AI Economy and American Dream

From the Dayton, Ohio, suburbs to boardrooms in Dallas, the employees fueling AT&T’s next wave of growth aren’t fresh-faced college graduates with expensive four-year degrees. They’re skilled, blue-collar workers ready to get their hands dirty — and AT&T can’t find enough of them. 

“We need people who know how to actually work with electricity. We need people who understand photonics. We need people who can go into folks’ homes and connect this infrastructure to make it work right,” AT&T CEO John Stankey told CNBC during a recent interview from the company’s Dallas headquarters.

“We find that we’ve got to go out and find them, train them, and incent them to come in,” he said. “It’s not like we’re growing them on trees in the United States.”

AT&T’s dilemma — hunting for blue-collar workers at a time when a record number of college students are projected to graduate this spring — underscores the palpable crisis facing new degree holders as the first wave of the AI revolution hits the U.S. economy. 

For much of the postwar era, the American bargain was clear: Go to college, get a degree and claim your place in the middle class. As factories gave way to offices and the U.S. economy increasingly rewarded credentials over physical labor, a four-year diploma became one of the clearest symbols of upward mobility. But as AI spreads across corporate America and begins to absorb the entry-level work that once gave graduates their start, that promise is beginning to fracture.

While the rapid spread of AI has not yet led to broad layoffs and empty offices, many new graduates, especially those in AI-exposed industries, are learning their degrees may no longer guarantee the opportunities they once did. 

Meanwhile, as AI implementation spreads and CEOs find they can do more with less labor, hiring is slowing. The downturn has hit hardest the workers with little real-world experience and those in industries expected to be most vulnerable to AI replacement, such as marketing, legal, accounting, human resources and IT.

If the trend continues, AI could reorder the U.S. workforce and global economy, redrawing the map of opportunity in ways that even some leading economists and technologists say they are only beginning to understand.

“Is the American Dream going away because of AI?... I think the fears are all very valid,” said May Hu, a 26-year-old tech consultant turned social media influencer who said she was laid off from Deloitte last year for what she described as nonperformance reasons. “I pursued college because... I think [for] most people who want to be working professionals … college is the route,” she continued. “That’s starting to change now.”

Like any technological revolution, the AI boom is expected to create new types of work. But, in a cruel twist for college graduates, many of those jobs will be blue-collar roles that for now don’t require a four-year degree, centered around the construction and maintenance of data centers.

Still, it’s unclear how sustainable the blue-collar job boom will be once companies complete an expected wave of chip factories, data centers and other AI-fueled construction in the coming years.

Major U.S. companies from Ford to Nvidia have stressed the growing need for workers to build out those facilities.

“This is the largest infrastructure buildout in human history that is going to create a lot of jobs,” Nvidia CEO Jensen Huang said during a panel at the World Economic Forum in January. “We are going to have plumbers and electricians and construction and steel workers and network technicians and people who install and fit out the equipment.”

He added that many of those roles will bring six-figure salaries as the U.S. addresses a “great shortage” of workers.

In March, AT&T announced plans to invest $250 billion over the next five years to expand its fiber network and meet the demands of AI data centers and a surge in network usage, fueled both by AI and a rise in mobile streaming and uploading. 

About 15% of that investment will be used for hiring and training employees, but not necessarily for white-collar jobs at its corporate office. Instead, it will primarily be used for blue-collar front-line workers, the majority of whom are skilled technicians, the company said.  

“As a society and within the United States, we’ve put a huge premium in value socially on a college degree, maybe for good reason, but in some cases ... we maybe have missed the mark,” said Stankey. “That hasn’t been optimal when you see the cost of education increasing at higher than the rate of inflation and yet we’re short HVAC [heating, ventilation and air conditioning] repair people, we’re short electricians, we’re short technicians that can go in and work on fiber.” 

The Birth of the American Dream 

At the beginning of the 20th century, about 1 in 10 17-year-olds in the U.S. had finished high school while far fewer young adults had pursued higher education, according to the National Center for Education Statistics. More time in school meant less food on the table, and few Americans had the privilege of pursuing more comfortable work outside of factories and farms. 

That all started to change after World War II, when the GI Bill offered veterans free access to college and public universities began cropping up across the country, fueling what labor historian Shannan Clark called an “explosion” in higher education.

There was “a widespread belief, shared by Democrats and Republicans alike, that this was a good investment. It was good for people to have access to higher education and that this sort of increase in human capital and a more trained, more capable, more knowledgeable workforce would also be a more productive workforce, right?” said Clark, an associate professor of history at Montclair State University.

In the coming decades, millions of Americans would trade sweltering factories for air-conditioned offices, hammers and nails for keyboards and mice, and hourly wages for sustainable salaries. Women and minorities entered the workforce in record numbers, wages grew and quality of life increased, fueling a rise in innovation, globalization and gross domestic product. By the end of the 20th century, society was in near universal agreement that an education and a little bit of grit were a sure path to the American Dream.

