Commentary: From K-Shaped Divergence to an I-Shaped Economy

In 2021, I began using the term “K-shaped divergence” to describe the shifting fortunes of different demographics, industries and cities. Today, that letter no longer captures our economic reality. The “K” has morphed into an “i”. Divergence has metastasized into severance.

In a traditional K-shaped economy, the upward trajectory of high-tech and new-economy sectors theoretically trickles down. Through supply chains, job creation and wealth effects, the prospering top eventually lifts the struggling bottom.