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Axios
4 days ago
- Business
- Axios
Spending climbs among the rich, as everyone else's debt rises, study says
Spending among the rich is propping up the economy, per a report analyzing detailed credit card data out Wednesday from the Federal Reserve Bank of Boston. Why it matters: These big spenders are masking increasing fragility in the economy among low- and middle-income Americans, who are seeing rising debt levels and slower spending growth — a situation that doesn't bode well for the economy overall. Zoom in: The Boston Fed analyzed large-scale credit card data that cover about 80% of card balances in the U.S., and includes information on monthly spending, debt balances and income when the account was opened. They looked at spending and debt across low-, middle- and high-income earners, and found that for the lowest-income group (earning less than $39,000), spending increased sharply in 2021 and 2022, and has since grown only modestly. The same trend largely held for middle-income earners. But spending for those earning $120,000 and up has continued to climb. Threat level: At the same time, credit card debt is now back above 2019 levels for the low- and middle-income groups. For the highest earners, debt is still below 2019 levels. That means this group has more to spend, says Dhiren Patki, a senior economist at the Boston Fed who coauthored the research. "That's potentially a force propelling their relatively strong spending today." Between the lines: Any kind of economic shock — job loss, big price increases — is going to be harder for low- and middle-earners to absorb, which would further depress spending among those groups. That decline would have all kinds of spillovers, slowing down growth. The big picture: For a few years coming out of the pandemic, low- and middle-income Americans were coming out ahead — able to pay down debt with the increased government support of those years. And for a time, wage growth at the bottom was higher than at the top. But those days are in the rearview.
Yahoo
25-06-2025
- Business
- Yahoo
Fed's Collins Favors ‘Actively Patient' Approach to Rates
(Bloomberg) -- Federal Reserve Bank of Boston President Susan Collins said an 'actively patient' approach to monetary policy is appropriate while assessing the impact of tariffs on the economy. Bezos Wedding Draws Protests, Soul-Searching Over Tourism in Venice US Renters Face Storm of Rising Costs US State Budget Wounds Intensify From Trump, DOGE Policy Shifts Commuters Are Caught in Johannesburg's Taxi Feuds as Transit Lags Mapping the Architectural History of New York's Chinatown 'While I continue to expect it will be appropriate to resume gradual policy normalization later this year, my outlook could change significantly as events unfold,' Collins said in prepared remarks ahead of a visit in the southeastern region of Massachusetts. 'Much will depend on whether the 'price shock' from tariffs dissipates quickly, without derailing inflation expectations, and on whether the associated slowdown in real activity is limited,' she said. Fed officials kept interest rates unchanged at their 4.25%-4.5% range last week, saying there's still elevated uncertainty on the economic impacts of several policy changes, particularly around trade. Policymakers expect higher unemployment and inflation this year, but are divided on the rate path ahead. Their median economic projection suggests two rate cuts this year, yet seven officials see no reductions in 2025. Governors Christopher Waller and Michelle Bowman have recently signaled they would be open to lowering rates as soon as July. On Tuesday, chair Jerome Powell reiterated his view that policymakers need not rush to adjust policy. In her remarks, Collins said she expects the bank's preferred gauge of core inflation to rise somewhat above 3% by the end of the year. Most of the price shock from tariffs will happen over a few quarters, as inventory front loaded during the beginning of the year starts to hit the shelves, she said. On the other hand, the labor market is moderating, but generally healthy amid low unemployment. 'I see the current monetary policy stance as modestly restrictive, and well positioned to address a range of possible outcomes,' she said. The central bank has 'the time to carefully assess the incoming data and their implications for the economic outlook,' Collins said. Inside Gap's Last-Ditch, Tariff-Addled Turnaround Push How to Steal a House Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros Apple Test-Drives Big-Screen Movie Strategy With F1 ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Miami Herald
21-06-2025
- Health
- Miami Herald
Fed study blasts few healthcare options in top U.S. tourism states
Romantic getaways. Family memories. Great escapes. We Americans love a good vacation. Don't miss the move: Subscribe to TheStreet's free daily newsletter You might be one of the millions lured this – and every – summer by a bold oceanfront, a lakeside fire pit or leafy mountain paths found in these popular tourism states. Related: Major health care company files for bankruptcy to sell assets Or maybe other seasonal adventures like world-class skiing, lush spring gardens or the simply fabulous foliage each autumn draw you and yours to these renowned venues any time of year. 'Cause there's also a ton of history, culture and sports to explore plus delicious local chow for the foodies. But beyond the cheery facades that welcome visitors are sad and scary realities that full-time residents face regarding year-round healthcare access in their rural communities. A new study by the Federal Reserve Bank of Boston spells out the first-hand accounts of mothers, children, elders and others challenged by distance, income, resources and other economic problems to receive healthcare that so many fellow Americans take for granted. The solutions don't seem to be short-term, straining hopes and accelerating chronic, life-threatening medical crises."Yep. It's a great place to visit but you wouldn't want to live here." Visitors to these states have heard this refrain from locals for decades, all the way back to the last century. Proximity to health care is an increasing concern in rural communities across America. As a result, patient