Data shows that four-year degrees still lead to higher wages and lower unemployment over a lifetime. Even so, the belief that college is the safest way to the American Dream has changed in recent years. First, the return on investment of a four-year degree came into question amid surging higher education costs and student debt. That return is still around 12.5% as of 2024, making it well worth the cost for many graduates, but it hasn’t budged beyond 13% for the past three decades, according to research from the Federal Reserve Bank of New York.

Now, AI could put the value of a diploma under even greater pressure.

“What does AI do best? AI is basically an infinite supply of 21-year-old interns that are smart but have no context,” said consultant Aaron Cheris, the global head of Bain & Company’s retail practice. “The job they used to do is now the one that AI is doing, right? AI is doing the entry-level job.” 

That’s made it harder for new graduates to find work, some research and data suggest. 

The average unemployment rate for recent college graduates ages 22 to 27 dating back to 1990 is 4.5%, but in 2025, that average jumped to around 5.4%, according to data from the Federal Reserve Bank of New York. 

The impact appears particularly acute among entry-level employees in AI-exposed fields. 

Last year, Stanford’s Digital Economy Lab published a research paper titled “Canaries in the Coal Mine?” that found early-career workers in roles most exposed to AI, such as software developers, marketing professionals and sales managers, saw 16% slower growth in employment than the least exposed young workers between mid-2024 and September 2025. 

Using payroll data from ADP, researchers found the trend persisted even when they controlled for company-specific challenges, rising interest rates, remote work and other variables. Those who held jobs where AI was poised to augment their work versus automate saw growing employment in the same time period.    

“It is notable that since we came out with the first draft of the paper, the effect has grown from 13% to 16%, so whatever it is, it’s not rebounding, or wasn’t some kind of temporary blip,” said Stanford University economist Erik Brynjolfsson, one of the paper’s authors and a leading expert on the economics of technology and AI. “If you just look at the top line of the ADP data, the overall effect, there wasn’t much going on. It’s only when you narrow in ... that you start seeing the different kinds of effects.” 

If the trend continues for young workers in AI-exposed roles, “we’re going to see it affect the broader labor market more,” said Brynjolfsson. 

Lee Tucker, a senior economist with the Center for Economic Studies at the U.S. Census Bureau, published a paper in April that built on Stanford’s research and found that the impact on early career workers was also showing up in a different data set: the agency’s quarterly workforce indicators. 

In his research, Tucker found that the hiring of workers between the ages of 22 and 24 dropped 9% immediately after ChatGPT in late 2022 launched for workers in AI-exposed industries such as finance, insurance and professional services, compared with all other industries. 

Between the third quarter of 2022 and the second quarter of 2025, there was a 12% to 15% decline in employment for workers in those industries, leading to about 150,000 fewer early-career jobs, the research found. 

While there is some evidence this decline may have started around 2020 and may not be fully attributable to AI, Tucker found the decline in employment was almost entirely due to fewer hires, not layoffs. 

“I empathize with early career workers, especially new graduates that are trying to get hired or just starting sort of their first rung on the career ladder,” Tucker told CNBC in an interview. “It is true that it is tough out there, and the data really do back that up.”

The Vanishing Investment Banker 

The advent of generative and agentic AI, and the technology’s ability to take over some entry-level work, has raised questions about the future of the junior consultant, the investment banking analyst and the first-year associate at a white-shoe law firm. 

Should senior leadership keep recruiting large classes from top schools and devote the time and money needed to train them, knowing those workers will form the bedrock of their future talent pipeline, or should they invest elsewhere and let AI do those jobs? 

In a recent interview with Derek Waldron, JPMorgan Chase’s

 chief analytics officer, CNBC asked if the bank has any plans to cut its recruitment classes. He said he didn’t know the firm’s specific strategy, but acknowledged “there may be some rightsizing.” 

“It’ll depend on the pipelines, the opportunities. In some cases, bigger [classes], in some cases, frankly, could be smaller as well,” said Waldron.

Waldron suggested the nature of work could shift for junior employees who do make it through the door — toward managing AI systems instead of doing the underlying work themselves.

“The world is moving to a paradigm where every employee becomes a manager, but a manager of AI systems,” said Waldron. “So whereas a new joiner in the past was basically primarily the worker doing the work, the expectation is that they would be able to come in and begin to act as a manager of sort of AI tools.” 

In some ways, that shift could be good news for entry-level employees, because they’re AI natives and may be more tech savvy than their older colleagues.

“I want more of them,” WHP Global CEO Yehuda Shmidman said of entry-level employees at his firm, which counts brands such as Toys “R” Us, Vera Wang and Express among its portfolio. “If you’ve been using AI to help you with that final paper at school, we’re probably going to want to know how you’re going to use AI to help us with the next contract negotiation. So I’m all in favor of it.” 

