Moody's Talks - Inside Economics - The K-Shaped Economy with Heather Long

Episode Date: September 22, 2025

Heather Long, Chief Economist at Navy Federal Credit Union, joins the Inside Economics team to discuss what she dubbed the K-Shaped Economy. She describes the reasons why the well-to-do are thriving and the bottom 80% of the income distribution is struggling to make ends meet. The team discusses the origins of this skewing in the income distribution and why we should care about it. Explore the risks and realities shaping the economy in our new webinar, now streaming for free.U.S. Economic Outlook: Under Unprecedented UncertaintyWatch here: https://events.moodys.com/mc68453-wbn-2025-mau25777-us-macro-outlook-precipice-recession?mkt_tok=OT…Hosts: Mark Zandi – Chief Economist, Moody’s Analytics, Cris deRitis – Deputy Chief Economist, Moody’s Analytics, and Marisa DiNatale – Senior Director - Head of Global Forecasting, Moody’s AnalyticsFollow Mark Zandi on 'X' and BlueSky @MarkZandi, Cris deRitis on LinkedIn, and Marisa DiNatale on LinkedIn Questions or Comments, please email us at [e-mail]. We would love to hear from you.  To stay informed and follow the insights of Moody's Analytics economists, visit Economic View. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Inside Economics. I'm Mark Sandy, the chief economist of Moody's Analytics, and I'm joined by my two trusted co-host, Chris DeReedies and Mrs. DeNataly. Hi, guys. Hi, Mark. Hi, Mark. Long time, no see. Yeah, we had a busy week last week, didn't we? We did, yeah, it was great. It was great, right? We had All Hands Day. That was the podcast, the last podcast were recorded. And we were in pretty tight quarters. I understand that the acoustics were all that great. I apologize. for that. But we're back remote now. So all is better. We're not used to being in person. And then, of course, we had our conference in New York. And I thought that went really well. Right? No? For sure. Yeah. Yeah. Thank you. reviews. Lots of great engagement. Lots of questions, obviously, uncertain times. Unprecedented uncertainty, but it was a really good conference. Yeah, it was really good. But here we are back

at it again. This is on Monday. Why are we doing a podcast on Monday? Does anyone know? Don't we generally do that on Friday? What's going on? I was guessing it was your schedule. Yeah, you asked if we could do a podcast on Monday. I just follow orders. I don't know. I don't know. Same here. Same here. Yeah, it's a trickle-down effect. Trying to single-handedly increase productivity. Yeah, well, maybe that's because we have a guest. Heather Long, hey Heather. Hi, Mark. Yeah, maybe it's your schedule.

That's what's the problem. Okay, okay. You could only do it on a Monday. No? I won't. Yes. Are we going to twice a week? Oh, no.

That would be tough. That would be tough. But Heather, it's good to have you on. You're the chief economist of Navy Federal Credit Union. Welcome. Well, thanks for having me. It's fun to flip the script here. How many years have I been calling you, Mark, for quotes?

And now you can turn the tables here. And that's a good segue into your background. You've been a journalist for much of your career. And I think we got to know each other when you were at the Post, the Washington Post, right? Well, it probably goes even before that to CNN, but I won't date how old we are here. Yes, for many years. You were at CNN. I forgot that.

Yes. Oh, wow. And how long, and then you went to the post, how long were you at the post? Eight years. Let me give me the 30 second highlight, Real. Started economics at Wellesley College in the era when Chip Case of the Case Schiller Index was teaching among other luminaries. I was fortunate to win a Rhodes Scholarship to study at Oxford University and I was in the first class of the master's in financial economics. I then worked in London for a few years at an investment firm and I actually helped Cambridge University.

set up its endowment office. This was all pre-great financial crisis. So I had kind of an interesting introduction to the global economy in those days. And then I made a crazy, huge life change that many of my friends called me insane. And I left London in June of 2008 to move back to my hometown of Harrisburg, Pennsylvania, to work at the Patriot News. My hometown paper, I was there for four years. we won a Pulitzer Prize for the Jerry Sandusky, Penn State, Child Sex Abuse scandal. And that really vaulted many of us onto the global, at least the national media stage. And then I went to CNN in New York. And for many years there, a couple years there, I ran the markets and economy coverage out of New York for CNN.

