On this Suze School, Suze explains the difference between a V-shaped, U-shaped and K-shaped recovery. She teaches us what to do if we’re on either of the K arms and what steps we can take to either stabilize or improve our financial situations.
Listen to Podcast Episode:
Podcast Transcript:
Suze: January 25th, 2026. Welcome everybody to the Women and Money podcast, as well as everybody smart enough to listen. And today is Suze School, so get out your Suze notebooks cause you’re gonna want to take notes again on this one.
So, as I told all of you, and I’ve told all of you over all these years, that if you have a question or a comment, you can write in to ask Suze Podcast, that’s S U Z E podcast at gmail.com. And I read many of the emails, as I’ve told you, if your question is chosen by KT it’s answered on the podcast, but I read a lot of them. And recently, I got an email from a woman by the name of Maria, and she’s from Texas. I hope she’s not freezing right now, but anyway, she’s from Texas and she said the following: Suze.
All the headlines say unemployment is low and the stock market is at all-time highs, but my husband’s hours were cut. Our rent is up $300 a month, and we had to put together money for groceries, and we then had to put him on a credit card. Are we doing something wrong? And I wrote her back and I said, No, Maria, you are living in what I call the lower arm of the “K” recovery, so the key is not to blame yourself, Maria. It’s to understand the forces that are working against you and then take back the power that you do have.
And if you remember a few weeks ago I said to KT, she said, Well, what are you gonna do on Sunday? I said, Oh, I’m gonna teach everybody about the difference between a “V” and a “U” and a “K-shaped” recovery. And she just looked at me and then we ended the Ask KT and Suze Anything podcast. And then something came up and I decided to do a different podcast and a different podcast, and then after I got this email the other day, I decided, all right, this Suze School is going to be on a “V-shaped” recovery, a “U-shaped” recovery, and a “K-shaped” recovery, and why you need to know what those mean.
Now, before I go into that, I just want to say something here. Many of you have been lucky enough, truthfully, to be with me for the past 30 or 40 years, and now, you are older, you have a whole lot of money. A lot of these things aren’t affecting you the same way as maybe they are affecting your children or your grandchildren, and therefore, you’re having to even help them out. That’s a whole another podcast on itself.
However, I want you to listen to this podcast. Because what would be really great is if you could start educating your children who are now getting their information from TikTok and all these crazy things that people are saying so that you can help pass down this knowledge that you have to your children, to your grandchildren, to get them to listen to this podcast, because many of the things on this podcast are still relevant to them, but they don’t think they need to know any of this stuff, and they could not be more wrong if they tried.
So, let’s start with a quick Suze School on recoveries. A “V-shaped” recovery. Now, can you just draw a V in front of you right now in your Suze notebooks? That’s when the economy falls fast, but it bounces back just as fast. So look at the V that you have in front of you straight down, straight up, and most people when we’re in a “V-shaped” recovery, it affects them all the same. They lose ground together. It doesn’t matter whether you have money, you don’t have money, you all lose ground together. But then you all recover together.
Now, draw a U on the paper in front of you or picture it if you’re not willing to draw it. And a “U-shaped” recovery is slower. You go down, you sit at the bottom for quite a while, and then you slowly climb back up, so the pain lasts longer. But again, what’s interesting is that it’s really spread across the entire economy, so everybody is affected the same way.
Now draw a K. A “K-shaped” recovery is very different. It’s not mainly about time. It’s about who. Who the lines, as you look at your K, they split one group versus another. Part of the K that’s going up is one group of people. The part of the K that is going down is another group of people.
So the line that’s going up, their income goes up. The jobs are stable. Their portfolios go up. That’s who makes up that top arm. The one that goes down, their income stalls or falls. Their debt grows, their savings disappear. The credit card debt increases. Those are the people that make up the bottom half of that. Do you see that?
That’s why Maria feels like nothing is going right for her, but yet all the news is how positive the stock market is going up. Sure it goes down, but it goes back up again, and the economy is doing great, lots of jobs. That’s why there is such a difference. So we need to understand, number one, why we are in a “K” recovery and what we can do about it.
This is all about education now, ’cause, you know, I think it’s important that you understand, well, how did we even get in the “K” recovery to really understand what to do about it, depending which part of the K you happen to be in. We ended up here truthfully, and it started after the 2020 recession.
