In case you forgot, this is a K-shaped economy

Summary

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Marketplace Morning Report

Episode: In case you forgot, this is a K-shaped economy
Date: December 8, 2025
Host: David Brancaccio

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Overview

This episode centers on the growing divide in the U.S. economy—described as a "K-shaped economy"—where upper-income Americans are prospering while lower- and middle-income households are struggling. In under ten minutes, host David Brancaccio explores this dynamic by discussing recent economic assessments, examining consumer behaviors in dining, and touching on relevant market headlines.

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Key Discussion Points & Insights

1. State of the Economy: Two Diverging Realities

Guest: Julia Coronado, Economist, Founder of Macro Policy Perspectives

• Big Bank CEO Perspective (Jamie Dimon, JP Morgan Chase):

  • Short-term outlook optimistic: American consumers are “doing fine,” companies profitable, stock markets robust.
  • Small negatives noted: Slight weakening in job market and persistent inflation.
  • Quote:

    “In the short run, it looks like the American consumer is doing fine, is chugging along, companies are making profits, stock markets are high, and that could easily continue. There are a little small negatives, you know, like jobs are weakening, but just a little bit. Inflation is there and maybe not going down.”
    — Jamie Dimon [01:29]

• Economist’s Perspective:

  • Economists are more concerned, especially about the labor market:
    • Noted private and public sector job losses.
    • Unemployment rate is rising.
    • Anticipation that the Federal Reserve will lower interest rates soon due to these concerns.
  • Fed’s Dilemma: Inflation remains "sticky" and above its 2% target—posing problems particularly for lower- and middle-income Americans.
  • K-shaped Economy Explained:
    • High-income groups are weathering inflation, benefiting from a buoyant stock market.
    • Lower- and middle-income households are being hurt by persistent high inflation.
  • Quote:

    "There's something we call the K-shaped economy where high income Americans who can, you know, have buffers of savings are doing fine and feeling the tailwind of the stock market. But the middle and lower income consumers are the ones who really get pinched by this sort of stubbornly high inflation.”
    — Julia Coronado [02:29]

2. Federal Reserve & Rate Cuts

• The Fed is expected to cut interest rates by a quarter-point.
• No clear guidance for 2026; further cuts depend on whether the economy shows resilience or continued weakness.
  • Quote:

    "Whether they will cut interest rates more or not at all depends on whether the economy is as resilient as Jamie Dimon expects or it's a little bit weaker and they need to cut more."
    — Julia Coronado [03:10]

• Kevin Hassett (Director, National Economic Council, and Fed chair contender):
  • Emphasized the importance of waiting for reliable data (noting gaps from recent government shutdowns).
  • Quote:

    “The Fed chair's job is to watch the data and to adjust.”
    — Kevin Hassett [03:50]

3. Market Headlines: Entertainment Industry Shake-Up

• Netflix & Warner Brothers Discovery:
  • Netflix was initially set to acquire Warner Brothers Discovery.
  • Rival Paramount launches a hostile $108 billion bid (30% higher than Netflix’s), with possible antitrust implications in the air.
  • Political links noted: Ellison family's ownership of Skydance/Paramount and ties to Trump, who commented on scrutiny for the Netflix deal.

4. The K-Shaped Economy in Daily Life: Eating Out as a Lens

Guest: Robert Byrne, Director, Consumer and Industry Insights at Technomic

• Dining Frequency Data:

  • Households earning under $50k: Weekly restaurant use dropped from 63% (2019) to 58% (2025).
  • Six-figure income households: Steady at 80% weekly restaurant use.
  • Quote:

    “Households under $50,000 annual income from 2019 to where we are today, in 2025 that number has dropped from about 63% who use restaurants weekly down to about 58%. If you go on to the other side of the scale ... that number's been even at 80%.”
    — Robert Byrne [06:50]

• Fast Food & Value Menus:

  • Value menu items can help somewhat, but overall rising menu prices hurt families’ ability to dine out.
  • Restaurants are considered a “luxury” for many; consumers either seek unique experiences or simply cut back.
  • Quote:

    “The unfortunate truth for restaurants is they still remain a bit of a luxury for consumers … If restaurants just are presenting a cheaper option as opposed to a more enticing option, well, it just becomes less appealing.”
    — Robert Byrne [07:29]

• Fine Dining vs. Mid-Tier Restaurants:

  • High-income consumers keep upscale restaurants in business—demand remains, especially for special occasions.
  • "Impact spending": Younger diners skip frequent casual meals, save up for more special, higher-impact restaurant occasions.
  • Pandemic’s lingering effects: Many independent restaurants struggle or close, but high-end spots see continued patronage.

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Notable Quotes & Memorable Moments

• “Economists tend to worry a little bit more maybe than bank CEOs.”
  — Julia Coronado [01:53]
• “It's incredibly difficult…restaurants just are presenting a cheaper option as opposed to a more enticing option, well, it just becomes less appealing.”
  — Robert Byrne [07:29]
• “Younger diners are doing what we like to call impact spending ... we’re now seeing them sort of save up for that impact occasion.”
  — Robert Byrne [08:18]

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Key Segment Timestamps

• [01:17] Jamie Dimon’s assessment of the U.S. economy
• [01:53] Julia Coronado responds; worries over labor market and inflation
• [03:10] Discussion of expected Fed rate cut
• [03:36] Kevin Hassett on the importance of economic data for Fed decisions
• [04:05] Headlines: Paramount’s bid for Warner Brothers Discovery
• [06:09] Robert Byrne on dining habits and economic divides by income

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Conclusion

This episode paints a vivid picture of the ongoing economic split in America. While the wealthy benefit from strong markets and remain insulated from financial shocks, millions face increasing hardship from inflation and job instability. Even everyday choices like eating out reveal starkly diverging realities—illustrating what it means to live in a K-shaped economy in 2025.