care suffers. So do patients. Greater distances from primary care providers, community hospitals and trauma centers are linked to higher rates of fatal accidents, fatal heart attacks and infant mortality, according to Federal Reserve Bank of Boston senior policy analyst Riley Sullivan. Rural healthcare facilities are finding it more difficult to attract the skilled workforce to fill jobs at every level of skill. Reasons include lack of affordable or available housing and high costs of living magnified by the many, many miles from larger towns and bigger cities. Plus healthcare providers across America maintain that inadequate insurance, Medicaid or Medicare reimbursement rates are leading to major losses at private, public and not-for-profit facilities. Related: Major bankrupt healthcare provider closes distressed hospitals Overall, U.S. hospitals are finding that they have no choice but to cut services due to these acute financial challenges. Some even close because all options have simply run out, leaving their communities in medical deserts facing life-or-death choices 24-7. Boston Fed principal economist and policy advisor Mary Burke, who studies regional labor force participation rates, said all these issues add up to big strains on healthcare systems in Maine, New Hampshire and Vermont. Sullivan's study showed: Northern Light Health, Maine's second-largest health care system, lost a staggering $156 million in 2024. Northern Light Inland Hospital in Waterville (known for its ski resorts) closed earlier this year. In New Hampshire, Catholic Medical Center in Manchester reported monthly losses ranging from "$2 - $3 million," before it was sold in February Vermont, a state-mandated though disputed analysis found that its hospitals will need to find between $700 million and $2.4 billion to break even by 2028. "I think that when you look around the country in rural areas and you find thriving health care systems or hospitals, what you see are thriving communities, where economic development is strong," said Dr. Sunil Eappen, CEO of The University of Vermont Health Network. Economic development is the key to reversing these trends in Vermont and its two northern neighbors. Tourism dollars, though in the millions, just aren't enough. Eappen, also a member of the Boston Fed's Board of Directors, said potential catalysts – including improved infrastructure and more housing – would help stop the bleeding of healthcare access. But ultimately, it all comes down to one thing. "We need another 100-150,000 young people to move in who are working and paying into a commercial insurance population," Eappen said. "We need more people to move in." Related: Major hospital chain owner files for Chapter 11 bankruptcy The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Boston Globe
24-04-2025
- Business
- Boston Globe
Rhode Island once had the highest unemployment rate in the nation. Some fear Trump policies could bring new woes.
Advertisement 'It's been challenging,' Lupis said. Lupis is job searching at a time when there are signs that Rhode Island's job market is starting to weaken amid policy changes in Washington that have Get Rhode Map A weekday briefing from veteran Rhode Island reporters, focused on the things that matter most in the Ocean State. Enter Email Sign Up hurt some businesses in the Ocean State. Meanwhile, the unemployment rate has been creeping up over the past few months and Rhode Island tends to hurt deeper than other states during times of recessions, said Leonard Lardaro, professor of economics at the University of Rhode Island. Advertisement 'When the national economy slows, Rhode Island goes down first. When it improves, we come out last,' he said. During the great recession following the 2008 financial crisis, . 'All these construction jobs suddenly went away,' Mary Burke, a senior economist at the Federal Reserve Bank of Boston, said. 'When the housing bust happens, boom, nobody wants to build a house anymore.' Andrew Schiff, CEO of Rhode Island Community Food Bank, said as job losses began to mount, food operators reported in the summer of 2007 seeing increased numbers of people seeking help. 'It was devastating,' he said. 'There was just an overwhelming number of people coming for help and you really couldn't meet the need, you were helping a little bit but the need was so great.' Some economists say it is unclear if a new economic downturn could hit as hard. 'We're going to have to wait and see. We could possibly go into recession even if the US economy doesn't. And that's the part that worries me and then coming out of it takes us longer,' Lardaro said. Advertisement Edinaldo Tebaldi, a professor of economics at Bryant University, said the state's 4.8 percent jobless rate in March is close to the natural rate of unemployment in a normally functioning economy. 'This rate is not excessively high,' he said. But that could change if President Trump's 'The consequence of this can be very severe here in Rhode Island, yet it's very hard to predict it at this point, given all the uncertainty that we have in both the U.S. as well as our trade partners' response,' Tibaldi said. Schiff, of Rhode Island Community Food Bank, said many Rhode Islanders are concerned about the high cost of living beyond just food. People are not saving enough, particularly among low-income earners, and are going into debt. 'The other thing is people are very nervous about the cuts in federal funding that are being considered in Washington to programs like SNAP, because that was a savior last time,' he said. The uncertainty in the economy could also lead to businesses pausing investment. 'If you don't know which direction the economy is going, you're probably not going to make any big decisions,' Burke said. 'You're not going to start hiring a lot of people.' Matthew Weldon, director of the Rhode Island Department of Labor, said the uptick in the state's unemployment rate mirrored what is happening in the region and the country as a whole, as 'There have been local and national stories about companies that have had layoffs. We've seen that over the last few months and that's contributed to the number of unemployed in Rhode Island, which has contributed to a slightly increased rate,' Weldon said. Advertisement Brown University, one of the largest employers in Rhode Island, i In March, At the same time, national economic dynamics have the potential to contribute to the uptick in the jobless rate in the state, according to Weldon. 