{"id":262462,"date":"2025-11-14T13:25:12","date_gmt":"2025-11-14T13:25:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/262462\/"},"modified":"2025-11-14T13:25:12","modified_gmt":"2025-11-14T13:25:12","slug":"a-recession-is-brewing-at-the-bottom-of-the-k-shaped-economy","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/262462\/","title":{"rendered":"A recession is brewing at the bottom of the K-shaped economy"},"content":{"rendered":"\n

This is The Takeaway from today’s Morning Brief, which you can sign up<\/a> to receive in your inbox every morning along with:<\/p>\n

The post-COVID recession that never arrived still hasn’t come. But that doesn’t mean Americans are in the clear.<\/p>\n<\/p>\n

Recession-like conditions are already gripping households on the lower end of the income spectrum<\/a>, putting a dark spin on the saying that the future is already here, it’s just not evenly distributed.<\/p>\n

That the wealthiest Americans are driving the bulk of consumption has reignited discussion of the K-shaped economy<\/a>. And while the tendency is to think that markets might be in trouble if those big spenders pull back<\/a>, the pressure felt by those on the lower rungs can have its own cascading effects.<\/p>\n

“What does keep me up is what’s happening at the lower ends of the income distribution for households where there is significant pressure,” said Mohamed El-Erian<\/a>, chief economic adviser at Allianz, in an interview during Yahoo Finance’s annual Invest conference<\/a>.<\/p>\n

El-Erian warned that the cohort of lower earners isn’t already in a recession, but they are close to one, raising the prominence of economic and political debate around affordability.<\/p>\n

Faced with the price shocks of the COVID era, consumers pushed through on the winds of government subsidies, wage growth, and a job environment where moving around meant a pay bump. But with inflation stuck at 3%, El-Erian said, the affordability crunch this time around doesn’t come with economic cushions to offset the difficulties.<\/p>\n

Without two months of official government employment data, owing to the shutdown in Washington, economists are less certain about the health of the labor market. But private-sector data is not reassuring. And even when the figures are positive, the gains are moderate.<\/p>\n

El-Erian pointed to last week’s report from global outplacement and executive coaching firm Challenger, Gray & Christmas showing that layoffs hit the highest level for October in over 20 years as employers shed over 150,000 jobs<\/a>, up 183% from the 54,064 job cuts in September. And the job gains revealed by payroll processor ADP’s most recent monthly report came in at a modest 42,000<\/a>.<\/p>\n

“There is real concern of the bottom bit of what people call the K-shaped economy,” El-Erian said, “And this is not an isolated concern. If lower-income households stop spending, not because they don’t want to spend, but they’re not able to spend, that will contaminate upwards for the economy as a whole.”<\/p>\n","protected":false},"excerpt":{"rendered":"This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox…\n","protected":false},"author":2,"featured_media":262463,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,108417,96081,1294,40970,56,54,55,108416],"class_list":{"0":"post-262462","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-chief-economic-adviser","10":"tag-economic-data-releases","11":"tag-economy","12":"tag-mohamed-el-erian","13":"tag-uk","14":"tag-united-kingdom","15":"tag-unitedkingdom","16":"tag-wealthiest-americans"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/262462","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=262462"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/262462\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/262463"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=262462"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=262462"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=262462"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}