Are We in a K-Shaped Economic Recovery?

Nov 9, 2022 | Finconomics 101, No Bull Economics

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A K-shaped recovery refers to when different economic sectors recover at different rates after a recession. The economic sector that recovers quickly is represented by the upper part of the K, while the lower part represents a sector that recovers more slowly (or even starts to decline).

In its recent 3Q reporting, YUM! Brands spoke of a K-shaped economic recovery in the US which benefits restaurant spending (driven by a strong equation in terms of convenience, experience & credibility) at the expense of some retail transactions, like furniture purchases which were pulled forward a couple of years when consumers used covid stimulus payments to improve their homes during the lockdowns (and therefore no longer need new furniture).

YUM! further reported that restaurant players currently will do well to offer consumers premium value. Not necessarily the lowest prices, but rather affordable luxury options attractively priced in comparison to very high grocery store inflation.

K Shaped Recovery Graph
K-Shaped Recovery Graph

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