Are we experiencing a K shaped recovery from COVID-19?

-Typical economic recoveries can include V, W, Z, U and L.

-However, economists are starting to think the recovery from COVID-19 might be K-shaped.

-This is likely as technology and large capital firms are expected to recover at a far faster rate than small businesses and industries directly affect by COVID-19, such as hospitality.

Since the start of the pandemic, we’ve heard about different recovery curves: Z-shaped recovery (optimistic: downturn, bounces back to pre-crisis growth), V-shaped (optimistic: steep decline, quick recovery), U-shaped (somewhat pessimistic: period between decline and recovery), W-shaped (pessimistic: recovery, second decline), and L-shaped (most pessimistic: extended downturn).

More recently, JP Morgan introduced the K-shaped recovery curve, which paints a more realistic, yet unpleasant, picture. As per their analysis, the covid-19 recovery path bifurcates in two directions: large firms and public-sector institutions with direct access to government and central bank stimulus packages will make some areas of the economy recover fast but leave others out. Those that get left out are the usual whipping boys: small and medium-sized enterprises (SMEs), blue-collar workers, and the dwindling middle class.

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