So remember the pandemic did not hit every job the same. If you could work from home, you could Zoom, remember that? That’s when I wanted you to all buy Zoom. You could do emails, laptops. Chances are truthfully you kept your paycheck and those jobs were more likely to be with higher income, more education, professional or tech fields. And if your job required you to show up in person, you were a server, you were a hotel worker, you were gig workers, many retail workers, your job either disappeared altogether or your hours were slashed during the lockdowns, and that’s strike one for the lower arm of the K. Makes sense?
And actually, if you think about it, those professionals who were still going to their jobs from home or whatever, they actually made more money than less, because why? They didn’t have to pay to go into the office. They didn’t have to get clothing to go into the office, they didn’t have to buy food during the day. They actually, bottom line, made more money than less, while others made no money at all.
Second, the government and the Federal Reserve stepped in, remember this? With massive, massive support. They gave you stimulus checks, enhanced unemployment, PPP loans, and truthfully near zero interest rates. You didn’t have to pay insurance or your student loans or any of that, and that absolutely truthfully helped avoid a depression and it kept markets, as you know, and big companies afloat. It did not help many of the small mom and pop companies. They all closed.
But who, I want you to think about this now, who benefits the most when stock markets and real estate take off because money is cheap? Why do I say money is cheap? Money was cheap during them because if you remember interest rates went all the way down. You could get a mortgage for 2 or 3%. Interest rates were just cheap to do anything, whatever you wanted to do, money was cheap.
The people who also though got damaged during that time were people in retirement when interest rates went down to 0%. And all of you were dependent on the interest rate on your money market accounts or your CDs or your treasuries, whatever they may be. So do you see how there was a difference? Interest rates were low. Some people prospered from that. Other people that were older and needed income at that time, they were the ones that were hurt. Are you starting to understand the “K” recovery?
And next came inflation. And that’s because supply chains were a mess. Do you remember trucks being lined up waiting for the ships to unload and nobody could unload them and da da da da. So demands for goods and housing exploded. And prices jumped and lower income households were hit the hardest because more of their money was going to essentials like food, rent, and gas. Higher income households, everybody, had more cushion, obviously they had more fixed rate mortgages and more assets that were also at the same time going up in value.
So let’s put it all together for you right now. Bigger, more digital, better capitalized companies and their shareholders, they recovered fast and then surged. Their money was surging. They all had it in the Magnificent Seven. The companies, the earnings, they were surging.
But smaller, more in-person, lower margin businesses like restaurants and everything and their employees suffered longer and deeper, and truthfully, many of you are still rebuilding. That is the “K”.
Do you all understand how our population now is made up of many people that are going up and many people are going down? But listen, I am not here to give you an economic lecture. You know I hate that, really, but you need to know my job is to make you strong, secure, and powerful with your money.
So what do you do if the recovery is “K-shaped”? First you have to know which arm you’re on. You have to be really honest with yourself. And are you on the upper arm or the lower arm?
How do you know? All right, I want you to ask yourself questions. Has your income grown? Has it stayed flat? Has it fallen since 2020? Has it, everybody? Are your debts going down every year, or are they going up?
Are you regularly investing every single month into your Roth retirement accounts? If you’re able, are you maxing out your Roth IRA and your Roth 401k? Or have you stopped putting money into your Roth IRA because you don’t have the money to do it anymore? And maybe you work for a company that doesn’t offer 401k or you’re working for someplace that doesn’t even have any type of retirement account. So you’re no longer able to put money into a Roth IRA. Where are you?
‘Cause if your income is stable or rising, you have an 8 to 12 month emergency fund, your debt is under control, you are investing regularly, you are likely on or close to the upper arm of the “K”, my friends. Maybe you still have work to do, but the wind, so to speak, is at your back. It’s pushing you right now.
However, after you’ve answered those questions, if your income is unstable, your savings are thin or non-existent, your credit card balances are growing, and you’re not investing, well, guess what? You are on the lower arm. Now, that is not a characteristic flaw. Do not feel like Maria who wrote in the other day and said, What am I doing wrong, da da da because her email went on and on, that it was her fault. What was she doing wrong? You’re not doing anything wrong. You just happen to be part of the lower end of the “K”.