And that's really where I became, again, a daily market watcher where I first read a lot of Mark Zandie reports and started quoting you from time to time. And then I was fortunate to travel in 2016, the country for CNN, in the lead up to the 2016 election, that a lot of reporting I'm really proud of from many, quote, unquote, forgotten places. And then Washington Post recruited me. So I moved to Washington, D.C. in 2017, just after President Trump took office. And at one point, I think I held, I was the Federal Reserve reporter, the labor reporter, the overall economic reporter. a bunch of people left and sort of, I was doing like three or four different jobs. I went to Jackson Hole twice. I went to the World Economic Forum three times.

Then I joined the editorial board and became a columnist. I probably was most well known for some of my reporting during the pandemic. And yeah, then I made another crazy life change this May to move to Navy Federal Credit Union to become chief economist at Navy Federal and really loving it. and we're doing some really neat work with our data. We now have almost 15 million members and almost 200 billion in assets. So we are a pretty big player now in the U.S. economy. Oh, that's so cool.

Your background is really amazing. I didn't realize Chip Case was your mentor, or sounds like he was your mentor. He was one of them, yes. He mentored a lot of people at Wellesley, especially athletes. He was a big champion of athletes. And believe it or not, I was on the fencing team at Wellesley back in the day, Sabre. But I will say we had a long conversation in his car shortly before he passed away. And this was a few years after the Great Recession. And he really got that number two million

housing starts stuck in my head and that he really felt at the time that the U.S. needed to be doing two million housing starts, you know, a year in order to have the supply needed. And it's interesting to hear that conversation. and come back to the forefront now. Yeah, it sure is. And yeah, I mean, he was instrumental. I'm on the board of MGIC, which is a mortgage insurer. And he was on the board prior to me.

He was instrumental in having them get me on the board. And I never forgot that. And we also go all the way back to the case tiller house price indices. I think we were regional financial associates at the time. And we helped finance the construction of those indices to put together a study. And I remember having a couple of long conversations with him. And Schiller, Schiller was also very Robert Schiller. He was a Nobel laureate, his Nobel laureate.

And he was very interested in how we were modeling house prices. This was most interesting conversation. But Chip was just the greatest guy. And he touches a lot of people's lives. like Austin Golsby, the Chicago Fed Chair, who we had on not long ago, was also mentored by Chip. Yeah, just an amazing guy. Anyway, so this transition from journalists to economists, how big a deal is that? Is that easy or is that like really hard? Or what's that like? Well, I can tell you it's been a lot of fun, Mark. And here's, I think for me, sure, it sounds like

a crazy transition. But the reality is I've won awards for data journalism and was kind of known as a trend spotter. I really like writing more about macro economy and people in particular than I did about political economy, which is where I think a lot of reporters have gone over the years. And so, yeah, it hasn't been that hard. I think the job at Navy Federal, I think I wrote in my application, this is a unicorn role at Navy Federal, and I am the right unicorn to do it. Something cheesy like that. They bought it. It works. It works. But it's kind of unique. role in the sense that, you know, about a third of what we do is probably what most of your listeners do, the number crunching, kind of predicting things for the forecast for 2026 so we can do

financial planning and risk modeling. But a third of what we do is education. You know, we are a credit union. A huge part of this is talking to our members and talking to our 24,000 employees. Like I now do a monthly economics brief at first Friday of the month, shortly after the judge report. And we have you know, 600 people across our organization who tune in, many of whom are frontline branch staff, who want to learn more, who want to be able to talk to, you know, our members coming in, military folks, veterans, their families in a really educated way. So it's been exciting to be part of that. And then a third of it is more kind of like what I did at the post, trying to position Navy Federal as a thought leader in the economic space, particularly around middle class issues.

