The Covid recovery still has a K shape

Cars line up to pick up food boxes at the Athens County Fairgrounds in Athens, Ohio, on Dec. 19, 2020.

BRAD LEE | AFP | Getty Images

The U.S. economy is on the mend. But the unequal — or K-shaped — nature of the recovery persists.

Economic activity is on pace to return to pre-pandemic levels by the summer, buoyed by an increase in vaccinations and government aid. The labor market is showing signs of improvement.

While those gains have been widespread, some groups — especially low-wage workers — continue to struggle.

Employment down 30%

K-shaped recovery

The diverging nature of the recovery for those at the top and bottom led many economists to say it had a “K” shape.

“The stock market’s been appreciating; home prices have been appreciating,” Aaron Sojourner, a labor economist and associate professor at the University of Minnesota, said. “The vast majority of Americans don’t have much of that, and the benefits are very concentrated.”

The S&P 500 stock index is up roughly 46% over the past year, for example.

Whites own 89% of all stock and mutual fund shares, compared to about 1% owned by Blacks and 0.5% by Hispanics, according to Federal Reserve data. (Other groups weren’t identified.)

Los Angeles County Regional Food Bank workers help with food distribution in Willowbrook, California, on April 29, 2021.

Frederic J. Brown | AFP | Getty Images

The dynamic is similar across wealth and education level.

Americans with a college degree own 83% of stocks and mutual funds, according to the Fed. That dwarfs the share for those with and without high-school degrees: 6.5% and 0.7%, respectively.

“The K-shaped recovery, to me that’s where there’s some truth to it,” according to Sojourner, who was a senior economist on the Council of Economic Advisers during the Obama and Trump administrations.

‘Hard to tell’

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