And so, it’s important that in a “K-shaped” situation, protection comes first. So these are things that are non-negotiable in my opinion for you to protect yourself if you are on the line of the “K” that is going down.
All right, are you ready, everybody? You need a bare bones spending program that is based on reality, not hope. Every single dollar has to have a job. It has to go for your needs first and maybe your wants months or years from now. So you are on a needs only basis at this point in time.
It is essential and I am telling you it is essential and I know that you’re like, “but Suze, I don’t even have enough money to pay my bills.” Listen to me. If you don’t have enough money to pay your bills while you have a paycheck coming in, how are you going to pay those exact same bills when you no longer have a paycheck coming in?
So I am asking you to have at least eight months, preferably 12, but all right, eight months of must pay expenses in a true emergency fund that is safe, liquid, and not invested in stocks. Now you know that I love Alliant Credit Union, and at the beginning of every one of these podcasts, the only thing currently you have heard me talk about was the Ultimate Opportunity Savings Account.
If you have not started a savings account yet, I am asking you to go to my alliant.com. I do not make a penny if you do this, not a penny. They sponsor the podcast and that is it. And truthfully, everybody, how many podcasts do you listen to in the middle of the podcast, have a break and say this is brought to you by such and such sponsor. You should go here and buy this, buy that. I can’t do a podcast that has advertisement that wants to sell you something. My job is to make sure that you don’t spend but that you save.
So, my podcast for the past four or five years now has been Alliant Credit Union, who gives you the opportunity to save and pay you to save, and this year we’ll be coming out with other programs for you that will make your money make more money. However, go to MyAliant.com, that’s A L L I A N T.com.
And if you already don’t have a savings account, start one there by becoming a member at Alliant Credit Union, and here’s how it works. If you open it and within the month that you’ve opened it, you deposit at least $100 and you do so every single month for 12 consecutive months. At the end of those 12 months, they will give you an extra $100. In the meantime, you are going to get 3.10% APR on your money, which is fine. There’s nothing wrong with that given that interest rates have started to come down.
So maybe you have money in a savings account or a checking account somewhere and you’re not making any interest at all, but if you add that extra $100 into it, it makes your return like 16 or 18% on your money. You can stop at any time you want, take the money out, up to you, and still make your 3.10% APR. But can you just go there?
So, you need to get a plan, by the way, to get rid of your high interest credit card debt. I don’t care how good your credit score is, if you are paying 22% interest on debt, are you crazy?
So, if you’re just being lazy, and you’re absolutely just not even looking at what interest you’re paying and you’re carrying debt to get yourself by, like Maria had to put her food on credit cards, can you just look at what your FICO score is? Can you just look at the interest rates on your card and make a plan to get out?
So, it is really important that you do that also, for those of you who have no life insurance whatsoever, and people are dependent upon you if something were to happen to you like you died, that can happen, people. You need to get term life insurance. You need to stay as far away from whole life, universal life, variable life insurance as possible, and I don’t care if you are getting communications from Alliant about whole life. They promised me that it was going to stop, and because it was from a company they had contracted with that was supposed to stop and they just haven’t.
So just know Alliant does not support that either, just don’t do it. Both of us do not believe in it, just so you know. However, now, who says that? Who says that to you? From a sponsor? What do you think about that? Anyway, that’s besides the point.
You need term life insurance, and even though you don’t have much money, believe me, all of you can afford somehow $25 or $30 or $40 a month to get term life, especially if you are healthy. So, if you are on the lower arm of the “K”, your first goal is stability. It is stability, and you are the ones that can provide that stability to you.
Just a quick story. I have a friend by the name of Ayana. Maybe you’ve heard me talk about her, and she is a woman who survived domestic abuse, financial, psychological, you name it, and I’ve worked with her forever. And she wrote me yesterday and she said, Suze, please, my daughter’s turning 15 years old. I need $100. Please just lend me $100 so I can do something special for her and I wrote her back. I said, absolutely I will not.
Money is not what’s going to make your daughter feel stable. What’s gonna make her feel stable is your love and your ability to say, I wish I had $100. I wish I had something that we could go out and celebrate, but I want to celebrate my love and the ability that we have to create stability by not spending money and making money the goal to simply spend it.