I mean, I know offense to Goldman Sachs and J.P. Morgan, they're great. But if you want to know the health of the middle class and how the middle class is doing, you know, you probably don't call Goldman Sachs. And so we really see that there is a void and a need. And that's something that I really focused on in my reporting over those many years. You know, I've been to America's poorest white town. I've been to a lot of factory floors. You know, I've been to the semiconductor chips training programs in Arizona. And so I bring that. kind of knowledge and front world experience to this job. That's great. So amazing. And thank you for coming on. I know you've done a lot of work on the so-called K economy, kind of the difference between folks that are doing well financially, the well-to-do and those that aren't. But before we go there, let's talk about the economy more broadly.

And it's just an open-in-a question. How do you think things are going? How do you feel about the economy? mean, it's near-term prospects. Yeah, we've been talking at our Navy Federal about going from that resilient summer that everyone was talking about to a really turbulent fall in winter, particularly for the middle class. And, you know, obviously we anticipate and are seeing the peak of the tariff impact

coming through in the next few months. And the way I've been describing it, and we can see this in our own data on our millions of members, is the middle class, they can still pay their bills. but there's no excess savings left. You know, you've done a great work on this, Mark, and your team. And we can see it in our data, too. You know, people, it's not like 2022 when people were able to absorb higher costs. And we can see people shifting around.

You know, T-Moo spending has just gone nosedived in our data since all these tariffs went into place in the de minimis, you know, thing. And we can see people shifting from the targets of the world to the, the Walmarts and the Costco's. You know, they're looking to stretch every dollar. Excuse me, Timo is, that's like clothing, right? What is Timo? Well, it's the Chinese, Chinese knockoff for Amazon.

Oh, okay. Really cheap, really cheap clothing. That's going to the minimis of terror. Yeah, all kinds of goods. All kinds of goods. Almost every month heading into this year, and even in the spring, we were seeing massive growth month on month. of middle class and moderate income families making purchases on TEMU.

You know, it was really getting brand awareness in the United States. So you're saying that's a good leading indicator of TEMU sales? I don't know about that. I mean, it's more like an indicator of the tariffs. Like this is, we can see this impact coming through and in more of a macro sense, you know, you're starting to see the inflation in Eden to the real wages. Right, right. So the fact that I didn't know what TEMU was, is that like, is that like a.

That's how I know how much money do you. Mark on me. We know what part of the K you're in. I'm kidding. I'm just old. That's the problem. Anyway. So you do an explicit forecast, though, maybe federal, right?

Do you have like a GDP forecast and a jobs forecast? You do that as well? Yeah, we do a little bit. I mean, we're more interested in where we think things will diverge from the consensus. Okay, got it. Then we are at sort of throwing out another number. So we, like most people, think that we're going to muddle through in the economy in the coming months, you know, avoid a recession. But we are very, very focused on what happens to the middle class.

And that's where we've been emphasizing that in this slow speed economy that we're in right now, It's really the two-speed economy to your very good K-shaped point. And it's also this two-speed with, I tried to write about this in my latest Washington Post column, and I thought Matthew Iglesias really hit it on the head in his Bloomberg piece over the weekend. This AI boom is just totally masking what's really going on on Main Street. And, you know, I don't see that changing anytime soon. But I think people are always like, why is there a difference? disconnect between these consumer sentiment surveys and kind of what we're seeing, the economic

data. And I think it really comes down to, look, the middle class is stressed. You know, it's not fun to have to change where you're buying things, right, to try to go to more, you know, different stores, even if you can still afford to buy the meat now at Costco or Walmart instead of where else you used to shop. That's a stress. You know, it's a strain on people. They're really, and it's only going to get worse in the coming months. We don't see much evidence. of pay increases really keeping up or accelerating. And so you can just see that they're going to have this squeeze. We're going to see this middle class squeeze and certainly modern income squeeze.

Hmm. So when you say muddle through, so you mean this is slow growth, but no recession. That's kind of your perspective. Right. But in that kind of slow growth environment, obviously folks that are in your focus on middle class, those folks are going to remain under significant pressure going forward. Yes. Yeah.

