY TO HIRE
A LOT OF PEOPLE THAT ARE GOING
TO PAY RAISES. SO I THINK
>> THAT'S THE KIND OF
ENVIRONMENT. THE THAT'S ONE OF
THE REASONS WE'RE IN THIS KIND
OF ENVIRONMENT.
>> SO IT'S A BIT OF A PERFECT
STORM, RIGHT? A BUNCH OF
DIFFERENT THINGS. YOU HAVE HIGH
INTEREST RATES THAT MAKE
EXPANSION MORE EXPENSIVE.
THE HIGHER COSTS FOR THINGS
LIKE INFLATION AND TARIFFS THAT
DON'T JUST MEAN HIGHER PRICES.
THEY MEAN CUTS WITHIN THE
COMPANY'S IN BEFORE THEY JACK
UP PRICES AND DRIVE AWAY.
CUSTOMERS COMPANIES WILL FREEZE
THINGS LIKE HIRING OR THEY WILL
CUT BENEFITS. THEN YOU HAVE A
I WRITE. REMEMBER THIS HEADLINE
FROM BACK IN OCTOBER, AMAZON
LAYS OFF 14,000 CORPORATE
WORKERS AS IT INVESTS IN MORE
AI, NOT PEOPLE I MANY LARGE
CORPORATIONS AND COMPANIES ARE
EITHER IN LOCKSTEP WITH AMAZON
IN THIS TYPE OF THINKING AND
PREPAREDNESS WHERE THEY'RE NOT
FAR BEHIND. THESE ARE FORCES
THAT FOR MOST OF US. WELL,
BEYOND OUR CONTROL. SO WHAT CAN
WE DO AS AN INDIVIDUAL? ONE
THINKS IT'S TIME TO BE FRUGAL,
ESPECIALLY AS MOST AMERICANS
WILL MOST LIKELY SEE A BIT MORE
MONEY IN 2026. AFTER TAX BREAKS
IN THE BIG BEAUTIFUL BILL.
>> IF YOU'RE LOOKING IN THE
MARKET FOR A NEW CAR, IF YOU
HAD YOUR CAR 10 YEARS AND
SOMETHING NEW AND DON'T DO IT,
DON'T DO IT. IF YOU'RE HOUSE
IS GETTING TOO SMALL, YOU WANT
TO MOVE UP A MOBILE MOVE UP TO
A BIGGER HOUSE, WHICH WOULD BE
A PORTAGE GAME. DON'T DO IT.
CUT BACK ON YOUR VACATIONS.
TRY TO SHOP CAREFULLY.
>> SPEND LESS SAVE MORE.
UNFORTUNATELY, IF EVERYONE
LISTENS TO HIM, THAT TOO COULD
TANK THE ECONOMY. IT IS A BIT
OF A CONUNDRUM. DO YOU THINK
IF PEOPLE STOP SPENDING THINGS
WILL SLOW IN THAT SLOWDOWN
COULD LEAD TO A RECESSION.
SO WE NEED PEOPLE TO KEEP
SPENDING, EVEN THOUGH MANY OF
THEM ARE DOING SO WITH A CREDIT
CARD, THE LOWER ARM OF THE
ECONOMY HAS RECORD DEBT WHILE
THE TOP CONTINUES TO
CONSOLIDATE ASSETS, CREATING
THAT K STRENGTHENING THAT K
IT'S A PATTERN. IF WE KEEP
GOING IS DESTINED FOR A
RECKONING. AND IF WE'RE NOT
CAREFUL, IT, AMERICA MIGHT TAKE
ANOTHER OUT. LET ME KNOW WHAT
YOU THINK ABOUT THEIR. SEND ME
AN E-MAIL TO 07:00PM AT WRAL
DOT COM. WE'RE USING THAT NEW
E-MAIL. WE KEEP ROLLED IT OUT
FOR YOU TO GET FEEDBACK FROM
OUR ABOUT OUR NEWSCAST. WHAT
YOU WANT TO SEE. YOU STILL USE
THE DATA. WRAL DOT COM E-MAIL.
GO AHEAD IF YOU WANT. BUT WE
LIKE AT 07:00PM EMAIL.
>> THAT IN BOX WORKS JUST AS
WELL AS THE OTHER ONE. KEEP