Hello everyone! Have you ever paid attention to the economy? Everything is getting more expensive and finding a job is becoming very difficult. Life is hard for little boys and girls. However, the top 10% are thriving due to the “K-shaped” economic recovery. By 2025, the top 10% will drive half of U.S. consumer spending. They're spending like there's no tomorrow because the stock and real estate markets are doing well. In contrast, lower-middle-class workers live paycheck to paycheck and are heavily in debt. Today, we talk about the K-shaped economy and how RB40 households are coping with this unequal recovery.
Normally, a rising tide lifts all boats. When the economy recovers, everyone usually prospers. However, this time it's a little different. There are clear winners and losers.
Winner
- investor. The stock market is doing better than ever. If you're an investor, you're probably feeling richer than ever.
- Homeowner. Home prices are higher than ever, making homeowners feel wealthy. The amount of equity held by U.S. homeowners is at an all-time high. If needed, they can get a home equity loan. Homeowners are also reluctant to move because many of them have low-interest mortgages.
- high-income knowledge workers. Recently, thousands of white-collar workers have been laid off. However, if you have experience in the right field, you can make a lot of money. AI scientists and researchers earn more than $450,000 per year. That's really rich.
- Artificial intelligence companies and related companies. Technology and AI-related companies are doing very well. Companies are trying to reduce costs by replacing humans with artificial intelligence. If successful, this will increase productivity and profits in the long run.
- Luxury goods and services companies. The top 10% feel wealthy and are increasing their spending. Luxury goods and services companies are doing very well.
loser
- low- and middle-income people. Inflation remains high. Everything is getting more expensive every day. Low- and moderate-income workers are struggling to pay mounting bills and mounting debt. Total household debt reached $18.388 trillion, a record high.
- small business. Many small businesses are struggling due to tariffs, inflation and rising costs. Low- and middle-income workers are tightening their belts. Businesses that rely on these consumers will also be in trouble.
- Entry level worker. In July 2025, the unemployment rate among American youth (16 to 24 years old) reached 10.8%. This is well above the overall unemployment rate of around 4%. Large companies are trying to replace many entry-level positions with artificial intelligence.
- job seeker. The company is not recruiting right now. They are trying to cut costs through artificial intelligence. On average, corporate vacancies receive more than 250 applications. The economy is full of uncertainty, and no one wants to hire under these circumstances.
- government staff. The current administration continues to expel federal employees and contractors. The federal government was once a great place to work, but now it is a hostile work environment. I don't think they even saved any money. The government is spending a lot of money to take over cities. It costs $50,000 a day for the Blackhawks to fly around Portland. This is ridiculous. There will be a lot of litigation in the coming years.
RB40 family
RB40 families perform well in the K-shaped economy. Mrs. RB40 has retired and our income is much lower than before. However, our net worth continues to increase every month. I feel richer than ever. We are also spending more money than ever before due to inflation. Groceries, gas, utilities, property taxes, classes, and extracurricular activities for our son are more expensive than ever.
Fortunately, I've been mostly successful at controlling lifestyle bloat. We didn't spend any money on luxuries or services. The only luxury we splurged on was a small kitchen makeover. But we need it. Our old kitchen was from the early 1980s. It had Formica countertops, uneven tile floors, and cabinet doors that didn't line up. I still drive our old 2010 Mazda5 and buy my clothes from Walmart. No one cares about how I look anyway.
All in all, we are doing very well in this economy. Ms. RB40 is retiring earlier than expected, but we are prepared for the loss of income. As long as our net worth continues to soar, I'm not too worried. I feel sorry for young people and job seekers, though. It's a tough job market.
And you? Are you doing well in this K-shaped economy?
This article How are you doing in this K-shaped economy? First appeared in “Retire at 40”.
