From time to time, a new set of economic discussions enter – or re-enter – the zeitgeist. This spring, terms like “K-shaped economy” and “stagflation” are trending.
They shape the way politicians, pundits, and the media discuss the economy, but their nuances and real-world implications often get lost in the discussion. For example, stagflation fears are emerging as oil prices are rising due to the US-Israel war against Iran, rekindling inflation concerns. Even Federal Reserve Chairman Jerome Powell said he reserved the term for “a more serious set of circumstances” that the country is facing today.
“I always have to point out that that was the tenure of the 1970s when unemployment was in double figures, and inflation was very high,” Powell told reporters on March 18. “That’s not the case right now.”
Still, such phrases reflect genuine concerns about rising prices, a slowing job market and the growing gap between high-income and low-income families, but the jargon can also obscure what economic growth means for everyday Americans.
USA TODAY asked experts what words are defining the American economy in 2026. Here are some of the most common and some words to keep in mind for the future:
Kashmir shaped
One of the most commonly discussed terms, the “K-shaped” economy, is one in which some groups or sectors advance financially, while others are left behind.
It is also used to describe the post-pandemic recovery, when higher income earners generally saw their wealth and property values increase. By contrast, many low-income earners with little or no investments struggled to stay afloat as prices rose faster than their paychecks.
Household wealth remains concentrated at the top, with the highest-earning households driving a larger share of consumer spending, while lower-income households make purchases but account for a smaller share of total spending.
“The notion that it’s ‘K’ makes it seem like low-end spending is going down. …But that nuance of the ratio of the total gets lost,” said Mike Scordales, head of US economics at Truist. That said, he prefers the term “two-speed economy.”
stagflation
Stagflation represents a scenario in which a nation faces rising inflation, rising unemployment, and stagnant economic growth simultaneously.
This is the Federal Reserve’s worst-case scenario as it attempts to balance its dual mandate of low unemployment and stable prices. The U.S. economy isn’t there yet, but economists are seeing some warning signs.
Data from the Bureau of Labor Statistics showed that in February, the unemployment rate reached 4.4%, still considered generally healthy but higher than a year earlier. CPI inflation came in at 2.4% year-on-year, a figure that does not include the surge in oil prices caused by the war, with some analysts expecting the number to rise further in March.
Meanwhile, the Bureau of Economic Analysis found that core PCE inflation, which excludes food and energy prices, rose to 3.1% in January – its highest level in more than a year. And on March 13, the agency revised its fourth-quarter GDP growth forecast to 0.7%, from 4.4% in the previous quarter.
supply shocks
Supply shocks are large and often cause sudden changes in the availability of a commodity. They are unusual, Skordels said, but the United States has faced several in recent years.
During the pandemic, car production slowed due to factory closures and supply chain disruptions, although people kept buying vehicles. Low supply and stagnant demand pushed prices higher. This is classic supply and demand economics.
Today, the halt to traffic in the Strait of Hormuz, which normally carries about 20% of the global oil supply, has sent oil prices around the world – and ultimately gas prices at the pump – soaring.
low rent labor market
For months, analysts have dubbed the U.S. labor market a “low-hire, low-fire” environment, meaning companies are neither willing to shed workers nor eager to bring on many new hires.
“I don’t think companies really know the impact of AI on employment,” David Royal, chief financial and investment officer at Thrivent, previously told USA TODAY. “They’re not willing to let people go, but they also don’t want to hire a lot of people because they’re not sure they’ll need them.”
Job gains are concentrated in sectors like health care, social assistance and private education, meaning those looking for work outside those industries often face a more difficult search.
Workers have observed that they cling to their jobs out of fear that they will not be able to find another job.
uncertainty
One of the most common words used to describe U.S. economic conditions over the past year has been “precarious.”
Evolving tariff policy, an unclear timeline for the ongoing war with Iran, stock-market volatility, increased AI adoption, 2026 midterm elections, and concerns about a potential asset price correction in the future make it difficult for economists to predict the future.
