Finance

After weathering Trumps tariffs, one U.S. and one Chinese manufacturer are looking to further diversify their supply chains, even as Beijing and Washington try to stabilize ties.

Georgia congressman Mike Collins spent most of his life running a trucking business. ProPublicas analysis of federal motor vehicle data shows that truckers for the business have a higher rate of unsafe driving and speeding violations per mile than the majority of similar companies in recent years. Tom Williams/CQ-Roll Call Inc. via Getty Images A Georgia congressman running for one of the countrys most competitive U.S. Senate seats has vowed in social media posts and interviews to make Americas roads safer - by taking commercial drivers licenses away from noncitizens. “If you cant read English road signs,” Mike Collins, a Republican, posted on Facebook in April, “you dont belong behind the wheel. Period.” Collins, the owner of a trucking business and a member of the U.S. House of Representatives transportation committee, is one of the loudest champions of the Trump administrations effort to revoke licenses from nearly 200,000 noncitizen commercial drivers, including thousands of truckers. The Trump administration has pushed the policy forward even though its own officials have written that theres no empirical evidence to show that foreign truckers cause more crashes than truckers who are American citizens. At the same time, however, Collins has opposed rules that experts say actually would reduce the odds of serious crashes. Those rules could have required that Collins family business sink substantial money into new safety measures for its fleet. Over the past 25 years, crashes involving truckers for Collins business killed five people and injured more than 50 people - including one woman who now needs around-the-clock care due to a severe brain injury - according to federal data, court filings, plaintiffs attorneys and police records. Drivers and passengers who were injured in those crashes later claimed in lawsuits that truckers for Collins business have caused them to collectively incur hundreds of thousands of dollars in medical expenses. The figure the business has paid out is not known because the settlements it reached with crash victims have been confidential, as is common in such suits. Court filings in one suit state that both parties agreed to a $1 million payout from the businesss insurer. Collins business denied wrongdoing by truckers and the business itself in those cases. ProPublicas analysis of federal motor vehicle data from the past two years shows that Collins business has a higher rate of unsafe driving and speeding violations per mile than the majority of trucking companies with substantial mileage. The analysis also shows that the companys recent crash rate sits around the median of similar companies, while the rate of injury from those crashes sits in the top fifth. Safety experts told ProPublica that some of the technologies opposed by Collins, which include devices on semitrucks to limit their speed and sensors on big rigs to automatically brake in the face of a potential collision, reduce the odds of crashes leading to serious injuries and deaths. The countrys largest trucking trade group - a group that Collins family business is a member of, according to the companys website - has supported mandates for those technologies. “These are proven technologies,” said Zach Cahalan, executive director of the Truck Safety Coalition, which advocates on behalf of crash victims and their families. He added that the technologies would “protect those we hold dear on our roads from horrific tragedy.” Neither Collins campaign nor his congressional office responded to ProPublicas requests for comment or to questions about his family businesss safety record or his policy positions on trucking safety. His campaign manager declined to make him available for an interview. The business did not respond to questions sent by ProPublica; an employee told ProPublica that press inquiries about the business are handled by Collins congressional office. In recent years, Collins has described his efforts to keep foreign truckers off the roads as “purely a safety issue.” He has also questioned the effectiveness of other safety measures and said that they would have saddled his industry with extra costs. “We want to be safe,” Collins said in one congressional hearing. “I dont know of a trucking company out there that doesnt want to be safe. And when they are not safe, they are taken off the road.” Toward the end of 2023, his first year in Congress, Collins had one of his first chances to support a measure that experts believed could make the roads safer. The Biden administration had proposed a rule that would require the installation of devices to limit the speed of trucks , capping it as low as 60 miles per hour. But Collins questioned the need for the rule. He told officials at a transportation committee hearing that the federal government shouldnt require the safety measure. He said insurance companies already serve as a sufficient speeding deterrent, because they have the ability to cut off coverage to truckers with unsafe driving records. He also said the rule wasnt needed because of yet another deterrent that had long been in place. “They are called speed limit signs,” he said. “They are enforced by law enforcement.” Collins position stood at odds with the industrys largest trade group, American Trucking Associations, which that year had expressed support for capping the speeds of trucks between 65 and 70 miles per hour. Collins did not respond to questions about why his views are at odds with ATA, which represents the interests of 37,000 members, including Collins family business. In 2025, the Trump administration withdrew the speed limiter proposal. U.S. Secretary of Transportation Sean Duffy celebrated the decision as one that would get “D.C. bureaucrats OUT of your trucks.” Collins also pushed back against a different proposal, which would have required trucks to have automatic emergency braking systems. That technology can force a truck to slow down if the potential for a collision is detected. Federal officials had estimated that the braking system mandate could prevent more than 8,000 injuries a year. ATA supported much of the proposal, too. Yet Collins, whose family business has used those systems in some trucks, explained at recent congressional hearings that the technology was “ very expensive ” and didnt work that well . “People dont understand that these things are actually hurting more than theyre helping right now,” Collins said at a hearing last year. Some of Collins truckers have been involved in crashes because of their alleged failure to slow down, according to citations and police reports obtained by ProPublica. Over the past five years, three people hurt in those crashes have sued Collins fleet because its truckers allegedly failed to maintain a safe distance, leading them to cause crashes. The plaintiffs claimed that they sustained serious injuries that cost five to six figures in medical expenses. The truckers and Collins business denied wrongdoing in the cases. The three cases were dismissed. Lawyers for two plaintiffs said the cases ended in a settlement; a lawyer for the third plaintiff did not respond to multiple requests for comment about the dismissal of the case. The fate of automatic emergency braking requirements is now up in the air, too. The Trump administration has delayed the rule from going into effect and, according to ProPublicas reporting last year , may narrow the scope of it. A still from Mike Collins ad for his U.S. Senate campaign from July 2025 . Collins has used his identity as a trucking business owner as political clout, despite his companys history of crashes and safety concerns. Screenshot by ProPublica via Facebook Collins has