- I have been binging on all your economy articles over the holidays. You’ve never once mentioned the “K Economy”. Why? That is what we have and it just keeps getting worse. Please talk about it. You need to, it’s important.
Okay, here goes…
The term “K Shaped Economy” as such (the term) really didn’t exist till recently…maybe 10 years ago. The term became popular about the same time COVID hit. And yes, we have a “K” shaped economy.
What is a “K Shaped Economy”? I will give the short version…
Really simplified!
- The rising part of the “K” represents the value of wealth in the upper-class due to increasing income and asset value. Just imagine lots of money in the bank and large amount of disposable income.
- The lower(ing) part of the “K” represents the decreasing purchasing power of the middle and lower-classes. Think real wages not keeping up with inflation, spending savings to pay bills, using debt (mostly credit cards) to pay bills, and more and more inability to afford things such as cars, food, and housing.
Another way to look at it…
- The rising part of the “K” represents the increase in prices of art, homes, cars, land, Rolex watches, luxury hotels, yachts, etc. Here’s the key…their prices keep going up, sometimes absurdly so, but the upper-class has plenty of money to keep buying that stuff…and that keeps driving the prices up. These folks usually have stable jobs/professions or own companies, and a pool of assets that grow in value such as large stock portfolios.
- The lower(ing) part of the “K” represents the incredible rise in prices on life’s basics such as food, clothing, housing, fast food, entertainment venues, etc. These folks tend to have less stable jobs, just as part-time, “gig” work, tourism, manual labor jobs, seasonal jobs, unemployed, or disabled. And more importantly they don’t have growth oriented assets such as stock portfolios and collectibles. And they also tend to be renters or own lower-value homes…or have large debt against assets. Daily expense just keep getting more and more unaffordable.
And don’t think about the rise in prices short-term. Such as inflation is only running 2.3% this quarter. Look at it in terms of decades: Price of a home in 2011 was $170,000…but in 2025 it was $427,000. And in 1982 is was $62,000. And in 1970 is was $24,000. You can see that the price of homes are up almost 1700% between 1970 – 2025. That is horrific!!!
But it WAY worse…average household income in 1970 was $9,460. Yeah, in 2025 it was $62,000. Now, do the math…in 1970 the average house was 2.53 times the average household income. In 2025 the average house was 6.89 times the average household income. What does that mean? The middle and lower income population is getting economically slaughtered! It clearly shows that housing is becoming a luxury not a basic necessity. And it means that the middle and lower income folks are more and more and more in debt…to the banks.
A “K Shaped Economy” is a perfect example of what has been happening to the USA since the early 1970’s. And I’ve 
written about that ad nauseam. Seems as if you’ve read a bunch of it. However, people have actually been talking about it for a very long time; they just used a different slogan…The rich get richer and the poor get poorer. Which is especially true in the US now…and has been true for 60 years. That is actual fact based on solid and reliable evidence.
Here’s the problem with the “K”…it leads to a nation’s/empire’s collapse every time in the history of the world. The total collapse starts with the middle & lower-income people getting pissed off. Then comes an economic collapse, then comes complete collapse, usually via a revolution.
Look at history…a good example of it not that long ago is the French Revolution that lasted 20 years in the late 18th century and was horribly violent and bloody. The rich and ruling classes suffered the most violence…often brutal deaths.
Here’s the savage part of the aftermath of a K-shaped economic-based collapse…as in France and other nations, a brutal authoritative ruler almost always takes power. In France they got Napoleon, an Emperor. And he waged war all over Europe for better part of a couple of decades…costing millions of deaths and huge financial losses to all of Europe.
I’m not sure what else specific you want me to write about regarding a “K-shaped economy”. We are in one, been in one for 60 years, most people are blind to it, almost everyone doesn’t understand what the outcome is, and no one seems to really care that…The rich get richer and the poor get poorer.
Here is something I want you to think about…what job market(s) are getting hit the worse from AI? You kinda saw it sneaking into the lower-income labor market first…think McDonald’s kiosks. But AI is hitting the middle-class job market now with a vengeance…think software programmers, hardware designers, tech support, manufacturing jobs that used to be good-paying, etc. AI is specifically designed to hurt the middle and lower-income people. Doubt me? Whose is getting wealthy off of AI? Yup, the companies that have designed it…and the wealthy owners of those companies. Imagine that.
Brooke DiPalma recently described it well…
“This year [2025], the division between the economic haves and have-nots 
widened, with sentiment souring as those in the middle of the income distribution were pressured by a softening labor market and feared inflation resulting from tariffs.”
A well known economist, Joanne Hsu, said it pretty clearly…
“Despite some signs of improvement to close out the year, [consumer] sentiment remains nearly 30% below December 2024, as pocketbook issues continue to dominate consumer views of the economy.”
A report from the Bank of America Institute published on Dec. 22 showed spending from consumers in the top third of the income distribution rose 4% over the prior year in November, the fastest level of growth in four years. Spending from households in the lowest third of the income distribution is up less than 1% over the same period.
And why spending is up less that 1%…while inflation is running at 2.7%. Meaning…the lower third of US consumers are buying less…nearly 3% less than they did in 2024. Yes, I said “buying less” not “spending less”…they simply can’t afford to buy what they did last year.
Remember the Walmart CEO came out earlier this year with an analysis of the economy…middle & lower-income customers were buying fewer consumer items, concentrating mostly on basic living necessities. And, they were spending only slightly less per purchase. What does that mean? Average American families have less money to spend on the basics of life, and have less and less money. The poor get poorer.
Here’s one for you…at the end of 2024 37% of American families couldn’t cover a $400 emergency expense. That’s not being able to cover that $400 emergency with cash, savings, or even a credit card.
Here’s another one for you…as of Q2 2025:
- Bottom-half of US citizens held $4trillion in wealth.
- Upper-half of US citizens held $164trillion in wealth.
Yup, upper-half of US citizens held 41 times more wealth that the lower-half. Look, I’m not proposing wealth distribution…no, not at all. What I am pointing out is the HUGE disparity of wealth in the US…and that spread is getting worse…big time worse. And I am laying it out for you…what happens when the poor half decide they don’t like that any more?
Now think about these points for a minute:
- There is no federal law enforcement agency authorized in the US Constitution.
- As of April 2025 there are 137,000 armed federal law enforcement officers in 65 federal agencies.
The average world’s military force has only about 26% of their force as armed combat troops. That being the case…armed US federal law enforcement offices are the 9th largest army in the world.
Now, let’s throw in the 463,000 non-federal armed law enforcement officers in the US. Yeah, that makes armed law enforcement officers in the US the LARGEST military force in the world…by a margin of 20%. Yes, larger than the world’s largest army…China’s army!
Now this gets interesting…throw in the 550,000 combat troops of the US military…we now have a combined force of over 
1,000,000 combat troops in the US who are authorized and can be, or are, used as law enforcement. That is far larger than the combat troops of most of the world’s armies combined. Why do you think that is?
150,000,000 (150million) US citizens 41 times more poor than the other 150,000,000 (150million) US citizens). And…it is getting worse. Just a question…do think there might be a correlation or relationship here between poor vs rich and the number of armed military and law enforcement?
Look at what history tells us, look at what facts tells us, look at what the fact-based economic numbers tells us…look!!! Don’t be blind, drop your bias, think about what reality is telling us. Realize what is…and what will be.
This is our fate…unless we do something about it. And folks…the answer ain’t politics or politicians…it’s becoming a disciple of Christ.
Send me some feedback…
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