“There’s a lot of economic uncertainty, market uncertainty, political uncertainty and it’s all coming together right now, and we don’t have the usual breadth of growth or a strong foundation for the growth story that we want,” said James Knightley, chief international economist at ING.
safe haven
Scordales defines heaven as “a place to escape and hide”.
They are typically investments including U.S. Treasury bonds, physical gold and defensive stocks, or shares of companies that provide consumer staples, he said.
Given the continued uncertainty, investors have turned to all three over the past year. Bankrate financial analyst Stephen Cates said that for the average consumer looking for shelter in today’s environment, high-yield savings accounts and certificates of deposit are good options.
“For the average person to go into something that’s not only safe, but also feels safe because you understand it and it’s comfortable, I think both of those fit the bill,” Cates said. “The banks, the FDIC insurance, the relative guarantees on that money – it can be one of the most beneficial safe havens.”
potency
“Affordability” and the “affordability crisis” are terms that shaped political campaigns in 2025 and will continue to do so in 2026, as Americans struggle to afford groceries, health care, and housing.
The University of Michigan’s consumer sentiment index fell to 51 in November, one of its lowest levels on record. Although it has climbed up again, preliminary March results of the survey showed it had fallen to 55.5, the lowest level since 2026.
“A big part of it is perception. It’s not that people are wrong. Things are priced higher than they were before,” Cates said. “Price levels are higher than they were pre-COVID or even in the middle of COVID, and the price changes are so rapid that people are still holding on to those old prices. They remember and they’re upset about it, and it’s hurting people.”
federal funds rate
The federal funds rate is the interest rate banks charge each other to borrow money overnight. The Federal Reserve’s Federal Open Market Committee sets the target range for rates eight times each year based on economic indicators such as inflation and the unemployment rate.
This range serves as a benchmark for interest rates nationwide, including on auto loans, mortgages, student loan debt, credit card debt, and savings accounts. Higher rates can help control inflation and allow savers to earn more interest on their accounts, while lower rates can help stimulate the economy by lowering the cost of borrowing.
At its last meeting on March 18, the committee opted to keep it steady at a range of 3.5% to 3.75% as officials assessed the economic impact of the war. President Donald Trump has consistently called for lower rates, which would help reduce interest on the national debt, but Powell has made clear that the Fed makes its decisions based on data, not the president’s preferences.
Kangaroo Market
While the stock market is typically called a “bear market” when prices are falling or a “bull market” when prices are rising, some analysts say that in early 2026 the market resembles a “kangaroo market”, where stock prices bounce up and down, often driven by emotions or the latest news.
An easy way to remember the difference is to think about the actions of animals. When a bear attacks, it moves its claws downwards, while the bull throws its horns upward. A kangaroo hops.
Job growth, private credit and social security
Scordales said if there’s one thing people are talking about today and they’ll still be talking about a year from now, it’s job growth — or the lack thereof.
“The six-month average is minus 1,000. … We’re basically staying in the black,” he said, adding that 12 months from now, economists “will be talking about employment growth, not about the Strait of Hormuz, and chances are it will be back up again by then.”
Knightley is eyeing personal loans.
“This opaqueness about where this funding is coming from, who owns it, what is the actual quality of this stuff?” Knightley said. “We don’t really know with real certainty, and that’s a risk.”
Cates said the term “Social Security” will soon need to be reintroduced into the national conversation, as the Congressional Budget Office now expects the Old-Age and Survivors Insurance Trust Fund, one of two funds used to pay Social Security benefits, to expire in 2032, a year earlier than anticipated.
Reach Rachel Barber at (email protected) and follow her at x @rachelbarber_
This article originally appeared on USA TODAY: From ‘K-shaped’ to ‘stagflation’. What do economic fundamentals mean for you?
Reporting by Rachel Barber, USA TODAY/USA TODAY
USA TODAY Network via Reuters Connect