The K-Shaped Economy Explained: What Earnings Season And Q2 GDP Numbers Are Telling Us | WMYM - video Dailymotion

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On "What's Moving Your Money with Spencer Hakimian," Spencer explored the idea that the U.S. is currently experiencing a "K-shaped economy," and broke down the earnings season and the Q2 GDP data.  Read the full story on Forbes:   Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.On "What's Moving Your Money with Spencer Hakimian," Spencer explored the idea that the U.S. is currently experiencing a "K-shaped economy," and broke down the earnings season and the Q2 GDP data.  Read the full story on Forbes:   Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Hey everybody, it's Spencer Akimian and welcome back to another episode of What's Moving Your

00:04Money on Forbes. On today's episode, we are covering the K-shaped economy, the winners and

00:11losers of the 2025 economy, what it all means for the second half of the year, and what inferences

00:18we can make about this going forward as it relates to the stock market. So sit back,

00:24get ready, and I hope you guys enjoy.

00:30So recently, there's been this coin term that's called the K-shaped economy, the K-shaped

00:37recovery, and it essentially means that the economy is operating like a K, right? There

00:44are some people that are significantly benefiting, which is the upward sloping part of the K,

00:49and there are some people that are significantly hurting, which is that downward sloping part

00:53of a K, if you visualize what a K looks like, the letter K in your head. Now, this is because

00:59particularly confusing because we are taught and we grow up growing up thinking that the

01:06economy all moves in one direction with one another, but that's actually not so true. The

01:12economy is much more of like many different parts that are all rolling at different speeds

01:19and in different directions than one thing moving in perfect direction and form and speed and shape

01:27altogether at once. So I think it's very important once in a while to just take a step back from the

01:34broader macro numbers. And yes, I am a macro guy. Everyone knows that. But I think it's worth taking a

01:41step back every so often and just looking at the actual parts of the economy and seeing, hey, look,

01:47are there some parts that are thriving? Are there some parts that are hurting? So let's break this

01:52down a little bit closer right now. Let's start with the parts that are hurting because frankly,

01:59this seems like it's a little bit more of the economy from my vantage point right now. When I say

02:04more of the economy, I'm referring to overall parts of the economy, the larger parts, so on and so forth.

02:12We have a housing sector that is basically dead in the United States right now. We just had our worst

02:21spring season for the housing market ever. Interest rates are too high for housing. Homes are not being

02:30sold. Homes are not being bought. Nobody is willing to leave a two and a half percent mortgage that they

02:35got in 2021 to move into a new home that they would have to get a seven percent mortgage to replace it

02:41with. At the same time, incomes to home prices have never been worse. Home prices are historically

02:49expensive in the United States relative to income, so much so that it's worse than 2008. You would be

02:55shocked, but that is a true fact. In 2025, homes relative to incomes are more expensive than they were

03:02right before the housing and financial crisis of 2008. Now, beyond just housing, we also have

03:12quite a weak consumer right now. As you guys all know, two-thirds of the American economy is consumer

03:18and consumer spending, so it is very important when we see the early signs of a weakening consumer.

03:24Even in today's GDP report that came out positive overall for the economy with plus three percent

03:32real growth for the second quarter, which is amazing. It's good to find out, get that news. But

03:37when you look at the consumption part of that equation, it is really weak. It is barely growing north of one

03:45percent right now. Now, this compares to positive three, even positive four percent growth back in 2023 and

03:522024 in real terms. So, in real terms, we have a consumer that has gotten 300 basis points weaker

04:00since just last year. Now, there might be many reasons for this. You can say it's tariffs. You can

04:06say it's uncertainty. You can say, you know, people are just exhausted. You can say COVID funds have

04:12run dry. Whatever it might be, you can say interest rates are finally taking a toll. There are a lot of

04:18things that are headwinds that are slowing down the consumer. And frankly speaking, this is really,

04:26at the end of the day, what you want to be focused on most as an investor is what is the health of the

04:32consumer? Is it improving? Is it getting worse relative to what we thought just six months back?