But the shift also highlights how necessary it is for students to be graduating with skills in AI that go beyond using it to write an email or replace a Google search. 

“If a kid comes out of school now and is like the expert in Claude and OpenAI ... and is able to then say to even, like, an accounting team, ‘Hey, look, I can come in and I can do the job of three people versus you hiring them, because I can use AI,’ OK, that person will still get a job,” said Omair Tariq, the founder and CEO of startup Cart.com, which provides logistics, fulfillment and other services for retailers such as Adidas, Guess and Eddie Bauer, and has about 1,400 employees.  

If they can’t, Tariq said, he’s not interested in hiring them. 

“When you’re in college, all you know is what’s in your curriculum. The curriculum is available in a book or online. It’s all tangible, it’s all ones and zeros. It’s all the sh-- that AI can read in 30 seconds that you took four and a half years to read,” said Tariq. “So tell me again what you can do that AI can’t do, because you don’t have any real-world experience.” 

Already, college campuses are feeling the pressure to change their curriculums and even their approach to higher education to adjust to an AI future. 

“For graduates to compete effectively, they’re going to need to know how to do at age 22 what they used to do at age 27,” said Matt Sigelman, the president of the Burning Glass Institute, a think tank that studies the future of work. “They’re going to need to be able to start their careers in the middle and not the beginning.”

How quickly colleges can adjust could determine how much AI will disrupt the careers of graduates in the future.

Tobias Sytsma, an economist at the think tank Rand who studies AI and the future of work, said recent graduates, those paying off college loans and students getting ready to enter college will likely face the most issues during this transition period. If the data continues to show an impact on early career workers, they could become victims of economic “scarring,” leading to unemployment, underemployment and lower incomes throughout their lifetimes. If there’s a major disruption to the middle class pipeline — the route young adults take from college to higher-paying jobs — that could have an enormous impact on the economy. Consumption could shrink, housing demand could fall and existing inequality issues could grow.

“The size of that transition cohort is important. If it takes 20 years and ... basically everyone that was thinking about going to college or just finished college is really struggling, then that’s a huge chunk of the future workforce that’s going through this scarring process,” said Sytsma. “If the transition is really quick and we’re able to kind of rapidly adjust the institution of higher learning so that we maintain value, then maybe the scarring cohort is a little bit smaller and the aggregate effects are a little bit smaller. But at this point, I think it’s pretty hard to tell.”

Suburban Daydreams 

In a small Ohio city between Dayton and Columbus, the American Dream is alive and well for 24-year-old Kyson Cook. The father of one owns a three-bedroom home, has no debt beyond his mortgage and ends most workdays around 4:30 p.m., leaving plenty of time to shoot pool, go fishing or spend time with family. He has a small plot of land with space for his daughter to play, along with enough money to buy her whatever toys she wants and regularly contribute to a mutual fund with her name on it, without needing to cut back on new clothes, vacations or eating out. 

In an interview, he told CNBC that the “coolest job in the world” pays for it all.

“I’m proud to tell people what I do. I climb telephone poles. It’s awesome,” said Cook, a premises technician with AT&T who helps connect the telecom giant’s fiber infrastructure to customer homes. 

“You feel like a superhero up there,” he added. “To other people, it might sound like, ‘Oh, it’s hard work. I don’t want to do that. You have to work in the elements.’ But there’s so many good things that come along with this job.” 

Cook, whose father and grandfather both worked at AT&T, said he started at the company in April 2022, a few months after he dropped out of college and realized he’d rather work with his hands. In less than a year, he’d saved up enough to buy his house. When his daughter was on the way about two years later, he said, he went back to college and got a bachelor’s degree — paid for by AT&T — because he thought it could help him get promoted in the future, even if the management roles he’d be aiming for don’t require it. 

Cook is one of the thousands of technicians helping AT&T expand its network so the telecom giant can meet the needs of an AI future. AT&T’s global workforce has been cut by more than half over the last decade, but the company is increasing head count in some areas and working to recruit skilled tradespeople who aren’t required to have a college degree to join the company. 

AT&T said it plans to hire around 3,000 technicians this year and is ramping up recruitment in places such as Nashville, San Francisco and North Carolina where it’s finding a dearth of skilled workers. That’s on top of the 10,000 the company has already hired over the last three years. To get employees up to speed, AT&T said it may spend anywhere between $50,000 and $80,000 in training per person.

“We’re investing a huge amount of money. We’re putting fiber out there. This needs to be built,” said Stankey. “And so part of what we’re doing is, we need trade.” 

AT&T’s hunt for blue-collar workers comes amid a national shortage for certain skilled tradespeople and a slight uptick in unemployment for college-educated adults. 

This year, there’s a shortage of around 350,000 workers necessary to meet the demand for construction services in the U.S., a deficit that’s expected to grow to more than 450,000 next year, according to a January report from Associated Builders and Contractors, a trade association for the construction industry. 

