Why are so many people struggling financially while the stock market is soaring?

Added: 2026-06-01

[00:00:00]What is a K-shaped economy?

[00:00:01]Or market, I should say.

[00:00:03]>> Uh economy.

[00:00:04]>> Economy. Yeah, it's usually what they call it. Okay.

[00:00:06]>> So, the the economy is basically, yeah, we got two stats, really, that we see. Headlines. Uh unemployment's relatively low.

[00:00:14]Inflation's actually ruling over.

[00:00:16]Inflation has [clears throat] been coming down for the past 2 years. It bumped up recently because of what's happening in Iran.

[00:00:21]Um wealth, consumers are going up. Like, they're spending more. And then on the flip side, we also see lots of other headlines. Delinquencies are going up in terms of credit card. Credit card debt, the amounts are going higher. More foreclosures, that sort of things. So, how could both be true?

[00:00:38]And that's because of this something called a K-shaped economy. So, the K-shaped means, if you think of a K, there's the the upper strand that goes up.

[00:00:46]That is like the the group of Canadians that's actually benefiting from inflation. So, a lot of people think, how do you benefit from inflation? It's It's because assets, inflation means prices go up. And if you own assets, real estate, stocks, gold, whatever it is, inflation goes up, typically asset prices go up. So, when you're offsetting, when you have to pay for discretionary spending, utilities, food, and everything, because your wealth has gone up, you can stomach it a lot easier. Now, the bottom part of the K that goes down, those people don't have assets. And inflation hits them the most. It's like a really big tax because they have nothing to offset it. So, what we're finding out, because the economy because of the top portion they're doing more of the heavy lifting. So, they're doing a lot more spending. They're than for the full and it's basically making up for the whole economy, and that's why our economic data looks great, yet when you talk to the person on the street a lot of them are struggling.

[00:01:44]>> Do we know what proportion of the population is in the upper and the lower?

[00:01:48]>> Yeah, this one's a bit of a debate. Uh there's probably some going to be some gray areas there, but a lot of people say the top 10% really is doing very strong in North America, not just Canada, but North America, and they're doing a lot of spending.

[00:02:00]But, that doesn't mean that it's like 90/10.

[00:02:03]>> Right.

[00:02:03]>> Because if I look out, I mean, I if I go to a hockey game, if I go to Whistler, I see people traveling, I see on social media people are still doing things. You can't tell me that only 10% of people are going to concerts and hockey games.

[00:02:16]>> So, I think our middle class is still spending, they're still doing things that they want to do, but they're I guess the more vulnerable of drifting lower.

[00:02:24]>> Mhm.

[00:02:24]>> Now, the bottom part, those are the people that are really struggling, and they're going to have a really hard time coming out of being part of that bottom cohort, because inflation is, again, it's really a tax, and they're they're living paycheck to paycheck, then they it's kind of like that hamster wheel, it's hard to get off.

[00:02:39]>> Yeah. And [laughter] we'll bring it back to Oakridge because this seems to be a theme for today. A lot of people looking at this massively expanded redeveloped mall, which is anchoring itself at least part in some big luxury brands. So, for the if so many Canadians are struggling, why are these retailers expanding? Is there something that they know that we don't?

[00:03:00]>> Oakridge is interesting because it's the mall, >> Yep.

[00:03:03]>> and then it's also the condos.

[00:03:05]>> Yep.

[00:03:05]>> The condos are doing horrifically.

[00:03:07]>> Yes.

[00:03:07]>> So, um the K-shaped economy cannot save every aspect of the luxury market, and we can say these condos are luxury markets, and they're selling for like a million dollars some of them off their list price. Now, if we look at the luxury brands on themselves, there's still quite a lot of demand for luxury brands. We can follow this by the like the Louis Louis Vuitton, uh it's actually a stock, and it spiked higher in 2021, 2020, when COVID was around because checks were given to all sorts of people.

[00:03:38]>> Mhm.

[00:03:39]>> And a lot of people didn't need it, they were fine. So, they had all this extra money, and we saw luxury goods spike higher.

[00:03:44]>> about CERB payments, emergency relief, that kind of thing.

[00:03:47]>> Okay.

[00:03:47]>> A lot of people needed it, but a lot of people didn't, so they had extra money, so they bought luxury goods. Then they came crashing down in 2022 when demand was lower and interest rates went higher and they had to sell. Now they're actually doing pretty good. So I would say from that perspective, uh these luxury goods are still in quite high demand. That 10% of the K-shaped economy is still spending on these luxury goods, high-end restaurants. And I saw on Instagram a lineup around for it. I was shocked. I did not expect that. Like I'm not in a luxury good type of person, but it obviously is there is a demand there, whether it's just curiosity and they're not going to buy anything. You know, we'll find out in a couple months.

[00:04:25]>> Do Where do you see this gap between the those on the high end of the K and the low end of the K? Is it Is it narrowing?

[00:04:32]Is it widening? What are What is your data telling you?

[00:04:35]>> Uh I'd love to say it's narrowing, but it seems to be have widened since 2020.

[00:04:41]In 2020, a lot of people got introduced to things like stocks and real estate and some of those things worked out, some of them didn't work out as well. Uh On the good side though, we're seeing younger people, like Gen Z, um millennials, they have a lot more stocks and assets than previous generations at their age. So we are seeing wealth going up in that way, so that's encouraging.

[00:05:02]But overall, history has saying seen that inflation really affects the bottom people and those people getting out to sort of the middle part, if there was a middle part of the K, that's the real struggle.

[00:05:14]>> Do we have any Do you have any advice for those who maybe on the lower end of the K and trying to improve their standing?

[00:05:20]>> Yeah, it's always really difficult if you're paycheck to paycheck. So we we did we did a column a um a couple weeks ago about how to make more money, right?

[00:05:28]And I used to think, okay, get a side hustle, do something on the side. And I've I've sort of said no, that's generally not the best thing. What I found from studies is you should look at the position you're in right now and you should try to improve that. There's a lot of tools available that are free, AI, various other things, that you can make yourself more um desirable, more like uh worthy to your employer and you can demand those things. So I would say that. If you can you buy the assets like start small stocks any type of assets it over time they just grow and they help so much with that inflation burden.

[00:06:04]>> Okay. Mark Tingle guide to personal finance and a partner with Foundation Wealth always appreciate your time and expertise. Thank you Mark.

[00:06:10]>> Thank you.