From ‘K-Shaped’ to ‘Stagflation.’ What Economic Buzzwords Mean to You

Every so often, a new set of economic buzzwords enters – or reenters – the zeitgeist. This spring, terms like “K-shaped economy” and “stagflation” are having a moment.

They shape the way politicians, academics, and the media discuss the economy, but their nuances and real-world implications are often lost in the conversation. For example, inflationary fears are increasing as oil prices rise due to the US-Israeli war against Iran, which continues to raise inflation concerns. Even the Chairman of the Federal Reserve, Jerome Powell, said that he reserved the term for “more serious situations” than the country is facing today.

“I always point out that that was a period in the 1970s when unemployment was double, and inflation was very high,” Powell told reporters on March 18. “That’s not the case right now.”

Still, such phrases capture real concerns about high prices, a sluggish job market, and a widening gap between high- and low-income families, but jargon can also obscure what economic progress means to everyday Americans.

USA TODAY asked experts what words describe the US economy in 2026. Here are some of the more common ones, and a few to keep in mind for the future:

K-shaped

One of the most popular concepts, the “K-shaped” economy, is one where some groups or sectors pull ahead financially, while others lag behind.

It is also used to describe post-pandemic recoveries, where high earners typically see their wealth and property values ​​rise. In contrast, many low-income earners with little or no investment were struggling to keep up as prices rose faster than their payments.

Household wealth remains highly concentrated, with high-income households driving the majority of consumer spending, while low-income households purchase but account for a small portion of total spending.

“The idea of ​​’K’ makes it sound like marginal spending is going down. …But that difference in part of the total is being lost,” said Truist’s Head of US Economics Mike Skordeles, adding that he prefers the term “two-speed economy.”

Stagflation

Inflation represents a situation where a nation is experiencing inflation, rising unemployment and economic stagnation all at the same time.

It’s a worst-case scenario for the Federal Reserve as it tries to balance its dual mandate of low unemployment and stable prices. The US economy isn’t there yet, but economists are seeing warning signs.

Data from the Bureau of Labor Statistics revealed that in February, the unemployment rate increased to 4.4%, still considered healthy but higher than last year. CPI inflation came in at 2.4% year-on-year, a figure that did not capture the war-driven jump in oil prices that some analysts expect will push prices up in March.

Meanwhile, the Bureau of Economic Analysis found core PCE inflation, which excludes food and energy prices, rose to 3.1% in January — the highest rate in more than a year. And on March 13, the agency revised its fourth-quarter GDP growth estimate to 0.7%, down from 4.4% in the previous quarter.

Supply Shocks

Supply shocks are large and often sudden changes in the availability of a good. It’s rare, Skordeles said, but the United States has experienced a few in recent years.

During the violence, car production dropped due to factory closures and supply disruptions, although people continued to buy cars. Low supply and strong demand have pushed prices up. The classics supply-and-demand economics.

Today, the suspension of traffic in the Strait of Hormuz, which normally carries about 20% of the world’s oil, has reduced oil prices – and ultimately pump gas prices – to record highs around the world.

Low Labor Market

For months, analysts have called the U.S. labor market a “low-cost, low-cost place,” meaning companies are in no rush to lay off workers and are reluctant to bring in many new ones.

“I don’t think companies really understand the impact of AI on the workplace,” Thrivent Chief Financial and Investment Officer David Royal told USA TODAY. “They are not ready to let people go but they don’t want to hire a lot of people because they are not sure if they will need them.

Job gains are concentrated in sectors such as health care, social assistance, and private education, meaning that those looking for work outside of those industries often face a more difficult search.

The workers have seen it, and they are holding on to their jobs, fearing that they will not find another one.

Uncertainty

One of the words most often used to describe US economic conditions over the past year is “uncertain.”

Changing tax policy, an unclear timeline for the ongoing war with Iran, volatile stock markets, increasing adoption of AI, midterm elections in 2026, and concerns about a possible price correction down the road make the future difficult for economists to predict.