By 2030, about 2.1 million skilled trades jobs could go unfilled, according to the U.S. Department of Education.

Shortfalls are more severe in areas with major projects such as semiconductor fabrication facilities, exacerbated by the fact that about one-fifth of electricians are over 55, said ABC chief economist Anirban Basu. 

“Even if construction spending fails to exceed expectations this year and next, contractors will continue to struggle to fill open positions, especially in certain occupations and regions,” said Basu. “Recent industry efforts to accelerate skilled worker development have helped, but the industry is effectively swimming upstream.”

Meanwhile, college-educated adults over the age of 25 are seeing a slight rise in unemployment. 

For nearly a decade other than the Covid pandemic, the unemployment rate for adults 25 and over who have a bachelor’s degree has been at 3% or lower, but in August, that number jumped to 3.2%, the first time the figure was over 3% in around nine years aside from during the pandemic, data from the U.S. Bureau of Labor Statistics shows. 

Since then, the rate has largely hovered at 3% or higher before falling to 2.8% in April. 

The unemployment rate for those 25 and up who have a bachelor’s degree or higher shows a similar trend.

Further, white-collar roles such as management, professional and office jobs have seen unemployment rise each year since 2023, while unemployment for blue-collar positions, like construction and maintenance jobs, largely declined or stayed roughly the same last year compared with 2024, BLS data show.

Still, the benefits of a college degree have hardly gone away. College graduates overall enjoy lower lifetime unemployment and higher earnings than those without degrees, who are more likely to be laid off during recessions or slowdowns. Between January 2000 and April 2026, the average unemployment rate for those with just a high school diploma was 5.7%, higher than the 3.2% average for those with a bachelor’s degree, BLS data shows. 

It’s tough to draw conclusions from minute changes in noisy data, and the figures are still emblematic of a relatively healthy job market and in line with historical averages. 

But the divergence in unemployment among blue- and white-collar workers is a trend economists are closely watching. 

“I’d be a little bit careful about drawing too much from these small trends. Maybe it could be indicative of future changes,” said Bharat Chandar, a postdoctoral researcher at the Stanford Digital Economy Lab and one of the authors of the “Canaries in the Coal Mine?” report. “I think we need to wait and see.” 

High Stakes 

To woo more technicians such as Cook and other skilled laborers, AT&T said it’s had to be competitive. For field technicians, it pays sign-on and retention bonuses of between $5,000 and $10,000, and entry-level wages can range between $18.18 and $31.45 per hour, depending on location and experience. The roles can also come with full benefits, including medical insurance, a 401(k) plan, tuition reimbursement, paid parental leave, adoption reimbursement, and up to 50% off AT&T mobile and internet plans, among other perks, according to online job descriptions.

Combating the shortage of skilled tradespeople requires not only government involvement but also a societal shift around whether college is the right move for every worker, Stankey said.

“We probably ought not to just assume that sending everybody to a four-year degree is the right answer,” he said. “We should be more thoughtful about what that four-year degree needs to look like, or what that advanced learning needs to look like, and also ask, does all work require that?” 

It’s understandable that many people chose offices over more hands-on work decades ago and why some companies struggle to recruit certain blue-collar workers. A long-held prestige and social standing come with a college education and a white-collar profession. Blue-collar work tends to be more physically demanding and often risky.

Workers such as Cook have to scale telephone poles 25 feet or higher off the ground, and though AT&T says its technicians are trained closely on safety, the type of work he does is still dangerous. Telecommunications line installers and repairers have a higher rate of fatal workplace injuries industrywide when compared with workers overall, according to BLS data.

In addition, they need to be able to lift and move up to 60 pounds, be available on holidays, work in small spaces and be prepared to tolerate rain, snow and extreme heat, according to online job descriptions.

During a recent shift, Cook said, he had to work in the rain and was so chilled he couldn’t get warm until he made it home and showered. He said that despite the physical toll his role can take, he’d still choose being a technician over an office job any day. If he’d stayed in college the first time around and pursued a white-collar career path, he said, he’d likely be in debt, wouldn’t own a home and would be making less money than he is now. 

Plus, there’s another perk that’s proving to be quite important these days: Cook said he’s not even remotely concerned about AI taking his job. 

“I don’t think robots can be climbing poles anytime soon,” he said, laughing. “Computers can’t do what we do.” 

Source: CNBC, Gabrielle Fonrouge

US College Graduates Face Harsh Job Market

Like clockwork each May, soon-to-be college graduates drift into New York City’s Washington Square Park in caps and gowns, typically in purple, the school colour of nearby New York University. A sea of mostly 20-somethings gather for photographs that mark the moment when the predictability of collegiate life comes to a close and new graduates face the uncertainty of what’s next.