Okay. I think where it gets interesting, I know you and I have talked about this a little bit over the summer is 2026 forecast. Right. So we think that there will be a little bit of an acceleration, not a ton, but a little bit as the various tax cuts kick in. And if we can get to a more tariff certainty once we get past the Supreme Court ruling, we do see companies, particularly large companies, starting to lock in and be a little bit more optimistic in 2026.

But again, it's a real big debate about whether that trickles down through the middle class and the modern income folks. Right, right. Well, let's talk about the case-shaped economy. Can I ask, do you know where that came from, case-shaped? we're kind of describing this world where the folks that are at the top of the income and wealth distribution are doing fine, no problem. Folks, everyone else is not doing so well. They're hanging in there. They've got a job, unemployment's low, but their wages and spending are just keeping pace with inflation, not much better than that. As you point out, they're not saving. So there's kind of

we could say haves and haves-nots, but where did the case-shaped economy come from? Do you have any sense of that? Is that, did you make that up? Does that come from you? Sort of. I popularized it. I wrote an article in August 2020 for the Washington Post, and right after that, Bloomberg had a tracker. You could see the mentions of the case-shaped economy go nuts. But I would attribute it to Peter Atwater of Financial Insights. So he was sort of where I got it from. He had written a week or so before about it. And then I connected it with some of the data that was showing that the jobs recovery for, even by August 2020 for the rich, basically had their jobs back because they were all working from home, you know, able to log in and worse as the bottom of the K

was just in depression-like situation. And so, so that's kind of where it was. And then I think it came, I, you know, you and I talked over the summer and then wrote a piece again in August 2025 that it's back.

The K-shaped is back. And I will say a lot of cynical people will say, hasn't the K always been around in the American economy? I'm curious how you answer that. I know what my answer is, but that's sort of the cynical question I get along. You mean the income and wealth distribution has always been skewed? So what's the big deal, basically? Right, right. Trying to illustrate why this is. It feels like it's a lot more skewed than it's ever been historically by orders of magnitude. Is that how you answer that comment? I think it's both. You know, it's your point when your data of showing how different it is,

than like the 1990s even or certainly late 80s, but then also to make the point in the last five years, what a roller coaster we've been on. We talked about the K-Jave economy term really came to light in summer of 2020 in the middle of pandemic. And then we have this unprecedented period with the government supports and the excess savings where suddenly a lot of moderate income folks

are doing really well. You can see the revenge spending across the income spectrum happening in 2022 and 2023. And so there wasn't a case shape. You know, most everybody was being lifted up. Many people have shown that the bottom earners were having the highest wage increases in the great resignation era when it was hard to find workers. And so that's to me the more recent experience of if, and we see this on our front

lines for moderate income folks, it feels like the whole world has changed in the last two or three years. You know, the government supports are gone. their excess savings are gone. Their bargaining power that they had at work, even a year, year and a half ago is totally wiped out now. They used to get a ton of overtime hours. We've had a lot of people calling in who are talking about what I would call job downgrading.

I still have a job at my warehouse or at my retail, but it's hard for me to get scheduled for more than 32, 35 hours a week. I used to be working 40 or 45 hours or 50 hours a week. And so these types of trends, I'm really paying close attention to the hours worked data in addition to just like, do people have a job? So do you have a go-to statistic to kind of describe the K-shaped economy? I mean, how K-shaped and how it's changed over time. Is there a statistic or two?

And we're going to play the stats game in just a few minutes, so I don't want to take your stat. but just curious what you point to to say, hey, here's the case-shaped economy. Lately, I think your data's been great. Obviously, I put your data in my column in the early August. I set you up for that, obviously. You did. Yeah, this is the Mark Zandi Appreciation podcast. But part of the reason I really became convinced of your data, you know, which I know

you go through some painstaking number crunching to take the Fed and other data, but is we can see it in our data at Navy Federal. So we've been tracing since the pandemic. Our prior CEO was on the Richmond Fed board, and we started crunching this data for her. But we can really see that in our debit and credit card spend data, that all the growth in spending is coming from $170,000 households and above, almost exactly mirroring your data. Yeah, exactly, right.

