What is a K-shaped recovery?

A K-shaped recovery happens when different sections of an economy recover at starkly different rates.
“Households at the top of the pyramid are likely to have seen their in- comes largely protected, and savings rates forced up during the lockdown, increasing ‘fuel in the tank’ to drive future consumption. Meanwhile, households at the bottom are likely to have witnessed permanent hits to jobs and incomes,”

What are the macro implications of a K-shaped recovery?

“With the top 10 per cent of India’s households responsible for 25-30 per cent of total consumption, one could argue consumption would get a boost as this pent-up demand expresses itself. But it’s important not to conflate stocks with flows, and levels with changes,”.

Upper-income households have benefitted from higher savings for two quarters. What we are currently witnessing is a sugar rush from those savings being spent.

This is, however, a one-time effect.

Source: IE