K-Economy: Scraping the Bottom and Pushing the Top Up: Stock-Driven Wealth Growth

K-Economy: Scraping the Bottom and Pushing the Top Up: Stock-Driven Wealth Growth

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The K-Economy model, which focuses on scraping the bottom of the low-income bracket and pushing the top up, has resurfaced, driven by stocks.

The AP reports that the K-Economy, which drives wealth at the top by scraping the bottom, is unsustainable.

The AP reported on the 2nd that "many economists worry that an economy driven primarily by the wealthy is unsustainable," adding, "Advertising revenue, which powers companies like Google and Facebook parent company Meta, typically plummets during recessions, and this cycle could lead to the Mag 7 pulling back on AI investments and pushing the economy into a recession."

​President Lee, as a presidential candidate, spoke with Professor Harari of Israel at the National Assembly on April 22nd, declaring that "worldly conflicts stem from inequality" and advocating for "solving the inequality gap with AI." 

In a publicity statement made the day before at a closed-door meeting of securities firm CEOs and center directors, Lee presented "American-style stock investment to cover living expenses (for salaried workers) with dividends" as a Korean model. He also demanded that securities firms adopt a strategy to attract "survival funds" into the stock market, akin to Korea's "technology stock speculation" model, which differs from the US's "industrial stock-focused" approach. 

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Peter Atwater, an economics professor at the College of William & Mary in Virginia, told the AP, "If layoffs become severe and unemployment rises, low- and middle-income Americans could sharply reduce spending. Sales at companies like Apple and Amazon would decline, effectively dragging the bottom of the K down."

Professor Perkins suggested another possible path forward: “Many American households will receive larger tax rebates early next year under the Trump administration’s budget law, and Trump is likely to appoint a more aggressive Federal Reserve Chair by May of next year to cut interest rates.” He added, “While falling borrowing costs could accelerate growth and wages, they could also exacerbate inflation,” suggesting a “reinvigorated inflation.”

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Regarding the K economy, the AP reported, “The upper end of the K represents rising income and wealth for high-income Americans, while the lower end represents weaker income growth and higher inflation for low-income households.” “While construction of AI-related data centers is surging, factories are laying off, home sales are sluggish, wage growth is slowing, and the stock market remains near record highs.”

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The AP continued, “While growth appears robust, hiring has slowed, the unemployment rate has risen slightly, and while overall consumer spending is still growing, Americans are less confident,” adding, “This also reflects ongoing concerns about the economic burden that is disproportionately burdening middle-class and low-income households.”

Peter Atwater, an economics professor at the University of Virginia, said of the K-economy, "The lower classes are living with the cumulative impact of price inflation, while the upper classes are benefiting from the cumulative impact of asset inflation."

The stock market has risen nearly 15% this year, fueled by the strong performance of the "Big Seven" companies like Google, Amazon, Nvidia, and Microsoft.

Conversely, according to Federal Reserve data, the wealthiest 10% of Americans own approximately 87% of the stock market, while the poorest 50% own only 1.1%, further exacerbating the K-shape of the economy.

The Associated Press reported, "References to the 'K-shaped economy' are rapidly spreading, from corporate executives to Wall Street analysts and Federal Reserve officials. One reason the term is so frequently used is because it helps to describe an unusually turbulent and complex period for the U.S. economy."

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This year's economic challenges have been particularly pronounced for lower-income Americans, with weaker inflation-adjusted wage growth and a decline in employment. According to the Minneapolis Fed, wage growth for low-income earners has plummeted to an annual average of 1.5%, lower than the 2.4% growth seen in the peak quarter.

Slowing income growth has reduced spending power for many low-income workers. The Bank of America Research Institute, based on data from credit and debit card customers, found that spending by high-income households increased 2.7% year-over-year in October, while low-income households saw a mere 0.7% increase.