I think anyone who's in the top 20% of the income distribution, and I think the cutoff somewhere about 175 and 200K is, if you're in that top 20%, you're doing fine, and your spending is kind of driving the train, and it's well above the rate of inflation. If you're in the bottom, 80% in this data, below 175, 200k, you're spending, has barely kept pace with inflation.

This is since the pandemic, since the pandemic. But you can see the roller coaster. You can see the roller coaster. You can see that it goes out. Buddy's having a pretty good tie. Yeah, yeah. 22, 23, you know, maybe even early 24. And then it's just down, down, down.

Right. Okay, so I want to talk about why. What do you think is behind all this? And then, you know, what are the implications of all this? So what's behind it? What's going on do you think? What's fundamentally dry? the skewing of the income and wealth distribution?

It's starting to look more like the AI boom impacts, but it just obviously the huge wealth effects for the top with the spending and wealth continuing to build from the stock market and the housing gains. But then I think people forget how hard inflation hit many Americans in 2022, 2023, and sure, our inflation has come down, but, you know, almost every day we have people who call in and say, I can't pay my bills because the prices are too high. And usually they're talking about things like my property tax has gone up so much. The maintenance on my car

has gone up so much. You know, these are enduring costs that have added hundreds, if not a thousand more dollars to their annual costs that they're struggling to keep up with. And then at the same time, I think the, you know, it's the bargaining power at work has just totally evaporated in the last year. I've been calling it the frozen job market. Now it's probably a cracking job market, but it's what we're talking about. People not getting as many hours, you know, people, if you change jobs, you know, you're not seen much of a bump in your income, even if you switch jobs, which used to, because there aren't, right? There aren't a lot of jobs out there to switch into. And so, you know, I think it's sort of all those factors combine.

And then unfortunately, the AI boom is probably mirroring the K, really benefiting those at the top. Of course, it's been long running, right? I mean, this is not something that's happened since last year or the pandemic. It's been all going on going since, I think, all the way back in the late 70s and early 80s. So I guess there's a bunch of stuff in there, you know, driving that. Hey, Mercer, let me bring you into the conversation. Do you agree with this characterization of the K-shaped economy? And what do you think, if so, what do you think it's behind it? What's, you know, what's going on? Yeah, yeah, I do. I think it's very evident. And I think it's been

around for a long time. But looking at the data that we have by income distribution, it's very clear this is sort of really expanded out. And it's become a lot more bifurcated in the past decade or so. I think there's been some structural things going on. So you look at the kinds of jobs that are being created in the economy and where the wage gains have come from over the past few decades. It's been a lot of professional jobs, finance jobs, tech jobs, right? I mean, you can look at that in the stock market. You look at the stocks that have been gaining.

If you take out the tech stocks, stock market hasn't gone bonkers without the sort of the tech boom that we've seen. So I think there's, I think there's some skewing in sort of just the kinds of jobs that are being created. And I think, I think policy has something to do with it, too. I think in the past several years, we've seen policy that has benefited the upper end of the income distribution a lot more than the lower end. Now, as Heather said, you know, we did get a lot of stimulus during the pandemic. We got direct checks to households all up and down the income distribution and that did help. But given where we are with how messed up supply chains were and inflation, I mean, that just got eroded at the lower end of the distribution so,

so quickly, right? It's just, it wasn't a lasting thing for the people at the bottom, where the people at the top could take a lot of that money and invest it. They could save it. They could get wealthier with it. They could go out and buy homes. They could refinance their mortgage to 2.8% during 2022. They could invest more in the stock market. So I think it was a more lasting effect, a lasting positive effect for the upper income folks. And I think it just kind of evaporated very quickly at the lower end. Yeah. Well, of course, another broad explanation is just globalization, right? I mean, China coming on to the scene after entering into the WTO in 2001 and even immigration to some degree. Kind of long running for work here.