'When programming is cut, when funding is cut and layoffs result, that can certainly impact our unemployment rate, it can drive down our number of employed Rhode Islanders and Rhode Island based jobs,' he said. Lupis, who has been looking for a job for a few months, received help with resume polishing, networking and interviewing skills from the nonprofit 'My goal is to find something by this summer,' he said. 'As time goes on, and the more financially challenging it is, that means I have to lessen my full goals of what I want to get.' Brenda Clement, executive director at the nonprofit HousingWorks RI, said one legacy of the financial crisis is that a mortgage, residents may find it difficult to find affordable options. Advertisement 'I worry about what is going to happen in the long term if we start to see large scale slowdown of the economy and large scale layoffs and people losing jobs,' she said. Lardaro, the economics professor, said Rhode Island has benefited from its proximity to Massachusetts and Connecticut as its neighbors, so job opportunities, though out-of-state, are not far away. 'That has helped to keep our unemployment rate lower than it would have been if we had to rely totally on in-state jobs,' he said. Other analysts said Rhode Island's labor market has changed compared to when the great financial crisis hit. 'We have a deeper, a greater mix of business and industry and services, professional services. And I don't think there's any over-dependence, if you will, on any one particular industry,' said Laurie White, president of the Greater Providence Chamber of Commerce. Businesses are also better attuned to dealing with crises, having gone through the great recession, the pandemic and now the uncertainties of a changing economy, she said. 'People seem to be more out of the box, more resilient in finding solutions to get through it. So the mantra would be, you know, 'we have to get creative to figure out how to get though this,' as opposed to being paralyzed,' White said. Omar Mohammed can be reached at
Yahoo
14-04-2025
- Business
- Yahoo
Americans are expecting a tariff-fueled price surge. A new Fed survey says they're right.
The most recent consumer sentiment survey out of the University of Michigan saw expectations of inflation one year from now to be the highest since 1981 amid President Trump's whirlwind tariff policies. A new analysis by the Federal Reserve Bank of Boston found that Americans are right to expect the costs of tariffs to be reflected in their receipts. Researchers based their findings on a Morning Consult survey of over 400 small- and medium-size businesses in late December that explored expectations and plans for tariffs. Respondents expected costs to rise due to higher tariffs on most US trading partners and planned to pass along those tariff charges to consumers in the form of price hikes. The analysis concluded, among other things, that "firms planned to pass along the expected tariff-induced changes in unit costs to their customers through price increases; the extent of this cost pass-through would vary under different tariff scenarios." The extent of the price hikes depended on the tariff scenario, companies said. Interestingly, they anticipated the sharpest price hikes in a low-tariff (10% rate) scenario, compared to high-tariff (25% rate) and uncertain (10% rate but variable) scenarios. A tariff is a tax that the company importing the goods pays when the goods clear customs at a port of entry; it is not paid by an exporting company or country. Businesses have a few options to offset the additional costs, such as eating the costs or negotiating with suppliers, but the most common tactic is to pass the costs on to consumers. The UMich survey found that consumers expect inflation to be 6.7% higher a year from now, up from 4.9% the month prior. Longer-run inflation expectations for the next five to 10 years also rose to 4.4% in April from 4.1% in March. A new New York Fed survey found similar but less extreme expectations. In a note over the weekend, after President Trump backed off the higher levels of his "Liberation Day" tariffs and announced some exemptions on tech products, Capital Economics calculated that the overall effective tariff rate on US imports a stands at around 22%, down from 27% last week. Read more: The latest news and updates on Trump's tariffs Despite the recent softening of the White House's tariff stance, President Trump's trade agenda has lifted the tariff rate on US imports to its highest level in over a century, which has driven inflation expectations higher and US growth expectations lower. According to the Boston Fed, importers expect tariff-induced cost increases to take about two years to be fully reflected in prices. One variable that is still not well understood is how tariffs on US imports will affect the prices charged by domestic firms, which has further implications for the inflation outlook. Economists have warned that consumers should expect inflation to accelerate again, especially for imports from China, which face a hefty 145% tariff rate. "If, in the short run, we have a big pullback in the supply of goods, that could show up in higher consumer prices," former Federal Reserve Board economist Claudia Sahm told Yahoo Finance in an interview on Thursday. "T-shirts could be the new eggs here shortly." On Friday, Federal Reserve presidents Susan Collins and John Williams told Yahoo Finance that they see inflation rising above 3% this year on account of President Trump's tariffs. Companies are also beginning to implement or prep customers for price hikes too, even as they work to mitigate those price shocks through inventory management and working with suppliers. German automaker Volkswagen (VWAGY), for instance, recently added an 'import fee' on all vehicles affected by the 25% auto tariffs. On a March earnings call, Best Buy (BBY) CEO Corie Barry said: "We expect our vendors across our entire assortment will pass along some level of tariff costs to retailers, making price increases for American consumers highly likely." Sign in to access your portfolio