said that his decades in the business make him especially attuned to safety measures that work, compared with bureaucrats who have “beaten to death” his industry with too many regulations. In the late 1980s, Collins became the head of the familys trucking company before he had graduated college. He took over for his dad, Mac Collins, who served as a congressman from 1993 to 2005. Shortly into Mike Collins time as president, one of his companys truckers lost control of his trailer. The crash that followed sent a 19-year-old woman to the hospital . The trucker later pleaded guilty to driving under the influence of cocaine. The business drew scrutiny because that trucker had pleaded no contest to drunk driving earlier that year but was allowed to stay on the road. A political opponent later aired a TV ad that accused the familys trucking business of being cited for “ more than a hundred” safety violations . At the time, Mac Collins blamed the companys insurer for missing the drunk-driving conviction in a background check. He said the ad contained “falsehoods” but didnt specify what was wrong. The company ultimately fired the trucker after the crash, Mac Collins told the Ledger-Enquirer in 1994. The larger the Collins trucking fleet grew - into one of about 100 trucks, hauling timber for Georgia-Pacific as well as tires and steel - the more traffic citations and inspection violations its truckers received. The data ProPublica reviewed showed that truckers have gotten into more than 90 crashes that have led to at least 51 injuries and five deaths since 2001. In 2007, one Collins trucker veered into oncoming traffic on a North Carolina highway and hit a white Honda CR-V. The CR-Vs driver, Bridget Murphy, and the trucker both died. Murphys estate and two of Murphys passengers filed a lawsuit and, according to a court filing in 2009 , agreed to a $1 million payout from the companys liability insurance coverage. The company wrote in a filing that the trucker had been “ stricken by a physical impairment beyond his control .” In 2021, another trucker switched lanes on an Indiana highway and collided into a car driven by Larkin Cooper. She claimed in a lawsuit that the truckers “ negligent and reckless ” driving caused injuries that forced her to drop out of nursing school and switch to a lesser-paying career. Her lawyer wrote that the total damages were likely to exceed $75,000. In 2023, a trucker failed to stop quickly enough while approaching a red traffic light on a northeast Georgia highway, causing a four-vehicle crash, according to court records. Drivers in two vehicles later said in lawsuits that they had sustained serious medical injuries. One of them claimed that the costs to treat his back, knee and neck totaled more than $120,000. Collins did not answer ProPublicas questions about the lawsuits. Lawyers for the familys business denied wrongdoing in the suits in Indiana and Georgia. Soon after, the business settled for undisclosed sums. During a televised debate in April, just weeks before the May 19 Republican primary for the U.S. Senate race, Collins told viewers that his time in the trucking business had taught him how to work across the aisle in Washington, D.C. His political ads feature him behind the wheel of a rig, and his yard signs have a logo of an American flag in the shape of a semi. Yet his messaging about making roads safer centers on one main idea: getting noncitizen truckers off the road. In one social video from November, Collins was on one side of a split screen, speaking about a sign on the other screen. “You know what this sign says?” Collins asked. “Nah, neither do I.” “Yall, Its a road sign from Uzbekistan, which is exactly why Im able to drive a truck in Georgia, but not Uzbekistan,” he continued. “But somehow, yall, that common sense, well, it didnt apply to one man on our roads.” Collins then replaced a photo of the sign with a mug shot of an undocumented trucker named Akhror Bozorov. Collins said he had been “wanted in Uzbekistan for terrorism and spreading Jihad.” After Bozorov was arrested last year, the Department of Homeland Security published a press release that criticized Pennsylvania Gov. Josh Shapiros transportation department for issuing a license to Bozorov and President Joe Bidens administration for granting the trucker his work authorization. Collins went one step further and used the truckers story to attack the politician hes trying to unseat, U.S. Sen. Jon Ossoff, D-Ga., for not being tough enough on immigration. He also cited Bozorovs story as justification to strip noncitizen truckers of their licenses - but failed to present evidence that noncitizen truckers make the roads less safe. In March, the Trump administration enacted its rule that could eventually revoke commercial licenses from nearly 200,000 noncitizen drivers. But according to the administrations initial analysis of its own rule last year, “ There is not sufficient evidence, derived from well-designed, rigorous, quantitative analyses, to reliably demonstrate a measurable empirical relationship ” between a truckers citizenship status and safety outcomes. A letter from nearly 20 Democratic state attorneys general pointed out that the Trump administration cited only five fatal crashes last year that were caused by noncitizens with commercial drivers licenses, out of more than 4,000 deaths involving CDL drivers nationwide. The letter said that the Trump administrations rule presented “no facts” to support the claim that revoking thousands of licenses would “benefit public safety.” Public interest lawyers have also filed a legal challenge to the rule. The challenge is pending. “The notion that immigrant drivers are less safe than other drivers is not supported by the facts,” said Wendy Liu, one of the lawyers who filed the challenge. The same week that Trumps rule was enacted, Collins doubled down on his calls to restrict commercial licenses for noncitizens, writing in an Instagram post that “this isnt some game. Lives are at stake. Deport these thugs now.” How ProPublica Analyzed Federal Motor Vehicle Data To examine the safety record of Collins trucking company, ProPublica used data from the Federal Motor Carrier Safety Administration, which tracks inspections, violations and crashes for trucking companies. The analysis was limited to crashes and violations over a recent two-year period that feed into the agencys Safety Measurement System . Using the most recent annual mileage total for each company from the FMCSA data, ProPublica calculated a per-mile rate for crashes, injuries, unsafe driving violations and speeding violations (which are a subset of unsafe driving violations). ProPublica compared Collins company - which reported about 7 million miles driven in 2025 - with other active trucking companies with more than 1 million annual miles logged recently, around 21,000 companies. During the two-year period examined from March 27, 2024, to March 26, 2026, Collins company had 31 unsafe driving violations, 11 of which were speeding violations, as well as four crashes resulting in six injuries. The data includes only crashes involving a tow-away, injuries or deaths. One crash, which involved an injury, was labeled as nonpreventable. Not all crashes are evaluated for preventability, and research has found crash involvement to be a strong indicator of future crash risk, regardless of role in the crash. When compared to the other trucking companies in our analysis, Collins family businesss crash rate per mile ranked higher than that of around 40% of other companies, while its per-mile rates of injuries, unsafe driving violations and speeding violations were higher than those of roughly 80% of other companies. The post A U.S. Senate Candidate Says Foreign Truckers Are Making Americas Roads Unsafe. His Own Truckers Have Caused Harm. appeared first on ProPublica .

