Stock Talk - What is a "K"-Shaped Economy? Stock Market Update, Friday November 21, 2025

Episode Date: November 21, 2025

What if I told you the shape of today’s economy might explain why some Americans feel prosperous while others feel like they are falling behind? In this episode of Stock Talk, I break down why economists are calling this a K shaped recovery and what that really means for consumers, workers, and long term investors.   Over the years, commentators have tried simplifying economic cycles with shapes like V or W. But what we are experiencing today looks very different, and the divergence in outcomes between groups is becoming clearer every month.   In this week’s discussion, I share what I’m hearing from hundreds of corporate earnings calls, how spending patterns are shifting, and what these changes might signal for markets going forward. My goal is to provide a calm, educational perspective so you can better understand the environment you are planning and investing in.   About Chris Perras, CFA®, CLU®, ChFC®, Chief Investment Officer: As CIO, Chris is the lead investment strategist and director of research at Oak Harvest Financial Group. Chris develops the firm's core market outlook, putting his decades of experience and expertise to work for our clients. He hosts Oak Harvest's podcast, "Stock Talk," available on the website with new episodes each week. He completed his undergraduate studies at Georgia Tech, and went on to obtain an MBA from the Harvard Business School. Driven by a desire to maximize his knowledge and skill set, he acquired financial planning and investment management qualifications, becoming a Chartered Life Underwriter (CLU®), a Chartered Financial Consultant (ChFC®), and a Chartered Financial Analyst (CFA®).   Stock Talk is a weekly vlog/podcast dedicated to discussing the Oak Harvest Financial Group Investment Team's perspective on what's happening in the market. Hosted by Chief Investment Officer Chris Perras, each episode brings you our views on stocks, the market, and the economy — with a little education thrown in for good measure. Listen each week and help stay connected to your money!   Do you need a retirement plan that goes beyond allocating funds to truly fit your needs? We can help you create a retirement life plan customized for your retirement vision and legacy. Call us at 877-896-0040 or fill out this form for a free visit: https://click2retire.com/lets-connect   Important disclosures: Content of Oak Harvest podcasts expresses the views of the speaker and is for informational purposes only. Oak Harvest believes that any data, articles, or information cited are reliable at the time of creation, but does not warrant any information contained herein to be correct, complete, accurate, or timely. References to third-party analysts should not be seen as an endorsement of their views or recommendations, and you should do your own research before investing. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast constitutes personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Any specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss, and past performance is not indicative of future results.

So investors, I think in a bit of an attempt to make economics more understandable to the masses, many financial commentators have over the years tried to reduce pretty complex economic theories into basic shapes, or nowadays a single letter in the alphabet. First, there was the V-shaped economy that was meant to show a steep decline into recession, but in equally as fast recovery out. Then there was the double-dip economy designated by a W, where the economy shrank into recession, began to grow again, slipped back into a brief contraction only before picking up speed again and on the growth side.

Investors, most recently, many in the economics world have introduced a new shape and a new letter into our financial lexicon. That's the letter K. This letter being used to describe an economic recovery where different demographic groups experience different results. Investors, unlike a V-shaped recovery, where theoretically everyone gains equally or at least at the same rate, rate, the case-shaped economy means some areas do well and gain while others suffer and decline, leading to a divergence in wealth and opportunity. In the current case-shaped recovery, the overall GDP of our economy is still growing currently at 3 to 4 percent, but it's highly concentrated and fewer workers believe that they're benefiting. Currently, the AI infrastructure buildout

is accounting for a very large proportion of incremental GDP growth. That infrastructure spending is helping drive up a number of large-cap tech stocks that are heavyweights in the S&P 500. Investors, at the same time, this CAP-X spending is contributing to a continued higher level of prices on energy and materials. At the same time, layoffs in a number of larger tech companies is causing a great deal of job anxiety for college students graduating and those entering the workforce, as well as workers making $100,000 to $250,000 per year who are fearing that AI automation will eventually eliminate their jobs. Investors currently, those individuals with larger stores of wealth,

fixed assets like houses and investment assets like stocks, might be feeling pretty good about the economy, while many others who don't have savings or don't have larger stores of fixed assets don't. The general idea here seems to be that only the rich and the super-rich are doing well in today's economy. They own all the assets. They spend all the money, they get to travel, buy cars and homes,

and enjoy life while many others are struggling. Investors, for the lower and middle-income class, case-shaped recovery means that these economic times still remain very difficult. Employment in the hospitality and food service sectors factors heavily for the lower income classes and middle-income classes, and clearly, these businesses are struggling

under the weight of a weakening consumer spending there due to migrant deportations affecting demand, as well as job insecurity fears. While it's hard to quantify these things in real time, particularly with a lot of missing economic statistics due the recent government shutdowns, our investment teams reviewed hundreds of earnings conference calls quarterly. Investors, it's really hard to argue against the concept of a K-shaped economic recovery currently when an investor hears one week that foot traffic at a well-known $10 burrito restaurant

was flat to down in the late third quarter. But the next week, when listening to conference calls, an investor hears that sales at Cartier and in luxury jewelry, we're up 17% year over year and up 11% last quarter. Yes, I know the rise in gold and platinum prices does help their results, but those are results after the added cost of import tariffs and into the U.S. So what's this K-shaped dynamic mean for you and your money if you're an investor? It probably means many shoppers are out looking for a deal on price. There are probably more shoppers at Walmart and off-price retailers than you remember a few years ago,

and probably fewer at Target. It might mean consumers might have been cutting back on planning next year's vacation or even smaller, affordable, weekly luxuries like that daily or weekly purchase of a triple foam upside down Carmel Macchiato, that even those smaller purchases might be pushed out to a... Even those smaller purchases might be pushed out to a monthly splurge

or they might be canceled altogether until one feels more secure about their job and about their future advancement. It might mean that, many online resale companies might be doing quite well, as many consumers look to raise a little more cash by selling some of their gently used merchandise in front of a holiday period. From an interest rate perspective and Fed policy perspective, it might mean the Fed is less dubbish or less willing to cut interest rates materially over the next year fearing higher

inflation or seeing already high asset prices, which might keep the housing market slower than buyers need or sellers want. With all that said, investors and followers know that regardless that the letter the economy takes or follows over the next few months, our financial planning and advisor teams will be here. Until next week, have a blessed weekend. And know, the Oak Harvest team is doing what we can to plan for you and your family's future, regardless of what stage you're at in your career or in your retirement. All content contained with an Oak Harvest podcast expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created, but any cited data, indicators, statistics, or other sources are not

guaranteed. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast should be considered as personalized investment, tax or legal advice, or an offer or solicitation to buy or sell security. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss and past performance is not indicative of future results.