“There’s a lot of economic uncertainty, market uncertainty, political uncertainty, and it’s all coming together right now, and we don’t have the normal scope for growth or the strong foundations for the growth story that we would like to have in this situation,” said ING Chief Economist International James Knightley.

The ports are safe

Skordeles defines refuge as “a place of escape and hiding.”

Investments typically include US Treasury bonds, physical gold, and defensive stocks, or shares in companies that provide basic consumer goods, he said.

Given the ongoing uncertainty, investors have flocked to all three over the past year. Bankrate Financial Analyst Stephen Kates said that for the average consumer looking for a place to live in today’s environment, high-yield savings accounts and certificates of deposit are good options.

“For the average person who walks into something that’s not only safe, but they feel safe because they understand it and it’s comfortable, I think those two go hand in hand,” Kates said. “Banks, FDIC insurance, relative guarantees on that money — that can be one of the most profitable safe havens.”

Accessibility

“Affordability” and “the unaffordability crisis” are the buzzwords that are shaping the political campaigns of 2025 and will continue to do so in 2026, as Americans struggle to afford food, health care and housing.

The University of Michigan’s November consumer sentiment index fell to 51, one of the lowest levels on record. While it has risen since then, preliminary results from the March survey showed it fell to 55.5, its lowest reading in 2026.

“A big part of this is perception. It’s not that people are wrong. Things are more expensive than they used to be,” Kates said. “Price levels are so much higher than they were before or in the middle of COVID, and those price changes are happening so quickly that people are still stuck with those old prices. They’re nostalgic and bitter about it, and it’s hurting people.”

Federal Funds Rate

The federal funds rate is the interest rate that banks charge to lend money overnight. The Federal Reserve’s Federal Open Market Committee sets its rate target range eight times each year, based on economic indicators such as inflation and the unemployment rate.

That range serves as a benchmark for interest rates across the country, including auto loans, mortgages, student loan debt, credit card debt, and savings accounts. Higher rates can help control inflation and allow savers to earn more interest on their accounts, while lower rates can help stimulate the economy by reducing borrowing costs.

At its last meeting on March 18, the committee chose to keep it unchanged at 3.5% to 3.75% as officials weighed the impact of the war on the economy. President Donald Trump has made repeated calls for lower rates to help reduce interest on the national debt, but Powell made it clear that the Fed makes its decisions based on data, not the president’s preferences.

Kangaroo Market

Although the stock market is often called a “bear market” when prices fall or a “bull market” when prices rise, some analysts say that the market at the beginning of 2026 looks like a “kangaroo market,” where stock prices jump up and down, often driven by emotions or the latest news.

An easy way to remember the difference is to think about the actions of animals. A bear swipes its paws down when attacking, while a bull raises its horns. The kangaroo is hopping.

Job Growth, Private Debt, and Social Security

Skordeles said if there’s one thing people are talking about today that they’ll still be talking about next year, it’s job growth – or the lack of it.

“The six-month average is 1,000. … We’re always in the dark,” he said, adding that 12 months from now, economists will be “talking about job growth, not about the Strait of Hormuz, and it’s likely to have picked up again by then.”

Knightley has his eye on private debt.

“This blurring of where this funding comes from, whose, what is the real quality of these things?” Knightley said. “We don’t really know for sure, and that’s dangerous.”

Kates said the term “Social Security” will soon need to re-enter the national conversation, as the Congressional Budget Office now expects that the Old-Age and Survivors Insurance Trust Fund, one of two funds used to pay for Social Security benefits, will be depleted in 2032, a year earlier than expected.

Reach Rachel Barber at [email protected] and follow her on X @rachelbarber_

This article first appeared in USA TODAY: From ‘K-shaped’ to ‘stagflation.’ What do economic terms mean to you

Reporting by Rachel Barber, USA TODAY / USA TODAY

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