Transcript

[A]

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[C]

Is the economy doing quite well? I'm David Brancaccio in Los Angeles. The CEO of the biggest of banks was on TV this weekend sounding fairly content about the state of the U.S. economy. Let us parse this further with economist Julia Coronado, who's founder of Macro Policy Perspectives. Good morning.

[D]

Good morning.

[C]

Turns out life is pretty good, economically speaking. I don't know if you saw this, but the CEO of JP Morgan Chase, largest of banks, Jamie Dimon, his assessment was this.

[E]

In the short run, it looks like the American consumer is doing fine, is chugging along, companies are making profits, stock markets are high, and that could easily continue. There are a little small negatives, you know, like jobs are weakening, but just a little bit. Inflation is there and maybe not going down.

[C]

Julia, is your current economic assessment in sync with what Jamie Dimon is saying?

[D]

Well, economists tend to worry a little bit more maybe than bank CEOs. The weak labor market is a big source of concern. We've seen private sector job losses, public sector job losses. The unemployment rate is creeping higher. In fact, that's one reason that the Federal Reserve is probably going to lower interest rates later this week is that they're worried about the economy, too.

[C]

Jamie Dimon pointed out that he's worried that prices are not gonna go down. I mean, inflation is prices going up. But the question of does it go down? A few see that as a possibility.

[D]

That's right. That's the other conundrum, especially for the Fed, is inflation has been sticky. It's been higher than their target of 2%, and that is also hurting Americans. There's something we call the K shaped economy where high income Americans who can, you know, have buffers of savings are doing fine and feeling the tailwind of the stock market. But the middle and lower income consumers are the ones who really get pinched by this sort of stubbornly high inflation.

[C]

Our central bankers start meeting tomorrow and then have their interest rate decision the day after. I mean, interest rates will go down a little bit, I suppose.

[D]

Yes, they'll cut interest rates a quarter of a percent and they really won't be able to tell us what their plans are for 2026. Whether they will cut interest rates more or not at all depends on whether the economy is as resilient as Jamie Dimon expects or it's a little bit weaker and they need to cut more.

[C]

Julia Coronado is also a professor at the University of Texas, Austin. Thank you very much.

[D]

My pleasure.

[C]

And Kevin Hassett is the director of the National Economic Council and seen as a leading candidate to succeed Fed Chair Jerome Powell in May. On CNB today, Hassett was non committal about the Fed cutting interest rates next year.

[F]

What you need to do is watch the data. We've got a lot of missing data because of the government shutdowns. We're going to get really back to back jobs numbers pretty soon. And so yeah, I think that the Fed chair's job is to watch the data and to adjust.

[C]

Last week, Netflix appeared to have won the competition to buy the studio Warner Brothers Discovery. Just now there's word of a hostile bid to from rival Paramount, which is dangling to shareholders $108 billion, 30% higher than Netflix. President Trump had suggested the Netflix takeover might draw antitrust scrutiny. Not clear if this one will Paramount Skydance is owned by the Ellison family who'd been prominent Trump support.

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[B]

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[C]

Let'S go deeper into what it's like to live in what we just heard is a K shaped economy trending up for higher income people, trending down for others. We can see this in how we eat out if we can afford to eat out for more. I'm joined by Robert Byrne. He's director of Consumer and Industry insights at Technomic. Thank you for joining us. Oh, you're very welcome.

[H]

Excited to be here.

[C]

So some economists see the graph of the US Economy shaped like the letter K with the leg going up for some and going down for some. When you look at the industry that's out there for us, if we want to eat out or have to eat out, what are some of the ways you're seeing this divergence play out? Do you see it too?

[H]

Oh, we see it quite clearly. And the easiest way to understand it is to look at restaurant frequency. So households under $50,000 annual income from 2019 to where we are today, in 2025 that number has dropped from about 63% who use restaurants weekly down to about 58%. If you go on to the other side of the scale and look at six figure income homes, that number's been even at 80%.

[C]

Well, just among fast food places, many are offering some what they would call value items and that might be an alternative. But there are some things on the menu are just getting more expensive and that's hard for many families.

[H]

Oh, it's incredibly difficult. And the, the unfortunate truth for restaurants is they still remain a bit of a luxury for consumers. Consumers do not need to dine at restaurants or order restaurant foods in order to survive. People are looking for experiences. They're looking for something new, something tasty, something that they can't make at home. And if restaurants just are presenting a cheaper option as opposed to a more enticing option, well, it just becomes less appealing.

[C]

Now fancy restaurants, right, that's the demand must be inelastic if you, if you're rich enough to go to a place that's going to cost you 150 bucks a head or more, if you have that kind of money, you're just going to go anyway. But do you have any data on nice enough sit down restaurants that aren't necessarily chains, are people going there to.

[H]

Local independent restaurants that are nice enough? Yeah, people are always going to have special occasions. The unfortunate issue there is that we still see a lot of the hangover from the pandemic creating issues and local independence closing down. But that high income consumer, oh, they're absolutely keeping a lot of those places afloat. And younger diners are doing what we like to call impact spending. So essentially, rather than going out to a work lunch three days a week, two days a week, what might have historically taken place and what value meals might have helped them attain, we're now seeing them sort of save up for that impact occasion, that occasion that is a little more special. And so they are absolutely engaged with restaurants that are good enough and sometimes, you know, a little bit more expensive than good enough.

[C]

Robert Byrne is director, Consumer and Industry Insights at Tech Nomic. Thank you so much for this.

[H]

Oh, David, thank you very much.

[C]

In Los Angeles, I'm David Brancaccio. This is the Marketplace Morning Report.

We're from apm, American Public Media.

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