I have oft written of the K-Shaped Economy. To wit….
K Street Dominates DC - So a K-Shaped Economy Dominates the US
What is a K-Shaped Economy, you ask?:
“(D)ifferent parts of the economy move in opposite directions at the same time….One segment - the upper arm of the K - experiences an increase in wealth due to rising asset values or incomes. The lower arm faces increasing financial strain due to declining purchasing power along with stagnating or decreasing wages.”
I have oft written of the Wealth Gap. To wit….
Immigration, Awful Trade Deals, Spending and Inflation: DC Keeps Making the Wealth Gap Wider
The Wealth Gap can be described as the chasm between the two Arms of the K-Shaped Economy.
With a twist. The Wealth Gap widens as the economy worsens. And as it widens, more and more of the least wealthy people on the Upper Arm? Fall off - and down on to the Lower Arm.
As the Wealth Gap ever further eviscerates the middle class? More and more of the once-middle class join the ever-increasing population on the Lower Arm.
Fewer and fewer manage to make it on to the Upper Arm. And more and more of those that are there - are unable to stay there.
Kroger Groceries and Pharmacy is America’s largest traditional supermarket chain. And on their September 11 Wall Street earnings call? They demonstrated and detailed this K-Shaped Wealth Gap economic free fall:
“In recent months, the grocery chain…has grown laser–focused on attracting and retaining price-conscious customers by offering more value and lower prices in its stores….
“(I)t began offering extra savings on gas in March and refreshed its loyalty rewards program to include more simplified offers. In May, Kroger CEO Greg Foran confirmed plans to cut prices on thousands of items in its store….
“‘The reality is, the basket has to come down,’ said Foran in a Bloomberg report in May. ‘It needs to be across thousands of products, and it has to be something that passes the commonsense piece with customers.’”
Foran is no dummy. He can see the K-Shaped Wealth Gap widening. He’s doing the customer math - and trying to serve the ever-increasing Lower Arm masses.
Foran sees the widening gap in his stores every day:
“The retailer also added more than 1 million high-income households over the past year, but lost 700,000 lower-income households.”
That’s 1 million high-income households - that a year or so ago were shopping at the likes of Whole Foods and Trader Joe’s. Who have now fallen off the Upper Arm - and down into Kroger.
But don’t just take my word for it. Thirty-plus-year economy writer Jeff D. Opdyke cut a video detailing this live-fire real world example of the K-Shaped Wealth Gap.
But as bad as all of this is? As yet another example of just how awful the US economy actually is? That’s not the worst of it.
The darkest, most alarming number? Is the 700,000 lower-income customers - that disappeared from Kroger.
Where on Earth are they now getting their food? I mean, you gotta eat.
That’s the worst part of being on the Lower Arm of the K-Shaped economy.
The inexorable gravitational pull ever further downward.