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A financial advisor breaks down how trillions of dollars sitting in low-interest checking and savings accounts are quietly losing value. With savings accounts averaging just 0.38% APY against 3.4% inflation, that cash loses more than 2% of real purchasing power annually, even as the balance stays unchanged.
Chicago Fed President Austan Goolsbee said Monday that the central bank might need to accept higher unemployment as a cost of bringing down persistently high inflation. He noted that supply shocks create a short-term conflict between the Fed's dual goals of stable prices and maximum employment, forcing policymakers to prioritize one over the other.
Wall Street saw another volatile week as the Federal Reserve raised interest rates a quarter point to a range of 3.75%-4%, its first hike in three years, while renewed concerns about AI safety rattled tech stocks. The Dow fell 1.7% for its third consecutive losing week, led by steep declines in bank stocks including Goldman Sachs, which dropped nearly 8.5%. The S&P 500 and Nasdaq held up better, with the Nasdaq even gaining slightly as investors bought back into AI names after an early sell-off, while oil price swings tied to Mideast tensions added further pressure on companies like Boeing and FedEx.
Canadian officials have responded positively to a proposal from the European Union that would grant Canada 'associate member' status in some EU framework. The specific scope and terms of the arrangement were not detailed in the available report, which instead focused on an unrelated segment about US interest rate hikes.
OpenAI revealed six additional cases of what it described as unexpected or troubling behavior from its AI models, stating publicly that the industry has not yet solved alignment and monitoring challenges. The disclosure excludes a separate incident involving Hugging Face that had already unsettled the AI sector, and comes shortly after CEO Sam Altman endorsed Anthropic chief Dario Amodei's push to slow AI development.
The US central bank lifted its benchmark interest rate, marking the first increase in three years as it responds to persistent inflation pressures. The move comes as American consumers face rising prices, with fuel costs climbing sharply amid geopolitical tensions in the Middle East.
The Federal Reserve raised interest rates on Wednesday for the first time since 2023, increasing borrowing costs for consumers just as prices for electronics, groceries and housing have been climbing for the past year and a half. Economists note that even if the Fed succeeds in slowing inflation toward its 2% target, existing price increases won't reverse, meaning consumers face a higher cost baseline going forward.
The Federal Open Market Committee voted unanimously to raise interest rates by a quarter point, marking the Fed's first increase since July 2023 and pushing its benchmark rate to a range of 3.75 to 4 percent. Chair Kevin Warsh cited persistently high inflation as the reason for the move. The change will ripple differently across consumer debt, from mortgages to car loans to credit cards.
A newly launched interactive analysis built on BLS Consumer Expenditure Survey data from 2000-2024 finds that the bottom 50% of U.S. households by income spend more than they earn once essential costs are covered. The tool reproduces official quintile-level averages for income, taxes and spending exactly, while offering adjustable what-if scenarios for finer breakdowns like deciles, childcare costs, and wealth taxes that aren't directly reported by BLS. It also flags several data inconsistencies, such as a 2013 methodology shift in tax estimation and missing 2024 after-tax figures, and includes inflation-adjusted projections for 2025-2026 since BLS hasn't yet published that data.
Major U.S. indexes closed lower for the week as crude oil topped $100 a barrel amid U.S.-Iran tensions and the 10-year Treasury yield hit its highest level since October 2023, reviving fears the Fed will raise rates again. The Dow fell 1.6%, while the S&P 500 and Nasdaq dropped 0.8% and 0.7% respectively, despite a Friday rebound. Inflation readings from the producer and consumer price indexes came in largely as expected, but portfolio holdings Meta and Apple offered upbeat signals about their AI prospects.
The August consumer price index rose 0.4% month-over-month and 3.4% annually, matching analyst forecasts, while core CPI ticked up slightly more than expected at 0.3%. The reading follows Thursday's hotter-than-anticipated producer price index and a surge in crude oil to $6 a gallon, pushing traders to raise the odds of a quarter-point Fed rate hike next week above 70%. Stock futures rose Friday morning as investors weighed the data and looked to snap a four-session losing streak, with Oracle's earnings also drawing market attention.
A Maine business that sold fox and coyote urine to hunters as a cover scent noticed an unusually large order from a lawn and garden store outside hunting season. A phone call revealed the retailer's customers were gardeners using the same product to scare rabbits away from vegetable patches, uncovering an entirely new customer base the founder hadn't realized existed.