Editor's note: As we covered recently, the bull market might slow down in 2026. That's setting the stage for a future boom... But in the near term, investors may need to get more selective. And if you're wondering what stocks to avoid, Vic Lederman – publisher at our corporate affiliate Chaikin Analytics – says one sector is on shaky ground...
In today's Weekend Edition, we're taking a break from our usual fare to share why Vic sees a split in the economy this holiday season... and why that's bad news for one group of stocks.
The "K-shaped economy" is taking a deeper hold on Americans...
Our founder Marc Chaikin recently discussed this phenomenon. In a K-shaped economy, some folks are doing great... but many others are struggling.
For instance, Marc noted that the top 10% of earners in the country account for 49% of all consumer spending.
Put simply, a gap is growing between the highest and lowest earners in our country. One part of the "K" is going up... But the other part is going down.
A weakening job market isn't helping the situation. And all of this is likely to weigh on one of the most important spending periods of the year – the holiday season.
Professional-services giant KPMG recently published a report on consumer health...
The firm asked about 2,000 Americans questions related to their personal finances. Among other things, KPMG asked folks in different income brackets if their income had increased or decreased since 2024.
Of the households making less than $50,000 per year, 31% reported that their income "increased slightly." And only 4% of that group said their income "increased significantly."
Meanwhile, 33% of the households in that lower income bracket said their income "slightly decreased." And 29% of those households said that their income "decreased significantly."
All this is a big contrast to households making more than $200,000 per year...
A whopping 64% of those households reported a slight increase in income. And 16% said that their income "increased significantly."
At the same time, only 16% of those top earners reported any form of decrease.
But that's not all...
The K-Shaped Economy Is More Than Just a Wealth Gap
You see, 58% of KPMG's survey respondents said that their increased incomes came from a promotion or new job.
But 38% of respondents whose incomes decreased said it was due to losing a job.
Data from the U.S. Bureau of Labor Statistics adds to the concerns...
The unemployment rate has slowly climbed from a post-pandemic low in 2023. Early that year, it came in at 3.4%. But as of this September, the unemployment rate has increased to 4.4%.
And this is only the official data...
The government shutdown delayed October's job report. Information from that month will come in November's report... which we can expect to see later this month. Until then, private research is helping fill the void.
One report by Challenger, Gray & Christmas suggests that the coming jobs data isn't going to be good...
It says U.S. employers cut more than 153,000 jobs in October alone. That's a 183% jump from the previous month. It marked the worst October for job losses since 2003.
According to the report, the main reason for these reductions in October was "cost-cutting"...
And the second-most cited reason was "artificial intelligence."
Folks, the effects of increasing reliance on AI in the workplace aren't entirely clear yet.
But we can see results of a softening labor market and developing K-shaped economy...
A Decrease in Holiday Spending Will Hurt This Industry More
The same KPMG report I discussed earlier showed that consumers are getting increasingly selective with their spending...
This winter and holiday season, overall monthly spending is expected to rise year over year for the survey's four "essential" categories. Those include "groceries" and "automotive."
Meanwhile, monthly spending is expected to decline for almost all of the 12 "discretionary" categories – where consumers spend on wants, not needs.
I also noticed something jarring about two of those categories in particular...
Last year, when KPMG held this same seasonal-spending survey, folks anticipated spending 6% more per month for two categories – "restaurants" and "travel/vacations."
These categories saw the biggest drops in 2025. According to this year's report, Americans intend to spend 3% less of their monthly income at restaurants... and 6% less on travel and vacations.
Of course, the Power Gauge has picked up on this trend...
At Chaikin Analytics, we use the Power Gauge to dig deeper into the stock market. It combines a look at fundamentals, technical signals, institutional interest, and more into an easy ratings system.
Today, the Power Gauge says only 7% of the stocks in the Hotels, Restaurants, and Leisure industry are in "bullish" territory or better.
Put simply, the hospitality market is struggling. That shows consumers are pulling back.
It's clear that a K-shaped economy is here...
This year, Americans don't plan on spending over the holidays like they used to. And we could see more pain ahead for hospitality companies in particular.
We'll continue to keep an eye on this trend... Make sure you do the same.
Good investing,
Vic Lederman
Editor's note: On December 16, Chaikin Analytics founder Marc Chaikin is sounding the alarm. He says a shift is coming to the U.S. stock market in 2026... And it could lead to fast, brutal sell-offs – even in some of your favorite stocks. So make sure you sign up to join his online briefing, where he'll reveal the No. 1 step to take with your money before January 1.