Julie Patel, who just finished a master’s degree in public health, was one of those graduates. But a tight job market has dampened the joy of the graduation ceremony.

“I think expectations of when I came into this programme and coming out of it in terms of a job search, funding and what’s available are two very different things,” Patel told Al Jazeera.

Like millions of her peers around the country, she is headed into a precarious job market amid a surge in economic uncertainty driven by a range of reasons, including tariffs, the proliferation of artificial intelligence, global conflicts and, in her case, government funding cuts in her industry, slowing hiring, especially of new graduates.

The most recent Job Openings and Labor Turnover Survey released by the United States Bureau of Labor Statistics showed that with 6.9 million open jobs in March, hirings increased marginally by 655,000 to 5.6 million, and separations were at 5.4 million. That means that for those who already have jobs, they are seldom leaving them for new ones, leaving students like Patel in a difficult position.

“The depressed hires rate suggests that it is more difficult for new entrants to get a foothold in the labour market,” Elise Gould and Joe Fast said in a recent analysis published by the economic think tank Economic Policy Institute.

“The quits rate is down, signalling a reduction in the overall churn in the labour market as workers and employers sit tight through this period of economic uncertainty, likely related to chaotic policy decisions and implementation around tariffs, deportations, and the conflict with Iran.”

The latest jobs report showed the US economy added 115,000 jobs, with most growth concentrated in healthcare, transportation and retail.

However, other white-collar sectors weakened. Financial activities lost 11,000 jobs, while information services shed 13,000. By comparison, the class of 2025 entered the job market last year when the US economy added 177,000 jobs.

Overall, job growth has slowed sharply. So far in 2026, the economy has added an average of 68,000 jobs per month, compared with 49,000 in 2025, 186,000 in 2024, and 251,000 in 2023, albeit the hefty numbers for 2023 and 2024 were on the back of layoffs during the COVID-19 pandemic.

“We have this kind of no-hire, no-fire environment right now,” Aleksandar Tomic, associate dean for strategy, innovation, and technology at Boston College, told Al Jazeera.

“We don’t see as much labour turnover as we normally would, and with the layoffs, we now have more experienced workers looking for jobs who will probably elbow out recent college graduates.”

Government funding ripple effect

Government funding cuts have hit potential employers in public health, the sector Patel is seeking work in.

Last spring, the Department of Government Efficiency – which was led by the world’s richest man, Elon Musk – slashed a myriad of government programmes and funds, which he said at the time were intended to reduce government waste. Among the cuts are roughly $4bn in funds for research awarded by the National Institutes of Health.

Cuts to research funding have led university systems across the United States to implement hiring freezes, including schools like Duke University in North Carolina and Harvard University in Massachusetts.

The universities have continued to announce cuts. Last month, the University of Maryland implemented a hiring freeze, and Princeton University cut jobs. That impacts research jobs like the ones Patel and her classmate Molly Howard are striving for.

“We’re competing not only with our cohort, but also last year’s cohort and fighting with people whose jobs have been defunded, with more experience, and everything has also been extremely difficult,” Howard told Al Jazeera.

This comes as cuts to the federal government continue. The latest jobs report showed the federal government workforce declined by 9,000 again in April – down 348,000 since a peak in October 2024- leaving those pursuing careers in public service, like Cathleen Jeanty, who is earning her master’s degree in international affairs from Columbia University, with fewer opportunities, and ramping up competition for roles at think tanks.

New graduates are also competing against students still in school for internships.

“I feel like I found myself competing for internships with people who are graduating, and then the people who are graduating are competing for jobs with people who lost their jobs due to funding cuts, the closure of USAID [US Agency for International Development], the UN’s funding cuts, et cetera,” Jeanty said.

“It kind of feels like everyone is competing with people you would assume they would not be competing with.”

AI looms

Artificial intelligence is weighing on the workforce for entry-level employees as well.

There’s a 16 percent decline in relative employment for early-career workers, including software engineers and those working in customer service-facing roles, while growth for more experienced workers remains fairly stable, according to analysis from Stanford Digital Economy Lab that examined AI-exposed sectors.

“AI is really disrupting the entry-level job market. We’re seeing evidence of that. It’s doing two things: making it more difficult for entry-level candidates, while also increasing demand for more experienced workers,” Tomic said.

That is only expected to tighten as time goes on. A Goldman Sachs survey published earlier this month found that advancements in AI translate to an average of 16,000 jobs cut from the economy each month.

Anthropic CEO Dario Amodei said several times over the last year that AI could eliminate half of entry-level jobs in white-collar sectors within the next five years.

The popularity of AI tools has tumbled among Gen Z in the last year. Twenty-two percent of Gen Z respondents are excited about AI, down 14 percent from this time last year as they enter a market with more competition across age brackets, according to a Gallup survey.

