The "K-shaped economy" is grabbing a deeper hold on Americans... Our founder Marc Chaikin discussed this phenomenon last month. It refers to how some folks are doing great in the current economy... but many others are struggling.
A Troubling Trend Threatens the Holidays This Year
By Vic Lederman, publisher, Chaikin Analytics
The "K-shaped economy" is grabbing a deeper hold on Americans...
In his essay, Marc noted that the top 10% of earners in the country account for 49% of all consumer spending.
Put simply, there's a growing gap between the highest and lowest earners in our country.
And a weakening job market isn't helping the situation.
Professional-services giant KPMG recently published a report showing this trend...
The firm asked about 2,000 Americans questions related to their personal finances. One of those was about change in household incomes. Specifically, KPMG asked if their income had increased or decreased since 2024.
Out of the respondents, 31% of the households making less than $50,000 per year reported that their income "increased slightly." And only 4% of households in that income group said their income "increased significantly."
On the other hand, 33% of the households making less than $50,000 per year said their income "slightly decreased." And 29% of those households said that their income "decreased significantly."
All this is a big contrast to households making more than $200,000 per year...
According to the report, a whopping 64% of those households reported a slight increase in income. And 16% said that their income "increased significantly."
At the same time, only 16% of those top earners reported any form of decrease.
But that's not all...
The K-Shaped Economy Is More Than Just a Wealth Gap
You see, 58% of KPMG's survey respondents said that their increased incomes came from a promotion or new job.
But on the other hand, 38% of respondents who saw their incomes decrease attributed it to losing a job.
Meanwhile, data from the U.S. Bureau of Labor Statistics adds to the concerns...
The unemployment rate has slowly climbed from a post-pandemic low in 2023. Early that year, it came in at 3.4%.
Fast-forward to this past September, and the unemployment rate has increased to 4.4%.
And folks, this is only the official data...
The government shutdown delayed October's job report. Information from that month will come in November's report... which we can expect to see later this month.
That's a big gap in the official data. And now, private research is helping fill the void.
For example, a report by Challenger, Gray, and Christmas suggests that the coming jobs data isn't going to be good...
According to the report, U.S. employers cut more than 153,000 jobs in October alone. That's a 183% jump from the previous month.
It marked the worst October for job losses since 2003.
According to the report, the main reason for these reductions in October was "cost-cutting."
And the second-most cited reason was "artificial intelligence."
Folks, the effects of increasing reliance on AI in the workplace aren't entirely clear yet...
But we can see results of a softening labor market and developing K-shaped economy...
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A Decrease in Holiday Spending Will Hurt This Industry More
The same KPMG report I discussed earlier showed that consumers are getting increasingly selective with their spending...
Now, according to the survey results, overall year-over-year monthly spending this winter and holiday season is expected to rise for the survey's four "essential categories." Those include categories for "groceries" and "automotive."
Meanwhile, expected monthly spending is expected to decline for almost all of the 12 "discretionary" categories.
I also noticed something jarring with two of those categories in particular...
Last year, when KPMG held this same survey on seasonal spending expectations, folks anticipated spending 6% more per month for two categories – "restaurants" and "travel/vacations."
These categories saw the biggest drops in 2025. According to this year's report, Americans intend to spend 3% less of their monthly income at restaurants... and 6% less on travel and vacations.
Of course, the Power Gauge has picked up on this trend...
Regular readers will recall that in late October, my colleague Ethan Goldman discussed surging consumer fear. At the time, he noted that the Power Gauge only rated 5% of stocks in the Hotels, Restaurants, and Leisure as "bullish" or better.
By now, things haven't changed much...
Today, the Power Gauge says only 6% of the stocks in that industry are in "bullish" territory.
Put simply, this corner of the market is still struggling.
It's clear that a K-shaped economy is here. And this time of year, Americans don't plan on spending like they used to.
As I said, some stocks in the Hotels, Restaurants, and Leisure industry are still "bullish" or better. But overall, we could see a lot of pain ahead for many companies in this space.
Here at Chaikin Analytics, we'll continue to keep an eye on this trend. And of course, when it comes to investing, we'll keep using the Power Gauge as our guiding light through it all.
Good investing,
Vic Lederman
P.S. By the way, we've started something else "behind the scenes" at Chaikin Analytics...
I've joined social media. And you can find me on Instagram and X (formerly Twitter).
I plan to share regular thoughts and observations on the markets. By doing that, I hope to guide everyday folks like you into making smarter decisions with your money.
It's all free to follow along. So if you're looking for even more financial insights, you can check out Instagram here and X here. I'll see you over there.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.41%
10
13
7
S&P 500
+0.19%
110
236
153
Nasdaq
+0.78%
25
46
29
Small Caps
-0.18%
567
976
363
Bonds
+0.05%
Information Technology
+1.03%
27
34
7
— According to the Chaikin Power Bar, Small Cap stocks remain somewhat more Bullish than Large Cap stocks. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Information Technology
+3.15%
Energy
+1.73%
Consumer Discretionary
+1.3%
Consumer Staples
+0.91%
Communication
+0.81%
Materials
+0.64%
Financial
+0.57%
Industrials
+0.55%
Real Estate
-0.73%
Utilities
-1.05%
Health Care
-2.78%
* * * *
Industry Focus
Health Care Equipment Services
11
37
14
Over the past 6 months, the Health Care Equipment subsector (XHE) has underperformed the S&P 500 by -6.25%. Its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #17 of 21 subsectors and has moved down 2 slots over the past week.
Indicative Stocks
BAX
Baxter International
ZBH
Zimmer Biomet Holdin
ENOV
Enovis Corporation
* * * *
Top Movers
Gainers
BA
+10.15%
INTC
+8.65%
NXPI
+7.95%
MCHP
+6.14%
TER
+5.74%
Losers
XYZ
-6.59%
PKG
-5.26%
IP
-3.42%
SW
-3.37%
PCG
-3.28%
* * * *
Earnings Report
Earnings Surprises
MRVL Marvell Technology, Inc.
Q0
$0.76
Beat by $0.02
CRWD CrowdStrike Holdings, Inc.
Q3
$0.96
Beat by $0.02
PSTG Pure Storage, Inc.
Q0
$0.58
Met estimate
* * * *
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