Understanding a K-Shaped Recovery
The term “K-shaped” recovery rose to prominence in 2020 in the wake of the sharp recession in the U.S. that accompanied the COVID-19 pandemic, and was used to describe the uneven economic recovery across different sectors, industries, and groups of people in the economy. Unlike other letter-shaped descriptors of economic recessions and recoveries (L-shaped, V-shaped, U-shaped, or W-shaped), which describe the path of economy-wide macroeconomic aggregate variables like Gross Domestic Product or total employment, a K-shaped recovery describes the path of different disaggregated economic variables, such as income across different segments of society or employment in different industries, relative to one another.
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