The SF Fed maintains three advisory councils: the Community Advisory Council , Community Depository Institutions Advisory Council , and Economic Advisory Council . Members of these councils represent businesses, financial institutions, and community organizations across the Twelfth District. They convene to discuss the Districts economy, bringing valuable perspectives from around the District to the San Francisco Fed. This Advisory Council Observations series highlights key insights contributed by the council members in recent meetings. The San Francisco Feds advisory councils are a crucial source of on-the-ground insights about the Twelfth Districts economy, and each has a specific focus: The Community Advisory Council (CAC) serves as an important source of information on economic conditions in lower-income communities in the District. The Community Depository Institutions Advisory Council (CDIAC) shares information about banking conditions, the ability of community depository institutions to support local markets, and other issues of interest in the District. The Economic Advisory Council (EAC) provides observations about the Districts economic, business, and labor conditions. President and CEO of the San Francisco Fed Mary C. Daly, other leaders from the Banks Executive Leadership Team and the Economic Research, Regional Engagement, and Banking Supervision groups attend council meetings and facilitate robust discussions. They ask Council members to provide their assessments of the general health of the economy, while also surfacing specific short- and longer-term opportunities and concerns. Here are some photos and key observations from the most recent meetings of the Councils: Economic Advisory Council March 2026 Economic Advisory Council (EAC) meeting Members of the Economic Advisory Council reported that economic activity slowed slightly in recent months. Council members described a bifurcated, or K-shaped, economy and noted that spending growth has been largely driven by high-income households. Overall, they said that retail sales and demand for consumer and business services declined slightly. Council members noted demand for computer chips and related energy products was very strong, while activity in other sectors was generally stable to somewhat softer. They observed that uncertainty around the outlook increased due to geopolitical tensions and their potential impact on financial and energy markets. Comments reflected that head counts were stable on net, and Council members remained focused on efficiency gains and rightsizing operations. They reported that pay levels grew at a slight pace, and annual pay increases were down from recent years but in line with historical averages. Members also noted that prices rose moderately, and input costs generally rose at a faster pace than selling prices. Council members noted broad AI adoption, primarily in office operations but also increasingly for revenue generation. Council members anticipated increased AI-related productivity gains without head count growth in many industries over the next two years as the technology matures, with some shifts in skill requirements across certain business areas needed. Community Advisory Council March 2026 Community Advisory Council (CAC) meeting Across multiple regions, Council members reported that housing, utilities, food, and transportation costs continue to strain household finances, particularly for low- and moderate-income families. Community organizations noted increases in credit card balances, loan delinquencies, and reliance on high-cost financial products. They also shared that many households are operating with little financial cushion and entering assistance programs during acute financial stress rather than seeking preventative counseling. Council members from tourism-heavy regions reported declining visitor volumes, particularly in Las Vegas, where visitor activity, including gaming, is down. They noted that these shifts are producing ripple effects across hospitality, retail, and food service sectors, where businesses simultaneously face higher input costs and thinning margins. Community lenders are also reporting significantly reduced small business lending activity. Council members noted that economic pressures are often amplified in Tribal and rural communities due to geographic isolation and infrastructure constraints. Nonprofit organizations reported significant increases in demand for housing assistance, food security, and crisis stabilization services. Simultaneously, many nonprofits are experiencing declines in philanthropic contributions and government contract reductions. Council members shared that this dynamic is pushing organizations to prioritize emergency response services while scaling back long-term programs, creating potential capacity constraints across community support systems. Community Depository Institutions Advisory Council March 2026 Community Depository Institutions Advisory Council (CDIAC) meeting Council members reported that credit performance remains generally strong, with commercial real estate (CRE) showing particular resilience. They noted that where borrowers face debt service coverage pressures, most maintain ample liquidity and continue making timely payments. Council members shared that banks are actively managing refinance risk as loans reprice, in part by maintaining ongoing dialogue with borrowers. Council members shared that competition for deposits persists, reinforcing banks’ continued focus on full-service relationships and various balance sheet management strategies. Council members indicated that vendor management remains a key factor in addressing cybersecurity risks, as a considerable portion of security challenges originate from vendors. They felt that multi-layered sub-vendor relationships add complexity to due diligence. Looking across the industry, Council members observed that strategic consolidation continues among institutions seeking portfolio diversification and deposit acquisition. Advisory Councils are a vital source of information for the San Francisco Fed. They provide valuable insights into how businesses and households across the Twelfth District are navigating economic conditions on a daily basis. These insights help inform and support the San Francisco Feds mission to advance the nations monetary, financial, and payment systems to build a stronger economy for all Americans. Related: PUBLICATIONS : twelfth district beige book Twelfth District Beige Book: April 2026 SPEECHES : mary c. dalys speeches Regionalism at the Federal Reserve: Many Voices, One Purpose Mary C. Daly POSTS : sf fed blog Advisory Council Observations: September/October 2025

Amazons head of devices and services, Panos Panay, says that the company is "not necessarily" planning to release a smartphone, but has stopped short of denying it outright. It was previously reported that Amazon is developing an Alexa-enabled AI phone codenamed "Transformer," more than 10 years after it scrapped its ill-fated Fire Phone. Speaking to the Financial Times , Panay was asked directly if the company was planning another smartphone. "Its just not the goal," he replied. "I know theres a lot of rumors out there." "I think your black and white question is, are you going after a phone? A lot of people want me to say no, but a lot … Read the full story at The Verge.