Of course, you want to weigh in here? You agree with this characterization about the case-shaped economy and, you know, what do you think is behind it? I do, and I was going to actually go where you just went. I studied this. You're taking me back to my thesis, right? Is this what you studied at Johns Hopkins? I studied inequality technological change. And we talked about the three T's, right?

Trade technology and taxes. Those are the drivers historically of inequality. And I think right now you see a convergence, right, when you think about what's going on with technology and what we've done with taxes in terms of shifting tax policy around. Maybe trade now, right, could swing things back, but that doesn't look terribly promising either. Right. Okay. Okay. Well, why don't we, because we don't have a lot of time with you have there. Why don't we play the game, the stats game, because I've been teasing that. And then we'll come back and talk about the implications of the case-shaped economy. You know, what does it all mean, you know, for these folks that are kind of caught in the case shape and what it means for the broader economy. So the stats game, we each before it is stat. The rest of the group tries to figure that out with clues, questions, deductive reasoning. The best stats, one that's not so easy that we don't get it right away, one that's not so hard.

we never get it. And if it's apropos to the topic at hand, all the better, but it doesn't have to be. It can be anything. And so we always, Heather, we're going to Marissa. Marissa leads the way here. So Marissa, you're up. What's your stat? Okay. There are two stats related to each other. Okay. 6% and 1.9%. And these are statistics that came out over the past week. Government statistics? Yes. this past week, 6% 1.9%. Job-related? Yep. Okay. What came out this week that was job?

There were the something in the UI claims data? No. Okay. Okay. Survey-based? You said government survey-based. Boy, what came out last week? That was employment-related.

I don't remember anything. You want to give us a hit? Did we get the state employment or something? Ah, that's right, we did. Look at you. Yeah. So this is this, go ahead, Chris. Fastest and slowest growing states?

Is that the... No. You're on the right track. These aren't growth rates. They are... Yes, they are unemployment rates. So it's the highest unemployment rate among states is 6% right now, and the lowest unemployment rate among states is 1.9%.

Do you know which places these are? Yeah. What do you think the 6% is? The 6%? That would be, where would that be? Because unemployment's low everywhere. DC. Yes. Yeah. So 6% is Washington, D.C. Heather, are you in D.C.? I'm just outside now, yes. So we're up a little bit, but not quite as bad as D.C. And 1.9's got to be some Midwest state. It's like Utah. Not Iowa, but in the Midwest.

Nebraska, Kansas, North Dakota, South Dakota, South Dakota. South Dakota. We know our geography. Yeah, yeah. Yep, so 6% is D.C. And I picked these because, well, very well known what's going on with D.C. With all the doge cuts, something to keep an eye on is that the people that took the early buyouts, government retirement, that ends in September. So when we get the October data, we should start, well, maybe it's maybe I guess it's the November data.

I don't know how long they'll be on the payrolls for, right? If they're on the payrolls all the way through September, then we would expect to see, with the October data, all these people start to come off the payrolls. They'll no longer be paid. So this could pop even, I expect it'll pop even higher. And we'll see even bigger losses in federal government jobs. And it's not just federal government.

It's all the contractors in the private sector related to this that are also losing jobs and getting contracts cut. South Dakota is interesting because it's kind of got a structurally low unemployment rate. But even that is up pretty significantly over the past year and a half. It's now it's struggling because it has the most agriculture in terms of GDP and income of any state in the country. And the ag economy is not doing well under tariffs right now. And they're actually getting one of the highest assistance payouts to offset lower commodity

prices of any state in the country. So they're getting about $400 billion to offset falling corn prices. So that's kind of helping to prop up the ag economy there. That's impressive. That's very impressive. And I think we also get the sum of states' employment data. That's right. One of our colleagues, everyone knows Dr. De Antonio, one of our other labor economists.

