Latest in Economics
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More Americans shift money from checking and savings to accounts with investment income, study says
WASHINGTON (AP) — New research finds that more Americans are shifting their money from checking and savings accounts into financial vehicles that pay an investment income — a trend that helps to explain the resilience of the U.S. economy after a bout of high inflation and recent uncertainty due to tariffs. The analysis by JPMorganChase Institute examined the accounts of 4.7 million households and found that people's total cash reserves are increasing when including new amounts going into brokerage accounts, money market funds and certificates of deposit to assess people's well-being. Inflation-adjusted cash balances in checking and savings accounts 'remain low with a flat-growth trajectory,' but since the middle of 2024 total cash reserves have been increasing and approaching historical growth trends once the additional accounts are included, the analysis said. 'Families across many income bands are now seeing a turnaround in their total cash,' said Chris Wheat, president of the institute. Wheat said it had been 'hard to square the circle' of consumer spending staying strong despite the lack of growth in checking and savings accounts, an issue that can now be explained by people in a higher-interest rate environment shifting more money into accounts that yield investment returns. He said people appear to be using the other accounts to manage their cash, rather than simply making long-term investments. Wheat cautioned, however, that the trend might be short term and that the institute doesn't have a basis yet as to whether it will continue. The analysis also found that households with incomes generally lower than $35,000 had their total cash balances increase at an annual rate of 5% to 6%. The lowest income quartile tend to have checking and savings account balance of just over $1,000, while the median balances of the highest income quartile are above $8,000. Josh Boak, The Associated Press
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BofA sees U.S. avoiding a recession, the Fed not cutting rates this year
-- Bank of America expects the U.S. economy to sidestep a recession in 2025 and sees no Federal Reserve rate cuts this year, even as political and market noise intensifies. In a note on Monday, BofA analysts wrote, 'These developments go in line with our view that the US economy will avoid a recession and the Fed will not cut this year.' Despite market hopes for a dovish shift, BofA says strong consumer spending and sticky goods inflation suggest continued economic resilience. BofA highlighted that recent inflation and retail data defied expectations. 'Goods inflation is picking up and consumer spending remains robust,' the analysts said, adding that the June retail sales control group rose 0.5% month-over-month, while food services grew 0.6%. The bank also warned against rate cuts driven by political motives. 'Cutting rates to help finance the government deficit is we think probably one of the worst reasons to cut rates,' it said, referring to President Trump's criticism of Fed Chair Jerome Powell. 'This unnecessary politically driven noise raises the bar for cuts,' BofA added. According to the bank, premature easing could 'backfire and end up bear steepening the yield curve... while de-anchoring inflation expectations, weakening the dollar, and increasing credit risk.' Looking ahead, BofA expects jobless claims to rise slightly in the week ending July 19, and for housing data to remain stable. Durable goods orders, due Friday, are forecast to fall 11% month-on-month. Related articles BofA sees U.S. avoiding a recession, the Fed not cutting rates this year What if the Fed hints at a September rate cut next week? Fed should cut rates by 25 bps in July, Governor Waller says 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
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Money Experts Dan Nathan and Guy Adami on What the Musk-Trump Feud Could Mean for Investors
There's trouble in paradise between President Donald Trump and his former senior advisor Elon Musk. The two seemed quite close at the beginning of Trump's term, with Musk heading up the Department of Government Efficiency (DOGE) for a time. However, since Trump introduced plans for his 'Big Beautiful Bill,' the Tesla CEO has repeatedly expressed his concerns over the tax implications in the bill, as well as domestic policy measures. Musk has even gone so far as to suggest creating his own political party, 'The America Party,' in opposition. Be Aware: Find Out: The richest man in the world feuding with the president could have ramifications on the economy. In a recent episode of the 'RiskReversal' podcast, money experts Dan Nathan and Guy Adami recently talked about what these opposing views could mean for markets and investors. Read on to find out what the Trump-Musk feud could mean for your money. Possibilities Are Worse Than Realities — So Far In the episode, Adami expressed that when he saw tensions rise between Trump and Musk, he expected the worst. 'I thought you would see continued dollar weakness. I thought the equity market would suffer a little bit, and I thought the bond market potentially could sell off,' he said. As of the podcast's release, Adami said that, fortunately for investors, it hadn't been the case so far. However, since then, June's consumer price index report was released, which led to Treasurys selling off in mid-July. This sell-off, while unrelated to the feud, caused the 30-year bond's yield to rise, which could mean bad news for stocks, per MarketWatch. Check Out: Tesla's Stock Price Could Continue To Decline Adami pointed out the disagreements between Musk and Trump could affect Tesla's stock price. Since Musk's tenure with DOGE ended in early June, right around when the pair started feuding, Tesla's stock has seen some drops. For example, it dropped by 14% on June 5 after Trump threatened to eliminate government contracts for Musk's companies, according to CNBC. Then, Musk again publicly criticized Trump and his 'Big Beautiful Bill' on X. By July 1, Trump had responded, threatening to look into government spending going to Musk's companies. That fight saw Tesla's stock drop by 6% in morning trading on July 1, per CBS News. Inner Turmoil Could Make the US Weak to Other Countries When reaching trade deals with countries like Canada, Mexico and China are paramount right now, a public feud between Trump and one of his former employees could make countries believe the United States is vulnerable. This could lead to countries refusing to make deals with the U.S. Nathan pointed out this could have huge consequences for the American economy. 'You have a situation where the Chinese are just sitting back and saying 'Let's let them eat themselves from within' … I just don't think there's going to be a trade deal, and at a certain point, that will weigh on U.S. corporate earnings. It's going to weigh on employment here, and then you have to ask yourself where the economy is going to be in the second half of this year,' he said. If corporate earnings are impacted, investors and their holdings could be affected as well. Ultimately, though, it remains to be seen what will occur as a result of this feud, so investors should stay informed and be aware of any possible impacts. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates 3 Luxury SUVs That Will Have Massive Price Drops in Summer 2025 10 Cars That Outlast the Average Vehicle 6 Popular SUVs That Aren't Worth the Cost -- and 6 Affordable Alternatives This article originally appeared on Money Experts Dan Nathan and Guy Adami on What the Musk-Trump Feud Could Mean for Investors