The SF Fed engages with businesses and communities across the region to gather real-time information on local economic conditions. These insights provide important context to quantitative data and analyses that the Federal Reserve uses to guide its monetary policy efforts. We also work to connect constituents with research, expertise, and networks that strengthen local economies. In this way, regional engagement furthers the SF Feds mission of advancing the nations monetary, financial, and payment systems to build a stronger economy for all Americans. The Federal Reserves system of 12 Reserve Banks , with the SF Fed representing the western states, helps ensure that local and regional perspectives inform Federal Reserve policies, actions, and decision-making. Heres a snapshot of what we learned during a recent outreach visit to Spokane and the surrounding region from Christina Prkic and Ian Galloway, Regional Executives of the Seattle and Portland branches, respectively, at the SF Fed. Discovering the Inland Northwests Economic Hub Washington state is served by our Seattle and Portland branches, where we, Christina Prkic and Ian Galloway lead as Regional Executives, respectively. A big part of our role is to foster ongoing dialogue with local business and banking leaders across the region to deepen our understanding of how different businesses are experiencing the economy in real time. This year, we teamed up for a joint regional engagement visit to Spokane and nearby areas. Our goal was simple: listen, learn, and understand the perspectives of the people we meet. They know their communities best, and their insights provide invaluable qualitative information that helps inform monetary policy . “Spokane has really emerged as the economic heartbeat of the Inland Northwest,” Christina observed. “The way it connects Coeur d’Alene, Idaho, and Eastern Washington creates a regional economic ecosystem.” “What’s particularly interesting is how businesses operate across state lines here,” Ian added. “They see opportunities between Washington and Idaho, viewing the entire Spokane-Coeur d’Alene area as an ecosystem. These kinds of insights from the Inland Northwest, and across the Twelfth District, play an important role in informing the Federal Reserve’s understanding of the regional economy. Industries Driving Growth and Innovation During our visit, we had the chance to explore several key industries that define the region’s economic character. “The growth in the bioscience and biopharmaceutical sectors was eye-opening,” Christina said. “And the web of manufacturers along the I-90 corridor supporting the aerospace industry shows how interconnected the regional economy really is.” We also spent time learning about the wood products industry, which provided insights into both traditional economic drivers and innovative approaches to modern challenges. “The wood products conversations were informative,” Ian shared. “Seeing how these established businesses are evolving and adapting to new market demands really demonstrates the resilience of this region.” Turning Challenges into Opportunities One consistent theme throughout our meetings was how businesses approach obstacles-not as roadblocks, but as chances to innovate. “I was genuinely impressed by the problem-solving mindset we encountered,” Christina remarked. “These business leaders don’t just accept challenges; they actively reframe them as opportunities. That kind of approach is essential for building resilient local economies.” This resilience was adeptly illustrated during our tour of Mercer International, a wood products manufacturer. The company has developed a highly automated process to manufacture mass timber materials-a creative solution to address construction supply issues. “Watching their production line in action was fascinating,” Ian explained. “It’s a perfect example of how industries can evolve to address current economic challenges. They’ve taken their expertise in wood products manufacturing and have begun to apply it to multifamily housing solutions, which addresses a critical need in many of the communities we serve.” “One major takeaway was the innovation of the businesses we met. They reframe challenges as opportunities, which is crucial for building resilient economies.” Christina Prkic The Value of Ongoing Conversations What makes these visits so valuable is that they’re not just one-time information-gathering exercises-they’re the beginning of ongoing relationships with the communities we serve. “Our goal is to start a conversation that continues over time. We reach out to businesses regularly to understand changing conditions and invite them to share their insights with us.” Ian Galloway “We’re committed to continuing these conversations,” Christina explained. “We regularly check in with the people we meet to track how conditions are evolving over time.” “These relationships help us gather real-time economic intelligence that complements our quantitative data,” Ian concluded. “When we combine both types of information, we get a much richer, more nuanced understanding of what’s happening on the ground.” These visits and conversations help us understand the diverse economic experiences across our District. The insights we gain provide valuable context that informs the Federal Reserve’s monetary policy decisions as we work toward our mission of building an economy that works for all Americans. Related: PUBLICATIONS : twelfth district beige book Twelfth District Beige Book: November 2025 PUBLICATIONS : community development research briefs On-the-Job Exposure to AI Among Lower-Income Workers Elizabeth Kneebone , Natalie Holmes POSTS : around the district , community development Around the District: Unlocking the Potential of Idaho’s Rural Communities Leilani Barnett

NPRs Steve Inskeep asks Chinese economist Dan Wang offers about the competing economic interests of China and the U.S.

After the Supreme Court ruled some of President Trumps tariffs unconstitutional, the first wave of tariff refunds have begun flowing in.