So he adds up employment by state from the Bureau. of labor statistics, and it came in on the soft side, I think. Well, it was actually for the, for the month of, what month are we in? August, right? July is a little stronger. August is a lot weaker, I think. August was actually, I think the sum of states was like about 55,000 or something in August. So it was, it was bigger than the national figure, but, you know, revisions. So we'll see. Still week. Still weak. Yeah. And weaker, same pattern. So definitely a big step down from where July was. after revisions. Oh, that was a good statistic.

Hey, Heather, you want to go next? All right. Marissa's hard to follow up. Okay, I did 23.8 million, and that's people in the United States. So I'll give a little hint there. Is it related? It's got to be related to the case-shaped economy. It can't be those in poverty, can it?

No, that's too low, isn't it? I mean, poverty rate is what? It's higher. percent is the poverty rate. This is roughly 18% of households. 18% of households. Is it something related to the income distribution?

Yes. It is. Is it the number of households in a distribution? Part of the distribution? Yes, yes. Okay. It's not the lower end. It's the top.

It's the top. So, yeah. But what are all these people? What's their net worth? Oh, the net worth. So just 20, what was the number again? 23.8. 0.8 million.

Okay, so 23.8 million. So the average. Over a million dollars? Yeah. Yeah, over a million dollars. Okay. All right. Very good with it.

Yeah. I often use this one for two reasons. One is trying to give some inspiration because most of those people are 60 and over. They aren't startup founders. They aren't Elon Musk's. They are people, you know, the person next door who followed the path of saving more than they earned and trying to buy a house and pay it off over time and invest money in the market. And we're seeing a lot of pessimism, a lot of pessimism among young people in America across the political distribution who just believed that the American Dream is dead. And that, you know, what's the point of trying to do any of them?

And so part, you know, I feel like we have this crisis of pessimism in America. And sometimes you have to remind people, look, there's almost 24 million millionaires in this country. And they're not all, yeah, they didn't all get it from their parents or from, you know, from a startup. Yeah. That, does anyone know what the median net worth is, the median household net worth is? I think kind of in the middle of the distribution, I think, I think it's pretty, pretty low, isn't it? It's like 100K, 250K, something like that.

I'm making that up. We can chat GPT it, but I think that's why people... That's 200,000. Yeah, it's around 200,000. Thousand, right? I think that's why people are pessimistic, right? Because that's the middle distribution. Right. People may have a net worth less than that. And a negative

network. A lot of people with a negative number in front of that, right? Exactly. Especially... You got to be careful about age, though, right? Yeah, you got to be... Sure. Yeah, yeah, okay. But still, one more. Let's do one more because, I mean, this podcast is going fast, so we're running out of time.

But Chris, let me turn to you. What's your number? Okay. Let's get ready. Fastest to the bell, I'd say. $100,000. Oh, 100,000. Wow, okay.

I built it up 100,000. 100,000. 100K. Middle class, what people think the middle class is, no. No. Is it related to the K-shaped economy? Not really. Okay.

Indirectly. I'll make it, I'll make a connection, but it's very recent news. How about that? Oh, that's the H-1BV. Oh. H-1BVsda. H-1BV's a application fee. Yeah, what do you think of that?

What do you think of that move? So I think it could be pretty damaging. Pretty damaging. You know, you might think it's helpful to this K-shape, right? It's excluding some potential higher income workers from the economy. Maybe that compresses things. But I think the research has shown that these workers typically are complementary to U.S. workers. They also end up starting a lot of startups.

And certainly I think this is potentially a pretty damaging development for the economy overall. It'll be interesting if it sticks. That was my first thought. Yeah. Yeah. The tech, many of the tech CEOs have been very effective at working with the White House through tariff issues, among others. And also, I wondered if this was a little bit trying to get India to the bargaining table right now.

Yeah. That's a very targeted kind of thing to come out right now. Yeah. Yeah, I think I read that like some extremely, it was like 80% of all H-1B visas go to Indians or something. something really high. So, yeah, that was my thought too. Okay. Right, right.