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Are you worried about being worse off in retirement than pensioners today? Have your say
Pensioners in 2050 are on track to be £800 worse off per year than those retiring today, the UK's Department for Work and Pensions (DWP) has said. The DWP said on Monday that an analysis showed four in 10, or nearly 15 million people, were under saving for retirement. In fact, 45% of working age adults are saving nothing at all into a pension, the DWP said, highlighting that lower earners, the self-employed and some ethnic minorities were particularly at risk. Indeed, more than three million self-employed workers are not saving into a pension, while just a quarter of low earners in the private sector are doing so. The DWP also said that just a quarter of people from a Pakistani or Bangladeshi background are saving into a pension. In addition, it added that the new analysis revealed a "stark" 48% gender gap in private pensions wealth. It said that a woman currently approaching retirement could typically expect to have private pension income worth over £5,000 less than that of a typical man. The findings came in an announcement on Monday that government was reviving the Pensions Commission to "examine why tomorrow's pensioners are on track to be poorer than today's and make recommendations for change". Read more: How to build passive income The Pensions Commission was a body originally set up in 2002 under the government of then-Labour prime minister Tony Blair. The commission last met in 2006 and its work led to the rollout of auto-enrolment into pension saving, which began in 2012. This policy has meant that 88% of eligible employees are now saving into a pension, up from 55% in 2012. The DWP said that the relaunched Pensions Commission will "explore the complex barriers stopping people from saving enough for retirement", with its final report due out in 2027. UK work and pensions secretary Liz Kendall said: "People deserve to know that they will have a decent income in retirement – with all the security, dignity and freedom that brings. But the truth is, that is not the reality facing many people, especially if you're low paid, or self-employed. "The Pensions Commission laid the groundwork, and now, two decades later, we are reviving it to tackle the barriers that stop too many saving in the first place." Jordan Clark, financial planner at Quilter, said: "People need to make sure they plan their finances before it is too late and give themselves enough time to rectify potential missed opportunities and mistakes from the past. Clearly there is a desire from people to glide smoothly into retirement, but without a pension pot set up to do this, it simply won't be possible." "The working-age population needs to be prepared to work later into life, with adequate private pension provision being the only route to avoiding this. There is a real need for bold and innovative solutions to the problems faced, and arguably speed is of the essence." Are you concerned about being worse off in retirement than pensioners today? Vote in the poll below. Yahoo UK's poll of the week lets you vote and indicate your strength of feeling on one of the week's hot topics. After the poll closes, we'll publish and analyse the results each Friday, giving readers the chance to see how polarising a topic has become and if their view chimes with other Yahoo UK readers. Read more: Stocks to watch this week: Tesla, Alphabet, Intel, Lloyds and JD Wetherspoon Average UK house asking price drops by almost £5,000 Jobs data increases odds on Bank of England interest rate cut
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Companies pledge to invest more than $700 billion in Germany over the next 3 years
BERLIN (AP) — A group of dozens of companies pledged Monday to invest at least 631 billion euros ($733 billion) in Germany over the next three years, sending a signal of confidence in Europe's biggest economy as the new government tries to breathe new life into it. The economy has shrunk for the past two years and is expected to stagnate this year. Chancellor Friedrich Merz's administration has made revitalizing it a top priority since it took office May 6. It has launched a program to encourage investment and set up a 500 billion euro fund to pour money into Germany's creaking infrastructure over the next 12 years. It is promising to cut red tape and speed up the country's lagging digitization. On Monday, Merz welcomed representatives of an initiative titled 'Made for Germany' to the chancellery to send a signal of confidence from and to private investors. The group currently includes 61 companies from across the economy, among them industrial conglomerate Siemens and financial giant Deutsche Bank. 'The investments by the initiative are a very powerful signal that we are now experiencing a shift in sentiment and consolidating it," Merz said. 'The message ... is very clear: Germany is back. It's worth investing in Germany again. We are not a location of the past, but a location of the present and above all the future.' He stressed that private investment is crucial to encouraging growth. The overall figure pledged Monday includes at least some already planned investments. Merz said the plans include investments in new facilities and in modernizing infrastructure, in research and development. Deutsche Bank CEO Christian Sewing praised the new government as being 'determined to end the reform backlog that has slowed us down for too long.' But he said that it still needs to do more, and the companies 'encouraged' the government 'to continue the course of reform.' 'Our priorities are clear: We want economic growth, we want to strengthen Germany's competitiveness, we want to defend or further expand our technological leadership and we want to bring our infrastructure into the digital age,' Siemens CEO Roland Busch said. 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
