02/24/26 Afternoon CommStock Report – Super-K…on the Way!

“U.S. Federal Reserve Chair Jerome Powell confirmed recently that a “K-shaped economy” appeared to be developing in the U.S. and questioned whether it was “sustainable.” The “K-shaped economy” concept expresses the idea that wealthier Americans have enjoyed boom times owing to inflation in their financial and property assets, while poorer Americans are hurt by price inflation in consumer staples such as food and electricity. The result can be seen in charts in which a downward curve shows the variables associated with low-income activity and an upward curve charts the fortunes of the wealthy, forming a “K” shape. The top 10% of earners now account for 50% of consumer spending so as the US economy is 70% determined by consumer spending, it is relying on a narrowing breath of consumers with the economic horsepower still making the economy grow. This shows up in consumer spending patterns such as McDonalds and Walmart doing well because consumers are tightening budgets, avoiding more expensive restaurant and retail venues. The super-K is showing up in auto sales. U.S. new car sales are increasingly driven by high-income earners, with households earning over $150,000 accounting for 43% of sales, up from 30% in 2019, while those earning under $75,000 dropped to…