Preparing For Financial Challenges When We Don't Know What's Next
Whether you are the CEO of a Fortune 500 company or of your household finances, the constant uncertainty of these times can be paralyzing. From on-again off-again tariffs, to government firings and rehirings, to talk of both inflation and a potential recession, how can Americans move forward with confidence?
It turns out that we don't need to be able to predict the future to be prepared for it.
Think about the weather: Between 2018 and 2023, three out of four people in the U.S. experienced an extreme weather event like a hurricane, a fire, or a flood. While the exact timing and force of these events may be impossible to forecast, the majority of us will experience them at some point, so we should prepare.
The same is true for our finances. While different economic scenarios bring their own unique challenges, the potential financial impacts are more predictable: paycheck disruptions, housing insecurity, unforeseen expenses. Any of these can be financially devastating. And so we also must be ready.
We can learn a lot from emergency management professionals who rely on a framework to ensure people are prepared for every stage of a disaster. It looks like this:
It turns out, this framework makes sense in all kinds of situations. In the face of the extreme uncertainty like we're facing now, one of the best things to do to regain some control is to focus on the front end of mitigating the risks and preparing for the worst.
Take Sherman, a middle school teacher who has been building a small emergency fund with help from SaverLife, a nonprofit that leverages technology to help people save and improve their financial health. When a severe accident totaled his car, Sherman had the savings he needed to buy a replacement. He wasn't happy about having to drain all of his savings, but doing so enabled him to continue to get to work and to make his student loan payments on time. Now he's working a second job at UPS so he can rebuild his savings.
Yet, preparing for a crisis is hard when simply paying for daily essentials can break the bank. Consider this: between 1990 and 2019, the median family's income grew 140%, but the cost of prescription drugs grew about 175%, childcare more than 200%, and higher education almost 400%. Housing costs are also a major strain: half of renters spend more than a third of their income on rent and utilities.
With statistics like these, it's not surprising that more than half of Americans spend more than they earn and 44% don't have enough saved to cover three months of living expenses.
Mitigation is particularly important for households with less of a financial cushion, and fintech firms are making it easier for people to reduce risk and build resilience. For instance, employers are increasingly turning to companies like Sunny Day Fund to help their workers build emergency savings. And a growing number of financial apps can help users find and cancel unwanted subscriptions in order to reduce expenses.
Some of the most exciting innovations are happening thanks to GenAI. One of the newest, Hiro, promises to be your AI personal CFO. One of the questions it can help answer: Do I have a large enough emergency fund given these turbulent markets and is it earning the best rate?
Private-sector solutions are more critical than ever and it's time to get creative. What role can you play in building financial resilience for your customers, employees, and their communities?
Ultimately, it doesn't matter if the next crisis is a hurricane or a recession. What matters is that we start preparing now so when the next storm hits – literal or metaphorical – we'll be ready to weather it together.
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The Hill
27 minutes ago
- The Hill
GM's quarterly results illustrate the folly of tariffs
General Motors, a cornerstone of American industry, is suffering the consequences of President Trump's unconstitutional 25 percent tariffs on imported vehicles and auto parts. In the second quarter of 2025, GM suffered a $1.1 billion tariff blow to its operating income, slashing the company's profit margin from a healthy 9 percent to just 6.1 percent. Net income plunged by 36.1 percent from the prior quarter and by a staggering 40.7 percent compared to a year ago. Although the estimated tariff impact for the full year of $4 billion to $5 billion is less than 3 percent of GM's overall revenue, that cost represents more than half of the typical annual income for the company over the past decade. The consequences extend far beyond GM's balance sheet. Tariffs, paid by importers to the federal government, are partly absorbed by companies and partly passed to consumers. We've especially seen this in import-sensitive sectors including furnishings, appliances, clothes and toys. Men's shirts and sweaters, for instance, rose 4.9 percent in June alone. When businesses 'eat' the cost, as GM tried to do last quarter, the fallout is no less severe. Diminished earnings mean less capital for investment in better technology or expanded operations, slowing broader economic growth, fewer resources for pay raises or new jobs — hardly the boon for workers that tariff advocates promise. The data confirms this. Nationwide, 14,000 manufacturing jobs disappeared in the past two months, erasing all gains in 2025. In June, real average weekly earnings dropped by 0.4 percent, an annualized loss of nearly 5 percent. Shareholders are also feeling the pinch. Stock valuations track a company's expected future earnings. Since 2012, GM's stock price increased by more than 200 percent. GM's price-to-earnings ratio today stands at 6.83, almost identical to 2012 levels. Stock prices increased alongside earnings. A sustained $5 billion annual hit, wiping out over half of GM's annual net income, could erase more than $20 billion in market capitalization if valuations adjust. With tariffs eroding profits, is it any wonder that GM's stock has slid 8 percent since its post-2024 election peak and now languishes 13 percent off its 2021 highs? This affects millions of middle-class Americans and retirees with pensions and savings invested. More broadly, lower dividends and diminished returns discourage investment, starving companies of the capital needed to expand. The result: slower growth, fewer jobs and weaker wage gains. GM, to its credit, is fighting to offset 30 percent of this burden by boosting U.S. production, cutting costs and increasing domestic content to comply with the USMCA trade agreement's labyrinthine rules. Yet even if successful, the net impact of $2.8 billion to $3.5 billion will devour a significant slice of GM's already thin margins. Profit margins at GM — as in most other sectors — are far less than conventional wisdom. GM's net profit margin over the past decade has averaged less than 5 percent. In other words, a $30,000 vehicle yields less than $1,500 in profit. GM's plans to shift some production to U.S. plants and rework supply chains is a testament to private enterprise's resilience. But make no mistake: These shifts sacrifice efficiency for compliance. Restructuring operations in a free market in pursuit of efficiency yields more profit, consumer benefit and economic growth. Doing so under duress to escape arbitrary tariffs may result in survival, but without these benefits. Resources that could have fueled innovation or lowered prices are now squandered on navigating artificial trade barriers. As an important sidenote, roughly half the tariff's cost stems from GM's South Korean operations, a stark reminder of the folly of taxing trade with allies. Rather than strengthening ties with democratic partners through bold free-trade agreements, these tariffs risk pushing nations like South Korea toward China, America's chief adversary. Far from economic strategy, it is geopolitical shortsightedness. Politicians sometimes prefer tariffs to other forms of taxation because they are less visible than taxes on income or sales. This makes it easier to dodge accountability by blaming 'greedy' corporations. For this reason, Trump called Jeff Bezos to deter Amazon from listing tariff costs on purchases. The White House press secretary labeled this a 'hostile and political act by Amazon.' Regardless, protectionism is not cost-free. Sustained tariffs will raise prices, shrink profits, erode real wages and slow economic growth. GM's quarterly results are a warning.
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an hour ago
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Trump stuns Wall Street, Washington with controversial BLS nominee
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