The neutral real interest rate-also called r-star-is the theoretical rate prevailing when maximum employment and 2% inflation are reached. How is this unobservable rate estimated?

Learn what the world population would be, and how it would be distributed across low- and high-income countries, if birth rates hadnt declined for the past 60 years.

As we approach the end of the year, heres a top five list of our most widely read FRBSF Economic Letter topics in 2025, featuring research and insights from SF Fed economists and research staff. 5. Data Revisions Do Low Survey Response Rates Threaten Data Dependence? Sylvain Leduc , Luiz Edgard Oliveira , Caroline Paulson March 31, 2025 Monetary policy is forward-looking and dependent on policymakers economic outlook. When the outlook is deemed highly uncertain, policymakers may put more weight on incoming data when making monetary policy considerations. However, falling survey response rates suggest employment and inflation data may have become less reliable. Analysis of payroll employment and consumer price inflation data shows that data revisions over the past few years have been in line with their pre-pandemic averages. This suggests that these data have not been an outsized source of uncertainty in recent years. 4. How Demand-Driven Inflation Responds to Monetary Policy Does Monetary Policy Tightening Reduce Inflation? Rami Najjar , Adam Shapiro February 3, 2025 Recent research has identified periods when the Federal Reserve intentionally acted to slow inflation when it exceeded desired levels. The success of these disinflation attempts reveals the extent of policymakers commitment to lowering inflation. An extension of this analysis indicates that successful disinflations are associated with a decline in the demand-driven component of inflation. This was especially evident during recent monetary policy tightening, with contributions to core inflation from demand declining 2 percentage points since the summer of 2022-the largest decline for any deliberate disinflation attempt since 1969. Is Demand or Supply More Important for Inflation? Kevin Lansing June 23, 2025 Simulations using a Phillips curve-type relationship provide insights into the importance of demand versus supply for inflation over different periods. The decade of low inflation after the Great Recession was driven mainly by supply forces. Given that monetary policy operates to influence demand but not supply, this result helps to account for the persistent undershooting of the Feds 2% inflation goal during these years. In contrast, the period of high inflation during the pandemic era was driven mainly by demand forces. 3. The Neutral Rate and Perceptions About Monetary Policy Underlying Trends in the U.S. Neutral Interest Rate Carlos Carvalho, Andrea Ferrero, Felipe Mazin, Fernanda Nechio April 21, 2025 After a prolonged decline, U.S. inflation-adjusted interest rates have increased somewhat since the pandemic-possibly implying a higher new normal. As central banks attempt to tame the post-pandemic inflationary bout, whether real rates will fall back closer to pre-pandemic levels will ultimately depend on the trends in their long-term underlying determinants. Estimates suggest that the pre-pandemic downward pressures from global factors and from U.S. population aging have faded, while fiscal conditions continue to put upward pressure on U.S. real rates. Current Perceptions About Monetary Policy Michael Bauer , Carolin Pflueger, Adi Sunderam February 24, 2025 Surveys of professional economic forecasters and financial market data can reveal public perceptions about the future conduct of monetary policy. Current estimates suggest that both professional forecasters and investors expect the Federal Reserve to respond strongly and systematically to changes in economic conditions. The current perceived responsiveness to inflation is particularly high relative to past responsiveness. Furthermore, the perceived importance of employment as a driver of future policy interest rates has strengthened since 2024. 2. Shifting Labor Market Conditions Tracking Labor Market Stress Rohit Garimella , Òscar Jordà , Sanjay R. Singh August 18, 2025 State-level unemployment claims can provide a real-time measure of national labor market conditions and the overall state of the economy. A rapid and widespread buildup of stress in state labor markets usually signals the start of a recession. In mid-2024, some widely followed indicators of recession risk flashed red. However, analysis of state-level data indicates that labor market declines were not as widespread as they had been in previous recessions. Applying this analysis to the latest data suggests that the labor market has remained stable through mid-2025. Assessing the Recent Rise in Unemployment Greeshma Avaradi , Marianna Kudlyak , Brandon Miskanic , David Wiczer April 14, 2025 The unemployment rate has risen over half a percentage point since the second quarter of 2023. Individual survey data underlying the unemployment rate can help in assessing which labor market transitions account for this rise. One dominant factor appears to be a fall in the job-finding rate-the share of unemployed individuals finding employment. The duration of unemployment has also increased recently. In past decades, these patterns have frequently occurred during the onset of recessions, which suggests that these data should be closely monitored. Immigration and Changes in Labor Force Demographics Evgeniya Duzhak , Addie New-Schmidt November 19, 2025 Recent shifts in immigration flows have lowered the estimates of net international migration into the United States. New data indicate that net migration will be close to half a million people in 2025, down from 2.2 million in 2024. Estimates based on these data and on past trends for the U.S.-born population suggest that this could lead to a decrease in the working-age population and slower growth in the prime-age labor force. Continued low levels of immigration would lead to decreases in the total prime-age labor force. 