So you know how hard that was for me to say no to her? But you also understand that helping her there would have been hurting her. Do you understand that? So your first goal is stability and needs only.
Now, if you are on the upper arm, what you have to understand is your first responsibility is to not get cocky. Because this can turn on you if you spend like the boom is gonna last forever, and many of you are.
You know, yesterday I went out to lunch. I know how unusual for me, but when you’re invited, especially from friends you haven’t seen for a while, you go. And we got there early and as KT and I were sitting there and it was a restaurant that was relatively expensive, and I looked around and my heart was breaking. Because I can tell when somebody can afford to be in a restaurant and when somebody cannot. I can see it. I can feel it, and I got so sad just sitting there watching how many people were treating themselves by going out, and how many people were enjoying themselves, ’cause it really wasn’t a treat. It was something that they did almost every single day. You could just see it.
So you have to remember that when you are on the upper end of that “K”, that you cannot pretend that this is going to last forever. Because many people who are on the upper end of that when they have an 8 to 12 month emergency fund, they are putting money in their retirement accounts, they have that low mortgage rate on their home, they’re sending their kids to college, they’re doing all these things. But they’re still working for income that provides them this lifestyle.
KT and I really aren’t working anymore for income. That doesn’t mean we don’t make money, but we’re not working for income. We own assets that provide us with income if nobody else ever wants to pay us. So that’s why everybody, I keep pushing you to max out your Roth 401k plans, and your employer better have one, and to own your home outright and to own, you know, broad diversified ETFs or stocks or different areas over the long run, and to avoid speculation really that you don’t understand.
Because I want all of you to eventually be in the position that KT and I are in, and that many of the people that are listening to the Women and Money podcast are also in after following this advice for years.
So, the “K-shaped” recovery shows you that you cannot rely on a job alone, and that you must own a piece of the engine that benefits when markets recover. Does that make sense for you?
So what can you do to secure your situation really if you are in the lower end of the “K” and maybe even in the possible upper end of the “K” but you don’t have everything together? Because if you look at it in 2020, the safest jobs were the ones that could go remote and were in resilient sectors. So if you’re in a fragile industry, I want you to think in terms of skill insurance. It’s not just about life insurance, disability insurance, home insurance, car insurance. It’s about, do you have skill insurance?
Can you add one technical skill this year that increases your earning power? Can you move towards roles that can be done from anywhere that are harder to automate or shut down with artificial intelligence or whatever it may be? Can you turn possibly a side gig, because many of you write me and say, especially the young ones, Suze, I have a side gig, da da da da. Can you turn that side gig into a real sustainable income stream, not just a few dollars here and there?
Your skills, listen to me now. Your skills, your ability to adapt, that is, in my opinion, your ultimate insurance policy when we’re in a “K-shaped” recovery.
Here we are, everybody. So 2020 recession did not just come and go. It carved a permanent “K” into our economy in my opinion, one line going up and one line going down, but you can believe it or not, control which arm of that letter you live on.
So this week, here’s what I want you to do. Very last thing in your little Suze notebook, you took it out, right?
On the top arm of the K, I want you to write down everything in your life that really is moving you up savings, investment, skills, and stable income. On the bottom arm, I want you to write down everything that is pulling you down: debts, unstable work, overspending, lack of emergency funds, whatever it may be. Then I want you to circle one item on the bottom arm there and make a concrete plan, everybody to change in the next 30 days.
Remember, haven’t I always said this, you can’t fix a financial problem with money alone. You fix it with truth, courage, and action. And if you’re on the upper arm of that, “K”, how do you make sure that you always stay there? What is it? What is one thing that you can do to make it even more stable?
So until Thursday when Ms. Travis will join us for another Ask KT and Suze Anything, two things I want you to check out. Go to Suzeorman.com. We have a brand new website that Ms. Travis designed for all of you. Check it out. It’s not like that stupid old dull one that we had for all those years. This one kind of is dynamic. KT you did such a great job on that.
Also, one other thing, go to youtube.com/ Suze Orman, my personal YouTube site, and subscribe because you never know when you might just get a little ding ding ding, and when you look at it, it will be because KT and I went live, all right.
So there’s only one thing that I really want you to remember when it comes to your money, and it is this, people first, then money, then things. Now you stay safe. Bye-bye.
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