The wildly uneven recovery in the U.S. economy since Covid-19 began wreaking havoc in early 2020 has given inequality a new shape: K. While nearly 11 million people were unemployed as of November, many other Americans had grown wealthier thanks to surging stock and house prices, spurring the term the “K-shaped recovery.”

1. Why K-shaped?

The diverging strokes of the letter K represent the differing fortunes of the haves and have-nots following the deepest recession in decades. As joblessness surged and many households struggled to pay the bills, plenty of Americans were able to work from home and benefit from a sharp rise in asset values. Unprecedented stimulus from the Federal Reserve kept mortgage rates low and encouraged investors to buy equities. America’s richest people have seen their fortunes balloon.

2. What happened in the job market?

At the peak of the U.S. job cuts in April, employees in financial and information services — bankers, real estate agents, telecommunications professionals — experienced some of the fewest job losses. These industries recovered faster and typically pay more, with information workers making over 50% more per week on average before the pandemic than the $981 for all private-sector workers. At the other extreme, the leisure and hospitality industry has borne the brunt of pandemic shutdowns, with half of jobs in the sector vanishing in April alone. Only a little over 50% of the lost jobs had come back by November. The industry employs 1 in 9 people and pays some of the lowest wages.

3. What about real estate?

The property market headed up, especially for affluent buyers and sellers, as urbanites relocated to more spacious suburbs. This didn’t help the two-thirds of low-income Americans who don’t own their home, although at least some city rents fell. Cash-strapped homeowners produced the fastest pace of mortgage defaults since the 2008 financial crisis. Foreclosures also saw a sharp rise, despite government efforts to keep people in their homes during the pandemic. Although President Donald Trump imposed a ban on evictions through the end of the year, the concern is this is only delaying a ticking time bomb.

4. What’s the upshot?

The gap between rich and poor had become a defining narrative of the 21st century long before the pandemic put racial disparities and the toils of low-paid workers in stark relief. The divergence during the health crisis exacerbated racial, wealth, social and gender disparities, according to Peter Atwater, a lecturer at William & Mary, a university in Virginia, who popularized the term “K-shaped recovery.” He described it as “stacked inequity on one side and stacked privilege on the other.” More women have lost their job than men and a decade of progress in the labor market for Black Americans has been erased. The K-shaped recovery is also compounding the challenges policy makers face as they consider stimulus measures to juice growth.

5. What other shapes could a recovery take?

When looking at the economy as a whole, the more optimistic analysts have predicted a V-shaped recovery -- a strong and quick rebound -- while others pointed to a U-shaped recovery that would entail a period of sluggishness before any upturn. Another scenario is a checkmark-shaped rebound (also referred to as a Nike “swoosh” recovery), which would involve a sustained period of steady economic growth following the sharp contraction. But it’s looking increasingly like it could be a W-shaped recovery, as the latest surge in Covid-19 threatens to stoke a second leg down for the economy.

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©2020 Bloomberg L.P.