1. The Economic Effects of Tariffs The Effects of Tariffs on Inflation and Production Costs Bart Hobijn , Fernanda Nechio May 19, 2025 A range of tariffs on U.S. imports has been enacted or considered recently. Trade tariffs can potentially affect price inflation for consumption and investment goods. Estimates suggest that the impact on prices for investment goods is likely to be much larger than for consumption goods. For example, if an across-the-board 25% tariff is fully passed through to finished goods, near-term price increases are estimated to be about 9.5% for investment goods and 2.2% for consumption goods. These price increases for investment goods can have important implications for businesses investment decisions. The Economic Effects of Tariffs Naomi Halbersleben , Òscar Jordà , Fernanda Nechio November 24, 2025 The United States announced new, higher tariff rates this year. Tariffs can affect supply chains, investment, and firms input costs, resulting in supply-side effects such as higher inflation and higher unemployment. However, tariffs can also affect spending, the demand side of the economy. Weaker demand translates to higher unemployment but lower inflation. Estimates using 40 years of international data show that, following a change in tariffs, initially the unemployment rate increases and inflation declines. Over time, however, the unemployment rate returns to normal levels while inflation increases. The Economic Implications of Tariff Increases Caroline Paulson , Aditi Poduri , Aayush Singh , Mauricio Ulate July 14, 2025 Trade policy in the United States has been in flux in recent months. A theoretical analysis of recent increases in U.S. tariffs, including potential retaliatory tariffs by other countries, suggests a resulting drop in overall U.S. employment, although manufacturing employment increases. Results also indicate a decline in overall real income for the United States of around 0.4%, although this number masks important variation across U.S. states. Photo by Sean Qiu Related: POSTS : sf fed blog Labor Supply and Demand Are Slowing in Tandem Addie New-Schmidt , Ingrid Chen , Leila Bengali , Nicolas Petrosky-Nadeau POSTS : sf fed blog The Center for Monetary Research: First Year in Review Michael Bauer POSTS : sf fed blog Update on Payroll Employment Gains Data Revisions Luiz Edgard Oliveira , Sylvain Leduc

How does economic uncertainty affect the economy? Uncertainty about economic policy can shape the decisions of households and firms. When the policy environment becomes less predictable, for example, households and firms may adjust their spending and investment behavior. This post looks at how uncertainty co-moves with consumption, investment, and output in India. Our first FRED graph, above, does show a negative relationship between economic policy uncertainty and the growth rate of consumption in India. That is, periods of higher uncertainty tend to coincide with weaker consumption growth. One plausible mechanism may be that higher uncertainty encourages households to postpone discretionary spending, increase precautionary savings, and delay major purchases. How do we measure uncertainty? The Economic Policy Uncertainty (EPU) Index for India , shown in the graph by the solid blue line, is constructed by tracking the frequency of newspaper articles that discuss policy-related economic uncertainty. Specifically, the index draws on major publications in India and counts articles that jointly reference terms related to uncertainty, the economy, and policy (such as regulation, fiscal policy, and central banking). These counts are scaled by the total number of economic policy uncertainty articles in each newspaper and then normalized to ensure comparability across sources and over time. The index is set to have an average value of 100 in the pre-2011 period. Higher values of the index indicate greater policy-related economic uncertainty, while lower values indicate relatively more stable and predictable policy conditions. The EPU Index is available at a monthly frequency. Since the growth rates of consumption, investment, and output are reported quarterly, the EPU index is aggregated to the quarterly frequency to ensure consistency. Our second FRED graph, above, shows another negative relationship-this time, between the EPU Index and investment growth in India. That is, higher policy uncertainty is associated with slower investment growth. It may be the case that higher uncertainty induces firms to delay irreversible investment decisions and wait for clearer policy signals. A similar negative relationship holds between EPU and real GDP growth . This pattern is consistent with the mechanisms described above: When households defer consumption and firms postpone investment, aggregate economic activity slows down. Overall, higher EPU is consistently associated with weaker consumption, investment, and GDP growth. While these are simple correlations, they suggest that policy uncertainty dampens economic activity. How these graphs were created : For the first graph, search FRED for and select the series “Economic Policy Uncertainty Index for India” and click “Edit Graph.” Modify the frequency to “Quarterly” and the aggregation method to “Average.” Then open the “Add Line” tab and select the series “National Accounts: GDP by Expenditure: Constant Prices: Private Final Consumption Expenditure for India” (series ID: NAEXKP02INQ189S). Set units to “Percent Change from Year Ago” at a “Quarterly” frequency. Then click on “Format,” choose line 2, and use dotted / red for line style. Set Y-axis position to “Right” and close the panel. Set the date range to 2003-01-01 to 2023-07-01. For the second graph, repeat the same exercise substituting the consumption series for gross fixed capital formation. Suggested by Bishmay Barik and B. Ravikumar .