Now, that was my thought that this was a way to put pressure on India to play ball on trade. But interesting. That was a good one. Okay, I'm not going to give you mine because we're running out of time. And I want to come back to like the implications, Heather. Why is this a big deal? Why should we care? I mean, obviously, everybody.

At the end of the day, everyone's got a job, or most everyone, we've got a 4.3% unemployment rate. You know, wages are rising, you know, not faster than the rate of inflation, but they're, you know, they're hanging in there. The economy is not going into recession according to your own forecast. So, you know, why, what's the big deal? Is it a matter of fairness, equity? What is it? Why should we care? Yeah, it's a good point. You know, I think we should care because I don't think it's very fair. And you can see the ongoing frustration in the economy and poll after poll and survey after survey that people really aren't happy with what's going on right now. They haven't been happy for a long time. And obviously, they're taking a lot of their frustration out at the

voting booth. They're also taking their frustration out. It's crazy numbers of Americans now don't believe in capitalism anymore or say they don't. I remember just a couple of months ago, last year before the election, several Republican pollsters pointing out to me how crazy it was to be in these focus groups with self-identified Republicans who are super skeptical of big business. They were like, it sounds like I'm in a lefty progressive focus group, but these are like hardcore Republican young voters or even middle-aged voters. And so I think people don't, CEOs are, CEOs are constantly asking me, I've been a lot of dinners, like, why don't people believe in American capitalism anymore? And boom, I think this is a huge part of it, the K-shaped economy, and

believing that this success and the benefits are not being passed along to enough people and shared in enough regions of the country. And this grows and grows. And if you believe sort of the Ray Dalio thing about these super cycles over 75 or 80 years, it's a pretty scary place to be. And in this kind of inequality that often erupts and has very negative consequences. On the more short term aspect, what I think isn't getting touched on enough, part of the reason that I don't think there's going to be a tariff or an inflation crisis this time around is sadly the case shape that consumers are pushing back because they don't have it this time around.

This isn't 2022. And I think in our own data and other data, you can see that. consumers are pushing back. So I guess I want to know that's the silver lining, but, you know, the middle class brands are in trouble. Yeah, you're saying the inflation took off during, in the wake of the pandemic, because people got checks and they, they had cash and they could, they didn't push back on the pricing. But this go around, they're under such financial pressure. There's no, there's no cushion here, and therefore they're pushing back. Interesting point. So what do you say?

And your point about the political fracturing of the nation, I mean, obviously that has all kinds of implications, short and long run. Marissa, do you have any other implications you would call out in terms of the case shape? I think that's my number one, is that this becomes a societal issue after a while. And then it becomes a global competitiveness issue as well, right? I mean, it's not just a domestic political issue. it becomes a more global issue. So, yeah, that's my number one. Chris?

I guess my concern is resiliency or lack of resiliency, right? If you're so dependent on one particular group, right? So today, I think in your latest data mark, top 10%, account for 50% of all the spending. If that group gets hit by a stock market crash or some other factor, and everyone suffers, right? So that's the concern I'd have in terms of an immediate effect that we're so top-heavy that anything goes wrong with that group.

Things could go down, could go south pretty quickly. Yeah. I mean, the economy can move forward, but it can't flourish if a big chunk of the population is struggling to just keep up with the rate of inflation. I can't, that's not sustainable. And it has all kinds of societal political implications. And as you point out, Chris, it makes the economy incredibly vulnerable. And it doesn't, you know, the folks at the top end of the K, they don't, it's not like

they have to pack it in and stop spending. If they just turn a little more cautious, given what else is happening to the rest of the distribution, we've got a problem, you know, particularly in this economy. Anyway, Heather, I know you got a job to do and you got to get back and I really do appreciate you taking some time with us. So we're going to have to have you back on if you're okay with that and spend more time. I had a ton of other questions. I was going to push back.

I was going to play journalist with you, you know, put you in the hot seat. But, you know, I didn't have enough time to do it. So you've got to come back. All right. I'll keep the time restraint. Well, well, thank you so much. And with that, dear listener, we're going to call this a podcast. We'll talk to you soon.

Take care now.