Economist Warns Of Hidden Crisis In 'Exceptional' US Economy As Lower Income Households Face 'Considerable' Challenges

[Yo_Mama_Been_Loggin]

Influential economist Mohamed El-Erian recently pointed out the stark contrast between US “economic exceptionalism” and the struggles of lower-income households in what he calls a “K economy.”

What Happened: On Monday, El-Erian posted a comment and shared a story from the front page of the Financial Times, highlighting the growing economic disparity in the United States. He noted that while the US economy is exceptional in many ways, it has also led to a “K economy” where lower-income households face significant and increasing challenges.

Link to tweet

El-Erian’s post comes in the context of a recent report on the surge in US credit card defaults, which have reached their highest level since the 2008 financial crisis.

Why It Matters: This situation underscores the financial strain on lower-income households, which El-Erian refers to in his “K economy” comment. The term “K economy” refers to a situation where the wealthy continue to prosper while the less affluent struggle, creating a divide that resembles the letter ‘K.’ Traditionally the economy is viewed as ‘V’ shaped with even ups and downs.

https://www.msn.com/en-us/money/news/el-erian-warns-of-hidden-crisis-in-exceptional-us-economy-as-lower-income-households-face-considerable-challenges/ar-AA1wJkEf

[MissB]

1. Sad but zero surprises there

[Bernardo de La Paz]

2. K economy means yet more wealth imbalance on top of historically extreme unbalance. . . . . nt

[MichMan]

3. Every time I posted about this leading up to the election, I was told I was wrong

With replies touting how much average incomes had risen to outplace inflation, and that most of those gains were with the lower income levels.

[Igel]

4. Increased min wage helped some at the low end.

But a lot of those making minimum wage are part-timers, students, 2nd incomes for the person or the household, and entry-level jobs. "Most" is where the generalization fails.

Two problems with the pollyannish all's well thinking: (1) Using an average income hides the real distribution; (2) they flip between individual wages or household income with barely an eyeblink while most readers just gloss over the difference.

Lots of income-related public discourse buries inconvenient facts in unstated assumptions or using vocabulary that conceals something unpleasant.

[W_HAMILTON]

5. Those in the lowest income bracket voted for Kamala.

Source: https://www.nbcnews.com/politics/2024-elections/exit-polls