Rajashri Chakrabarti, Thu Pham, Beck Pierce, and Maxim L. Pinkovskiy In our companion post, we used a new module of our Economic Heterogeneity Indicators (EHIs) to shed light on how recent retail spending growth has been driven by high-income households. This fact is consistent with the popular presss idea of a “ K-shaped economy ” in which higher-income households experience faster growth in spending than lower-income households. In this post, we dive deeper into the reasons behind this divergence by analyzing for which goods this trend holds true and ask whether it can be explained by changes in wages, inflation, or wealth. We find that, since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households. In contrast, earnings display a more mixed pattern, though earnings of the highest earners have grown more rapidly than earnings of the lowest earners. Who Is Buying What? We first exploit our consumption data to examine the types of goods that contributed the most to the divergent patterns across income groups. In the chart below, we present real cumulative spending growth for two types of goods: necessities (food and gas, top panel) and luxuries (retail spending less autos, food and gas, bottom panel). We see that real spending on luxuries increased cumulatively since 2023 for all three income groups and spending on necessities declined for most groups. Notably, the growth in retail spending has been driven by the growth in luxury spending. We also see that growth of both necessity and luxury spending by income group displayed the same K‑shaped pattern as seen in total retail spending. K-Shaped Pattern Evident for Both Necessity and Luxury Spending Real food cumulative growth (Jan 2023 = 100%) {"padding":{"auto":false,"right":40,"left":27},"data":{"groups":[],"labels":false,"type":"line","order":"desc","selection":{"enabled":false,"grouped":true,"multiple":true,"draggable":true},"x":"Date","xFormat":"%m\/%d\/%Y","rows":[["Date","Low income ( (Jan 2023 = 100%)","color":{"pattern":["#61AEE1","#B84645","#B1812C","#046C9D","#9FA1A8","#DCB56E"]},"interaction":{"enabled":true},"point":{"show":false},"legend":{"show":true,"position":"bottom"},"grid":{"x":{"show":false,"lines":[],"type":"indexed","stroke":""},"y":{"show":true,"lines":[],"type":"linear","stroke":""}},"regions":[],"zoom":false,"subchart":false,"download":true,"downloadText":"Download chart","downloadName":"chart","trend":{"show":false,"label":"Trend"}} Real gas cumulative growth (Jan 2023 = 100%) {"padding":{"auto":false,"left":27,"right":40},"data":{"groups":[],"labels":false,"type":"line","order":"desc","selection":{"enabled":false,"grouped":true,"multiple":true,"draggable":true},"x":"date","xFormat":"%m\/%d\/%Y","rows":[["date","Low income ( (Jan 2023 = 100%)","color":{"pattern":["#61AEE1","#B84645","#B1812C","#046C9D","#9FA1A8","#DCB56E"]},"interaction":{"enabled":true},"point":{"show":false},"legend":{"show":true,"position":"bottom"},"grid":{"x":{"show":false,"lines":[],"type":"indexed","stroke":""},"y":{"show":true,"lines":[],"type":"linear","stroke":""}},"regions":[],"zoom":false,"subchart":false,"download":true,"downloadText":"Download chart","downloadName":"chart","trend":{"show":false,"label":"Trend"}} Real luxuries cumulative growth (Jan 2023 = 100%) {"padding":{"auto":false,"left":27,"right":25},"data":{"groups":[],"labels":false,"type":"line","order":"desc","selection":{"enabled":false,"grouped":true,"multiple":true,"draggable":true},"x":"date","xFormat":"%m\/%d\/%Y","rows":[["date","Low income ( (Jan 2023 = 100%)","color":{"pattern":["#61AEE1","#B84645","#B1812C","#046C9D","#9FA1A8","#DCB56E"]},"interaction":{"enabled":true},"point":{"show":false},"legend":{"show":true,"position":"bottom"},"grid":{"x":{"show":false,"lines":[],"type":"indexed","stroke":""},"y":{"show":true,"lines":[],"type":"linear","stroke":""}},"regions":[],"zoom":false,"subchart":false,"download":true,"downloadText":"Download chart","downloadName":"chart","trend":{"show":false,"label":"Trend"}} Sources: Numerator Consumer Spending Data, Consumer Price Index via Haver Analytics, and authors calculations. Note: Real spending uses corresponding demographic food, gas, and luxuries prices. What’s Driving the Divergence? Next we consider whether differences across income in wages, real wealth, and inflation have been important contributors to this divergence. Using the Federal Reserve Bank of Atlantas Wage Growth Tracker , we examine workers wage growth by their wage quartile. The Atlanta Fed observes a panel of individuals and are thus able to define growth as the median percent change in the hourly wages of individuals observed twelve months apart. In the chart below, although the lowest wage quartile has experienced the lowest wage growth in the past year, we see that this has not always been the case. In fact, in some periods of 2023 and 2024, this group experienced the highest growth out of all the quartiles. Given that the K-shaped spending growth appeared in late 2023 and has persisted since, we suggest that there are other factors besides wages that may explain the K-shaped spending pattern starting in late 2023. 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Notes: Twelve-month moving averages. October 2025 data not collected by the Bureau of Labor Statistics. We turn to our EHIs to explore whether differential inflation by income group may be playing a part in this K-shaped economy. In the chart below, we examine differences between each income group (the bottom 40 percent, middle 40 percent, and top 20 percent of the income distribution) and the national average. We see that beginning in late 2022, low-income households consistently faced higher inflation than middle- and high-income households did. Specifically, the lowest-income households have experienced inflation above the national average, restraining their spending, whereas the middle 40 percent and top 20 percent of the income distribution have experienced inflation below or near the national average. 