Influential economist Mohamed El-Erian labels US as K economy, says lower-income households are struggling in America

Lower-income households across the United States are currently at a position that they need to plan out their finances in a manner that they are able to afford an average lifestyle in the country. These households, according to market veteran and economist Mohamed El-Erian, are facing major financial issues, even though the richer income groups are thriving in the US.

Is there a wider economic disparity in the US as of 2024?

Terming this phenomenon as the 'K economy', El-Erian posted a comment and shared a story from the front page of the Financial Times regarding the increasing economic disparity in the country, and the problems associated with it.

The issues regarding the increasing number of credit card defaulters comprise of El-Erian's primary concern about the US economy. US credit card defaults have reached its peak as of now, and is matching the levels seen during the epic 2008 financial crisis. However, it must also be noted that there has been quite an increase in people opting for the plastic economy as compared to 2008.

Rich getting richer? Credit card reports for 2024 suggest the same

According to the latest data from BankRegData, credit card lenders wrote off a staggering $46 billion in loan balances during the first nine months of the previous year. This is a massive alarm for the US consumerism, looking at the fact that high-income groups are doing just fine, but the bottom of US consumers group is currently 'tapped out'.

FAQs:

Will the US stock market undergo an inflation in 2025?
According to reports, Trump's economic policies may be inflationary in nature, and that may impact the US stock market from January 2025, when Trump's Presidency kicks off.