Tyler Schipper, economics professor at the University of St. Thomas College of Arts and Sciences, recently spoke with CNBC about a “K”-shaped economic recovery since the COVID-19 pandemic.
From the story:
At American Express, consumers are continuing to open high-fee credit cards and splurge on luxuries like travel. But for lending firm Upstart, there’s a strong interest in microloans as cash-strapped Americans try to scrape by.
That juxtaposition underscores the growing picture of bifurcation among income brackets in America. And adds to an increasingly popular view that the U.S. is experiencing a “K”-shaped recovery since the end of the pandemic, where higher-income classes reap the most benefits and lower-income Americans tread water or fall behind. ...
It’s also important to remember that lower-income Americans were feeling financial pressures before the pandemic, said Tyler Schipper, an associate professor of economics at the University of St. Thomas in Minnesota. While the group had made up ground amid the worker shortage, he said a return to more troubled waters makes sense as the economy continues unraveling from the 2020 shock.
“They were starting from a place of struggling,” Schipper said. “This idea that lower-income workers are going to be looking for the best prices, I think is, in some sense, a return to normalcy.”
Schipper said evidence of price matching or trading down can be good news for the Federal Reserve, which is looking for signs that previous interest rate hikes have had their intended effects of tightening the economy.