04:39Because at the end of the day, two-thirds of the economy is consumption. It's personal consumption,

04:44right? All these other things, exports, imports, government spending, transfers, whatever it might

04:51be, that is marginal. It matters. It is one-third of the economy. But it is not as significant as

04:58the consumption element. So, it's worth thinking about it quite clearly. Now, look, I said it's a

05:06K-shaped economy because there's also some good parts to this. And we have to talk about it. And it's

05:10also really good, right? Thank God there's some parts of the economy that are doing better than

05:15housing and the consumer. As an example, AI, CapEx, artificial capital expenditures from companies in

05:23the technology space is exploding. You guys saw Microsoft, Meta, Amazon, all these companies that

05:32have reported, they're saying that their AI numbers are growing 35% year over year. And that's great

05:39because AI requires a lot of data centers. It requires a lot of chips. It requires a lot of

05:47transportation of goods and real products. So, it's great. People think of technology as a pure

05:54service. But what you don't understand is that technology is servicing a real good at the end

06:00of the day. Whether that's advertising for real products on Facebook or it's trying to better

06:05understand education through chat GPT. These are real things at the end of the day that come out

06:11of these products. So, look, the good of our economy right now is AI. It's corporate CapEx. It is

06:21anything that's not related to tariffs that is related to Wall Street. It's going well. And that's

06:29good. Earlier in the year, I personally thought that we were going to have, because everything

06:36else slowed down, we were going to get a slowdown ripple through into the AI, into the technology

06:44sector. It hasn't happened yet. That's not to say it won't happen at all. But as of now, it hasn't

06:49happened. So, that's good. We should be happy about that, if you ask me. And look, look at the

06:54Nasdaq, it's on a good run lately. I think it's verifying some of that. I think it's proving that

07:00certain parts of the economy that are insulated from tariffs, that are a little bit more insulated

07:04from just purely consumer spending, are doing a little bit better. But, again, I want to stress,

07:13we shouldn't forget about those other things. We shouldn't forget housing is weak. We shouldn't

07:17forget the consumers having a tough time. We shouldn't forget auto delinquencies are on the

07:22rise. We shouldn't forget credit card charge-offs are rising, right? These are the warning signs that

07:28you want to know ahead of time. You don't want to find out about this once we're in the middle of a

07:33problem. You want to know ahead of time. So, it's my duty to inform all of you about it. Now, guys,

07:38before we go today, I want to briefly talk about earnings, because I think this earnings season

07:44is the perfect microcosm of this K-shaped economy that I've been talking about. And guess what? I'm

07:51going to be talking about it more going forward, because as I see it, it's getting more noticeable,

07:57not even less. This is becoming more apparent. If you look at Meta and Microsoft today, their

08:04earnings were fantastic. Not only did they beat for the second quarter, but they raised guidance

08:10for the third quarter, right? They see strong demand ahead for their products. Yes, some of that strong

08:18demand is actually coming from Europe and Asia. It's not coming from the United States. But even

08:22their local domestic businesses, they are saying is holding up strong for now. Ad spend is good.

08:29Hardware sales are good. Microsoft suite sales are good. Microsoft Azure, which is their version of

08:36data centers, which is the cloud, is good. All of these things are good right now. And that's a good

08:43thing. It's a very good thing. Look how good stocks are up right now. My portfolio is doing well. So

08:48I'm happy about it. How about you guys? Let me know in the comments, as always, please. But then

08:54we look at the other half of this equation. Ford and UPS just today reported horrific earnings,

09:04horrific. Ford just said that they now expect their 2025 hit to their earnings from tariffs to be $2

09:11billion versus their estimate just a quarter ago of $1.5 billion. Ford doesn't even make $5 or $6

09:20billion a year worth of profit. We're talking about almost half of this company's profit getting wiped

09:25out because of tariffs. It's going to lead to layoffs one way or another. We can't be naive about

09:31this. Over time, if companies' profits fall, they have to lay off people. It's just that simple.

09:38UPS, if you want to look at UPS as a bellwether for the shipment of goods, if you want to look at

09:45UPS as a bellwether for the upcoming Christmas season or for the upcoming back-to-school shopping

09:51season, however you might want to look at it, they are lowering their guidance for the year.

09:57What they are seeing is a very different economy than what the tech leaders in Silicon Valley and San

10:03Francisco are seeing. Neither is more important or less important. It's just different. It's amazing

10:10that Microsoft and Meta are doing great, and it's very sad that Ford and UPS are not doing great.

10:17Look, overall, I think we have an economy that is not thriving. It is surviving, right? It could be doing

10:25a lot better had we not done all these extracurricular activities in the first half of the year.

10:30And ultimately, I tend to think that as a consumer weakens, everything else slowly drifts like gravity

10:38towards the health of the consumer. Because if you have 66% of anything pulling you down, it's a lot

10:45harder for that other 33% to sustainably lift you up. So guys, I want you guys to comment,

10:51what are you seeing? Are you seeing in your hometown, in your local job market, in your local housing

10:57market, in your personal earnings, in your personal 401k, are you seeing this K-shaped economy? Are you

11:04seeing some people and some companies that are thriving while other people and other companies

11:08are suffering? Let me know in the comments, and I can't wait to see you guys on Friday.

The K-Shaped Economy Explained: What Earnings Season And Q2 GDP Numbers Are Telling Us | WMYM

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