“For the first time in decades, college graduates are coming into a labour market where they are competing against their peers, millennials, Gen X, and, in some cases, baby boomers who have recently been laid off due to the uptick in AI. In many instances, entry-level roles have been eliminated and fully replaced by AI,” Stephanie Alston, CEO of BGG Enterprises, a recruitment firm, told Al Jazeera.

New graduates are also grappling with a job application process increasingly shaped by AI, making the barrier to entry even harder. AI-assisted resumes in overwhelmed applicant portals and the rise of fake applicants have strained the hiring process. The consulting firm KPMG forecasts that by 2028, one in four job applicants will not even be real.

“I have had a few interviews, but if I have to be completely honest, in the last month, I have applied to 60 roles and my response rate is about 10 to 12 percent, and it’s frustrating,” Vivica D’Souza, who recently earned a master’s degree in media innovation and data communication from Northeastern University, told Al Jazeera.

With AI now, there is also a phenomenon in which applicants are being interviewed by AI recruiters before speaking to a real person.

Courtney Gladney, who just graduated from the historically Black college (HBCU), LeMoyne-Owen College in Memphis, Tennessee, with a bachelor’s degree in business administration, told Al Jazeera that he has been in interviews conducted by AI personas.

Gladney was in the workforce before returning to school to obtain his degree.

“We’re in that age of AI. So those are new things that companies are using,” Gladney told Al Jazeera.

“I feel like sometimes it’s bad because I need the person in the interview to read me versus an algorithm.”

A new wave of an old problem

A difficult employment landscape is not a particularly new issue. In 2020, new graduates faced a stagnating job market driven by the onset of the COVID-19 pandemic. In 2008 and 2009, new graduates entered the workforce during the Great Recession.

However, Tomic argues that in 2026, the US economy tells drastically different stories for different people.

Turmoil during COVID, for example, hit the broader economy, while tariff pressures impact lower-income households more than higher-income ones. When it comes to jobs, AI’s displacement has put more pressure on less experienced roles and placed a higher premium on those who already have experience.

“The job market for experienced workers is very different from the one for those who are not experienced,” Tomic said.

“It [AI] has not affected experienced workers in the same way it has affected inexperienced workers. In fact, we’ve seen data showing that demand for experienced people has actually increased, while it has decreased for inexperienced workers, especially in jobs that are more prone to AI displacement.”

The unemployment rate among recent college graduates has surged twice over the last two decades. In June 2020, it reached 13.4 percent, slightly higher than the 12.9 percent rate for the general population during the height of the COVID-19 pandemic. It also climbed sharply in the aftermath of the Great Recession of 2008, reaching 7.1 percent in May 2010 after several years of rising unemployment. That figure, however, remained lower than the general population’s unemployment rate of 9.8 percent, according to data from the Federal Reserve Bank of New York.

It is drastically lower now, at 5.6 percent, but it is still higher than the rate for the general population at 4.2 percent.

Underemployment, on the other hand, has not fundamentally changed, standing at 41 percent among recent college graduates, compared with 43 percent this month 10 years ago and 42 percent at this time 20 years ago, according to data from the Federal Reserve Bank.

That also means this is not exactly uncharted territory for colleges and universities.

“We have to tell students that this is not the first time we’ve been here. I mean, this is a part of the economic cycle. This is a lived reality. There are highs and there are lows in the economy,” Christopher Davis, president of LeMoyne-Owen College, said.

Davis stressed that while AI and political uncertainty have presented challenges for students, a focus on soft skills, like in-person networking in the age of AI, will help students get further.

“The degree may get you an interview, but it’s the soft skills that not only land you the job, but allow you to keep the job.”

Source: Andy Hirschfeld, ALJazeera

Americans Pessimistic About the Economy

Economists told CNBC that consumers remain scarred from years of rapid price increases, even as the annual inflation rate cools. On top of that, Americans are worn out by a salvo of economic disruptions — from Covid to wars to President Donald Trump’s tariffs — that have defined the current decade.

“It’s a series of shocks,” said Yelena Shulyatyeva, senior economist at the Conference Board, which conducts another popular gauge of economic confidence. “Consumers don’t get a break.”

            

American consumers have been pessimistic for so long that now economists are wondering when — or even if — households will ever feel financially better off.

The University of Michigan Surveys of Consumers, a closely watched bellwether, hit all-time lows in May, according to a preliminary reading released last week. That is just one of several consumer opinion surveys showing Americans have never regained confidence in the U.S. economy since the Covid pandemic struck more than six years ago.

Economists told CNBC that consumers remain scarred from years of rapid price increases, even as the annual inflation rate cools. On top of that, Americans are worn out by a salvo of economic disruptions — from Covid to wars to President Donald Trump’s tariffs — that have defined the current decade.

“It’s a series of shocks,” said Yelena Shulyatyeva, senior economist at the Conference Board, which conducts another popular gauge of economic confidence. “Consumers don’t get a break.”

