Table of Contents

K-Shaped Recovery: Definition, K-Curve Chart Example, and Causes

By

澳洲幸运5开奖号码历史查询:Adam Hayes

Updated March 16, 2025

Reviewed by

Michael J Boyle

Fact checked by

Ryan Eichler

Part of the Series

Guide to Economic Recession

Recession: Definition, Causes, and Examples

Understanding Recessions

Effect on the Economy

Effect on Businesses

Investing During a Recession

History of Recessions

Recession Terms A-F

Recession Terms G-Z

The Shapes of Recession Recovery

Long line of people — Yellow Dog Productions / Getty Images

Definition

A K-shape൲d recovery is when segments of an economy recover f⛦rom a recession at different rates.

What Is a K-Shaped Recovery?

A K-shaped recovery occurs when, following a recession, different parts🍸 of the economy recover at different rates, times, or magnitudes.

It's called K-shaped because the path of the different parts of the economy when charted together may diverge, resembling the two arms of the letter "K."

Key Takeaways

In a K-shaped recovery, the performance of different parts of the economy diverges like the arms of the letter "K."
Some parts of the economy may experience strong growth while others continue to decline.
The meaning of a K-shaped recovery depends on the choice of how to disaggregate data across the economy.

Understanding a K-Shaped Recovery

A K-shaped recovery leads to changes in the structure of the economy as economic outcomes💝 and relations are fundamentally changed before and after the recession.

The term "K-shaped" recovery gained prominence in 2020 and 2021 in the wake of the sharp recession in the U.S. that accompanied the COVID-19 pandemic. It was used to describe the uneven economic recovery across different sectors, industries, and groups of people in the economy.

Unlike other letter-shaped descriptors of economic recessions and recoveries (e.g. L-shaped, V-shaped, 澳洲幸运5开奖号码历史查询:U-shaped, W-shaped), which describe the path of economy-wide macroeconomic aggregate variables like 澳洲幸运5开奖号码历史查询:gross domestic product (GDP) or total employment, a K-shaped recovery describes the path of different disaggregated economic variabl🥂es, such as income across different segments of society or employment in different industries, relative to one another.

While economic performance always varies across different parts of the economy, economists traditionally understand 澳洲幸运5开奖号码历史查询:economic cycles of recession and recovery to be broadly correlated across most sectors of the economy.

Important

What makes a K-shaped recovery different is that while some parts of the economy may enjoy a booming recovery immediately following the recession, others may remain mired in sluggish growth or even continue to decline.

What exactly this means depends on how the aggregate macroeconomic data is broken out to suggest the K-shaped profile. It can mean that some industries quickly return to strong growth in output while others see declining activity, or that some types of asset values rise while others continue to fa🧜ll, or that some segments of society see increasing wealth and income while others lose wealth and income. It might also mean other possibilities.

Causes of a K-Shaped Recovery

Several different economic phenomena may be at work in driving a K-shaped recovery. First, a K-shaped recovery can reflect creative destruction in an economy as described by economist 澳洲幸运5开奖号码历史查询:Josef Schumpeter, which occurs when new technologies and industries replace older technologies and industries over the course of a recession. Second, it can reflect the public policy response to a recession in terms of monetary and 澳洲幸运5开奖号码历史查询:fiscal policy, which ൲can benefit some seg﷽ments of the economy more than others.

Alternatively, it can simply reflect the differential impact that the initial recession had on different parts of the economy in the first place, especially when the recession coincides with or is triggered by negative real 澳洲幸运5开奖号码历史查询:economic shocks that affect specific parts of the economy and can have more lasting effects on them than on others. Note that these three conditions may not be mutually exclusive. All th🌜ree may be at play in a given K-s🍨haped recovery, along with other factors.

How Can Fiscal Policy Work During a K-Shaped Recovery?

Fiscal policy is applied when the government changes its taxation and spending to help steer the economy. During a K-shaped recovery, governments can selectively implement tax breaks and other incentives that target certain industries, leading thos🍸e sectors to recover at a faster pace than those left unaffected by the policy measures. The government also can choose to spend on infrastructure or other projects that benefit a certain industry.

Was There a K-Shaped Recovery Following the COVID-19 Pandemic?

Some economists have pointed to the aftermath of the economic fallout due to the pandemic as resulting in a K-shapedඣ recovery. For instance, the technology sector remained fairly robust amid work-at-home measures, teleconferencing, and lockdowns that kept people online and streaming. Likewise, parts of t🙈he healthcare sector that worked on vaccines and treatments saw a boost. Meanwhile, service-based industries such as restaurants, travel, and hospitality took an outsized hit.

How Long Do Recessions Last, on Average?

The U.S. has experienced 34 recessions since 1857, according to the National Bureau of Economic Research (NBER). They have varied in length from two months (February to April 2020) to more than five years (October 1873 to March 1879). The average recession has lasted 17 months, while the six recessions since 1980 have lasted less than 10 months, on average.

The Bottom Line

A K-shaped economic recovery is where various sectors, industries, and grou꧂ps within an economy recover at different rates after a recession. This ca🦩n happen for a number of reasons related to technological and structural change within an economy as well as responses to a recession by policymakers.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

Arthur F. Burns and Wesley C. Mitchell. "." National Bureau of Economic Research, 1946.
McKinsey & Co. "."
Joseph A. Schumpeter. "." Taylor & Francis e-Library, 2003.
National Bureau of Economic Research. "."