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St. Olaf College Associate Professor of Economics Allison Luedtke recently spoke with the Minnesota Star Tribune about an economic model and how it factors into grocery sales. 

In a recently published article, the Star Tribune reports that more shoppers are opting to buy groceries at bargain chains or high-end grocers over middle-market retailers. This phenomenon may be explained by the growing wealth gap in America, creating what some economists and analysts describe as a “K-shaped economy.” As a result, mid-range retailers like Target are struggling to compete, and are reconsidering their grocery strategy. 

In an interview with the Star Tribune, Luedtke –– whose research focuses on network, computational, educational, and macroeconomics –– offered professional insight into whether the U.S.  is truly in a K-shaped economy. She noted that some of the narrative surrounding the topic is anecdotal. 

“People say that they see people wealthier than them spending more, and they see people less wealthy than them spending less,” she said. “It doesn’t appear to necessarily be true everywhere in the economy, but it does seem to be true in groceries.” 

In other words, if the economy were truly K-shaped, these spending patterns would likely extend beyond groceries. Luedtke said that groceries are “still pretty expensive, both from a tariff cause and from inflation.” Even after inflation went down in mid-April, she continued, “prices didn’t really come back down. They stayed pretty high.” 

Read the full article on the Star Tribune’s website.