A K-Shaped Economy
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Market Mood
Economists increasingly describe the U.S. economy and stock market as “K-shaped,” highlighting diverging outcomes where higher-income consumers and a handful of large technology and AI-driven companies continue to benefit, while lower-income households and broader market sectors struggle. This polarization underscores the need for diversification, as U.S. equity performance is heavily concentrated among a few major players. While these companies may sustain growth if AI investments deliver strong returns, rising scrutiny over profitability and the potential for Federal Reserve rate cuts could shift momentum toward underperforming sectors and international markets. Emerging markets, supported by a weaker dollar and attractive valuations, are showing signs of relative strength. Meanwhile, weaker wage growth among lower-income workers further illustrates the uneven economic recovery.