Furthermore, a study by the Boston Federal Reserve Bank in August found that while consumer spending has been driven by wealthier households in recent years, low- and middle-income Americans have accumulated more credit card debt despite spending less.

Early in the COVID-19 pandemic, the Moon Jae-in administration implemented the "Index 3000," a policy of a booming stock market, as a V-economy driven by a sharp rebound in stock prices.

The term "K-Shape Economy" became popular on social media during this period in the United States. American economists have explored various models to explain how the 2020 COVID-19 recession could unfold: a V-shaped recovery, meaning a sharp decline followed by a rapid rebound; a U-shaped recovery, meaning a more gradual rebound; or, worse, an L-shaped recession followed by a prolonged period of stagnation.

During the pandemic, widespread layoffs in factories, restaurants, and entertainment venues pushed unemployment to nearly 15%, while stock prices soared, widening the gap between white-collar workers who remained employed and those who were working from home.

Professor Atwater told the AP that at the time, "there was a kind of land grab," and "the letter that made the most sense to me was 'K.'"

TSLombard economist Dario Perkins revisited the term "K-shaped" economics, saying, "We went through a two-year period where the bottom caught up and talk of a K-shaped economy faded away. Since then, the economy has cooled again." Delta Air Lines CEO Ed Bastian said, "First-class and business-class ticket sales are driving Delta's revenue and profits," adding, "The low-cost consumer is clearly struggling."

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Best Buy CEO Corey Barry said, "The top 40% of U.S. consumers drive two-thirds of all spending. The remaining 60% are focused on getting the best deals and are more reliant on a healthy job market."

He added, "One of the things we're watching is how employment continues to evolve, particularly for that group who live paycheck to paycheck."

 

​On the 1st, Financial Supervisory Service Governor Lee Chan-jin said, "The (national) pension is ultimately affecting the crisis that makes you angry that your salaries are being discounted even at this moment," and "If the exchange rate becomes an issue, asset polarization will worsen," criticizing the national pension's overseas investments and announcing its shift to using them for currency exchange defense. 

Regarding the national pension that "salaried citizens have saved for themselves," Governor Lee said, "Whether to expand overseas investment or not is a secondary issue," and "We have reached a point where we need to have a social discussion about the issue of the national pension becoming the mainstream that determines the exchange rate," limiting the national pension, which has grown in size through mandatory contributions by law, not as an asset of the people, but as a "tool for government officials to accumulate low-level stock investments."

 

See <K-shaped polarization of the US-Korea economy leads to a decline in consumer confidence, while rising stock prices drive up high-priced housing prices, October 29, 2025>

<Lee Jae-myung's Stock Market Stimulus Pledge, Hardline Conservatives Seeking Supply Expansion During Recession, May 14, 2025>

<Israel's AI Technology Targets Hamas, Lee Jae-myung: 'AI to Ease Polarization', April 26, 2025>

<Lee Jae-myung's 'AI Sovereign People's Rule System' Stock Price Manipulation vs. US: 'Stocks Divide the Nation', April 14, 2025>

<Lee Jae-myung pledges to restore Park Chung-hee-style command economy and "KOSPI surges to 5,000", January 3, 2022>

<Young people's short-term employment at small and medium-sized enterprises is becoming a class system for temporary workers in their 60s, June 10, 2021>

<Two years of recession, repeated rebounds, and debt overhang crisis, December 16, 2020>

<COVID-19 treatments lead to K-economy recovery, while stocks maximize wealth disparity, October 16, 2020>

<Stock market rebounds, leading to a 36% surge in January unemployment in a capital-rich country, February 10, 2020>

<Households' spare funds double in the COVID-19 stock market, driving overseas investment tenfold See "Surge, April 9, 2021>

<Administrative Dictatorship Joins Capitalist Dictatorship, Social Classification, January 15, 2021>

<Employment of 97% of People in Their 60s Concentrated in Manufacturing, Decline Worse Than Last Year, February 15, 2023>