Price level pain

Economists and monetary policymakers typically track the rate of inflation over a 12-month time frame. By that measure, price growth is closer to the Federal Reserve’s target of 2% than to the four-decade highs seen during the pandemic.

But shoppers have focused on the cumulative change in prices over the past several years. From that vantage point, Cleveland Fed President Beth Hammack told CNBC, there’s been about a decade’s worth of inflation in half the time. 

“People are starting to hear that inflation is going down, but their box of cereal is still really expensive,” said Kyla Scanlon, an economic commentator known for coining the term “vibecession.”

“That feels really, really bad,” Scanlon said.

High prices have caused most of the decline in consumer sentiment between 2019 and 2026, according to a data analysis from PNC Financial Services. Sticker shock also explains why a model of economic conditions stopped moving in line with consumer sentiment over recent years, the bank’s analysis said.

Consumers are thinking more about the role of inflation in their lives. The share of respondents to Michigan’s survey who said they heard negative news about price growth or blamed that for their sour outlooks spiked after the pandemic began in 2020.

Google searches for the term “inflation” hit all-time highs earlier this year.

“No one cared about inflation until it became a problem,” said Brian LeBlanc, PNC’s senior economist. “Now, it’s something that everybody in the country is thinking about.”

One shock after another

There’s another reason economists believe confidence hasn’t rebounded: Consumers don’t have enough time to recover from one economic jolt before another raises its head.

“I can’t think of a period where you’ve had shocks like these,” said Eric Winograd, an alumnus of the New York Federal Reserve Bank who is now the chief economist at asset manager AllianceBernstein. “I’m not saying that these are the biggest in magnitude, but to have this many sequential events is extremely unusual.”

For sentiment to recover, U.S. consumers would need to see “positive” and “stable” economic conditions for several quarters, Georgetown University finance professor Francesco D’Acunto said. Instead of that, as geopolitical conflicts break out and as Trump continues his push for higher tariffs on trade partners, consumers have been getting “the opposite,” D’Acunto said.

The plunge in sentiment mirrors trends in reported happiness and trust in public institutions seen this decade.

“Consumer sentiment isn’t the only thing that really breaks around the pandemic,” said Joanne Hsu, the director of Michigan’s survey.

Open wallets

But despite what they tell pollsters, consumers, broadly speaking, have continued to open their wallets with abandon. Uber and Walt Disney last week reported strong customer spending, defying fears that shoppers would tighten their purse strings in response to price increases.

“The traditional correlation between sentiment and spending has largely broken down,” said Gregory Daco, chief economist at consulting firm EY-Parthenon. “We have to depart a little bit from the traditional analysis of these gauges because of the unique circumstances that we’re currently living through.”

As a result, AllianceBernstein’s Winograd said investors looking for a pulse check on consumers should monitor the direction of confidence indexes rather than pre-pandemic comparisons. Consumer opinion is still a low-tier economic data point for traders making investment decisions, he said.

The S&P 500 reached an all-time high on the same day last week that Michigan released its record-low consumer sentiment reading. The benchmark stock index has more than doubled, surging roughly 130%, since the start of 2020, while Michigan’s sentiment gauge has been cut in half, tumbling 52%.

“If this is the new normal, then this is the new normal,” Winograd said. “The question is: Are things getting better or worse?”

A ‘resilient’ consumer

In the near-term, sentiment is unlikely to improve as oil prices stay above $100 a barrel in the wake of the Iran war, several economists told CNBC.

The national average price for a gallon of gasoline soared past $4, the level at which a 2022 AAA survey found that a majority of Americans implement lifestyle changes. Gasbuddy, a price tracking platform, said its daily active user base nearly doubled in March as the war ramped up.

Whirlpool said last week that it experienced a “recession-level” decline in appliance demand due to cratering consumer confidence owing to the Middle East conflict. McDonald’s CEO Chris Kempczinski warned analysts that customer spending could take a hit as rising gas prices pressure pocketbooks.

What happens next in the job market can also dictate consumers’ feelings and behavior, Winograd said. Federal government data released last week showed the U.S. job market expanded more than economists expected in April, while still pointing to a “low-hire, low-fire” environment.

But even with these uncertainties and their gloomy views, American consumers — responsible for roughly two-thirds of all economic activity — are unlikely to crack, Winograd said.

“It’s a foolish man who bets against the U.S. consumer,” the economist said. “The base case has to be that the consumer continues to plug along.”

Source: CNBC, Alex Harring

Inflation

Inflation jumps to its highest level since 2023.

The U.S. war with Iran has pushed inflation to its highest level in almost three years.

Consumer prices in April were up 3.8% from a year ago, according to a report Tuesday from the Labor Department. That was the biggest annual increase since May 2023.

Prices rose 0.6% between March and April.

From gas prices to housing, here are three things to know about the rising cost of living.