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YYYY"},"axis":{"rotated":false,"x":{"show":true,"type":"timeseries","localtime":true,"tick":{"centered":false,"culling":false,"fit":true,"outer":true,"multiline":false,"multilineMax":0,"format":"%b %Y","values":["01\/01\/2019","01\/01\/2020","01\/01\/2021","01\/01\/2022","01\/01\/2023","01\/01\/2024","01\/01\/2025","07\/01\/2025","07\/01\/2024","07\/01\/2023","07\/01\/2022","07\/01\/2021","03\/01\/2026","07\/01\/2019","07\/01\/2020"],"rotate":40},"label":{"text":"","position":"outer-center"},"format":"%Y-%m-%d"},"y":{"show":true,"inner":false,"type":"linear","inverted":false,"tick":{"centered":false,"culling":false},"padding":{"top":3,"bottom":0},"primary":"","secondary":"","label":{"text":"","position":"outer-middle"},"max":0.6,"min":-0.8},"y2":{"show":false,"inner":false,"type":"linear","inverted":false,"padding":{"top":3,"bottom":0},"label":{"text":"","position":"outer-middle"}}},"regions":[{"axis":"x","start":"02\/01\/2020","end":"04\/01\/2020","class":""}],"chartLabel":"Demographic inflation rate gaps (percentage points)","color":{"pattern":["#61AEE1","#B84645","#B1812C","#046C9D","#9FA1A8","#DCB56E"]},"interaction":{"enabled":true},"point":{"show":false},"legend":{"show":true,"position":"bottom"},"grid":{"x":{"show":false,"lines":[],"type":"indexed","stroke":""},"y":{"show":true,"lines":[],"type":"linear","stroke":""}},"zoom":false,"subchart":false,"download":true,"downloadText":"Download chart","downloadName":"chart","trend":{"show":false,"label":"Trend"}} Source: BLS Consumer Expenditure Survey microdata; BLS Consumer Price Indexes. Notes: Shaded region indicates the COVID-19 recession. Demographic inflation gaps are calculated as demographic inflation less overall inflation. Three-month moving averages. Finally, using data from the Board of Governors Distributional Financial Accounts (DFA) we note that there have also been K-shaped growth patterns in household wealth. The left panel below shows cumulative growth in real wealth (where we define wealth as net worth or assets less liabilities) for the bottom 20 percent, the middle 40 percent (the third and fourth 20 percent), the second to top quintile, the top quintile excluding the top percentile, and finally the top percentile by nominal household income. Once again, we deflate nominal net worth using our income-specific deflators. We see that, like retail spending, real net worth has displayed a K-shaped pattern since 2023, with higher income groups experiencing higher cumulative wealth growth, relative to the first quarter of 2023, than lower income groups in nearly every quarter. The bottom quintile was an exception as its net worth grew slightly faster than that of the middle 40 percent. Thus, real net worth of the top percentile grew by more than 25 percent, while that of the middle 40 percent grew by less than 10 percent. This growth in net worth has been driven by large increases in financial assets for higher-income groups and especially the top percentile (right panel below). Given these wealth patterns, it is not surprising that higher income groups also increased their retail spending by more than lower income groups. K-Shaped Patterns Exist in Wealth and Financial Assets Growth Real net worth (2023:Q1 = 100%) {"padding":{"auto":false,"left":28,"right":18},"data":{"groups":[],"labels":false,"type":"line","order":"desc","selection":{"enabled":false,"grouped":true,"multiple":true,"draggable":true},"x":"date","xFormat":"%m\/%d\/%Y","rows":[["date"," (2023:Q1 = 100%)","color":{"pattern":["#61AEE1","#B84645","#B1812C","#046C9D","#9FA1A8","#DCB56E"]},"interaction":{"enabled":true},"point":{"show":false},"legend":{"show":true,"position":"bottom"},"grid":{"x":{"show":false,"lines":[],"type":"indexed","stroke":""},"y":{"show":true,"lines":[],"type":"linear","stroke":""}},"regions":[],"zoom":false,"subchart":false,"download":true,"downloadText":"Download chart","downloadName":"chart","trend":{"show":false,"label":"Trend"}} Real financial assets (2023:Q1 = 100%) {"padding":{"auto":false,"left":28,"right":18},"data":{"groups":[],"labels":false,"type":"line","order":"desc","selection":{"enabled":false,"grouped":true,"multiple":true,"draggable":true},"x":"date","xFormat":"%m\/%d\/%Y","rows":[["date"," (2023:Q1 = 100%)","color":{"pattern":["#61AEE1","#B84645","#B1812C","#046C9D","#9FA1A8","#DCB56E"]},"interaction":{"enabled":true},"point":{"show":false},"legend":{"show":true,"position":"bottom"},"grid":{"x":{"show":false,"lines":[],"type":"indexed","stroke":""},"y":{"show":true,"lines":[],"type":"linear","stroke":""}},"regions":[],"zoom":false,"subchart":false,"download":true,"downloadText":"Download chart","downloadName":"chart","trend":{"show":false,"label":"Trend"}} Sources: Distributional Financial Accounts via Federal Reserve, Consumer Price Index via Haver Analytics, and authors calculations. Notes: Real spending uses corresponding demographic prices. Looking Ahead In this post, we have seen that the K-shaped recovery characterizing real retail spending is mirrored to an extent in earnings, but more notably in inflation and especially in wealth accumulation, especially of financial assets. The substantial role played by financial assets raises questions regarding the potential vulnerability of retail spending to a financial market correction. We will continue monitoring differential trends in spending across demographics, as well as their potential explanations, in subsequent releases of the Economic Heterogeneity Indicators . Download Charts Data Chart Data EXCEL Rajashri Chakrabarti is an economic research advisor in the Federal Reserve Bank of New Yorks Research and Statistics Group. Thu Pham is a research analyst in the Federal Reserve Bank of New Yorks Research and Statistics Group. Beck Pierce is a research analyst in the Federal Reserve Bank of New Yorks Research and Statistics Group. Maxim L. Pinkovskiy is an economic research advisor in the Federal Reserve Bank of New Yorks Research and Statistics Group. How to cite this post: Rajashri Chakrabarti, Thu Pham, Beck Pierce, and Maxim L. Pinkovskiy, “Explaining the K‑Shaped Economy: Whats Behind the Divide?,” Federal Reserve Bank of New York Liberty Street Economics , May 1, 2026, https://doi.org/10.59576/lse.20260501b BibTeX: View | Download function _toggle_bibtex6(){ let el = document.getElementById(bibtex6); el.style.display = el.style.display === none ? : none; } @article{ChakrabartiPhamPiercePinkovskiy2026, author={Chakrabarti, Rajashri and Pham, Thu and Pierce, Beck and Pinkovskiy, Maxim L.}, title={Explaining the K‑Shaped Economy: Whats Behind the Divide?}, journal={Liberty Street Economics}, note={Liberty Street Economics Blog}, number={May 1}, year={2026}, url={https://doi.org/10.59576/lse.20260501b} } You may also be interested in: Tracking the K‑Shaped Economy: Whos Driving Spending? A New Dataset for Consumer Spending in the New York Fed EHIs Disability in the Labor Market: Earnings Disclaimer The views expressed in this post are those of the author(s) and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author(s).