Gas prices are a big driver

Gasoline prices have jumped sharply since the war began, snarling tanker traffic in the Strait of Hormuz, a vital corridor for energy shipments. The average price of regular gas is $4.50 a gallon, according to AAA. That's up 38 cents from a month ago. The jump in energy prices accounted for 40% of the monthly increase in the consumer price index in April.

Rising fuel costs are affecting other prices as well

When energy costs jump sharply, it can have spillover effects. Airfares, for example, jumped 2.8% last month and are more than 20% higher than they were a year ago, as airlines struggle with a spike in jet fuel prices. The cost of diesel fuel has risen by $1.88 a gallon since the war began. If that lasts, it could put upward pressure on the price of everything that's delivered by truck or train. Excluding volatile food and energy costs, "core" inflation was 2.8% in April.

Housing prices also contributed to higher inflation in April

Housing costs were also a driver of inflation, jumping 0.6% between March and April, but some of that is a statistical fluke resulting from the six-week government shutdown last fall. Government number crunchers were temporarily idled in October, so were unable to collect housing prices that month. That's had the effect of artificially lowering the measure of housing inflation. Tuesday's report provides a kind of catch-up.

Source: Scott Horsley, NPR

URC at UNH

The Undergraduate Research Conference (URC) is a celebration of academic excellence at the University of New Hampshire. In 2026, the URC celebrated its 27th year during a series of events, running from April 21 to 25. Around 1,800 UNH undergraduate students, from all academic disciplines, presented at the URC. The presentations showcased the results of students' research, scholarly, and creative projects in over 20 professional and artistic venues at both campuses (Durham and Manchester), making the UNH URC one of the largest and most diverse conferences of its kind in the country.

The URC session in the Peter T. Paul College of Business and Economics was held on Friday, April 24. Below is a list of the of the research projects conducted by ECON B.S. capstone students:

Kyle Chauvette, Nolan Jones, Aidan Kiley

The Effect of Telehealth on Health Care Costs

Jialin Chen, Molly Mikkonen

Public Debt and Economic Growth

 

Ariana DiGregorio, Savannah Nestler, Katherine Soucie

Major Economic Events and Students’ Choice of College Major

 

Willa-Maya Dowling, Cohan Drainville, Tim Mitus

 The Impact of Crime Rate Changes on Domestic Migration

Samuel Farrington, Skye Loto, Anna Steele

Assessing the Impact of Education Savings Accounts on 8th Grade Students’ Math and Reading Scores

Pierce-Gabriel Fiorini, Reid Osborne

Student Loan Debt and Homeownership

 

Jesse Harriott, Ryan Vogel

Occupational AI Exposure and the Wage Premium for Economics Majors

Tyler Truesdell, Andrew Turkington

The Economic Impact of the Olympic Games

Consumer Confidence Index

The Conference Board Consumer Confidence Index increased by 12.3 points in May to 98.0 (1985=100), up from 85.7 in April. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—rose 4.8 points to 135.9. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—surged 17.4 points to 72.8, but remained below the threshold of 80, which typically signals a recession ahead. The cutoff date for preliminary results was May 19, 2025. About half of the responses were collected after the May 12 announcement of a pause on some tariffs on imports from China.

“Consumer confidence improved in May after five consecutive months of decline,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “The rebound was already visible before the May 12 US-China trade deal but gained momentum afterwards. The monthly improvement was largely driven by consumer expectations as all three components of the Expectations Index—business conditions, employment prospects, and future income—rose from their April lows. Consumers were less pessimistic about business conditions and job availability over the next six months and regained optimism about future income prospects. Consumers’ assessments of the present situation also improved. However, while consumers were more positive about current business conditions than last month, their appraisal of current job availability weakened for the fifth consecutive month.”

May’s rebound in confidence was broad-based across all age groups and all income groups. It was also shared across all political affiliations, with the strongest improvements among Republicans. However, on a six-month moving average basis, confidence in all age and income groups was still down due to previous monthly declines.

Guichard added: “With the stock market continuing to recover in May, consumers’ outlook on stock prices improved, with 44% expecting stock prices to increase over the next 12 months (up from 37.6% in April) and 37.7% expecting stock prices to decline (down from 47.2% in April). This was one of the survey questions with the strongest improvement after the May 12 trade deal.”

Write-in responses on what topics are affecting views of the economy revealed that tariffs are still on top of consumers’ minds. Notably, consumers continued to express concerns about tariffs increasing prices and having negative impacts on the economy, but some also expressed hopes that the announced and future trade deals could support economic activity. While inflation and high prices remained an important concern for consumers in May, there were also some mentions of easing inflation and lower gas prices.

Consumers’ views of their Family’s Current and Future Financial Situations improved. The share of consumers expecting a recession over the next 12 months declined. (These measures are not included in calculating the Consumer Confidence Index®). Consumers’ expectations for interest rates ahead were little changed, while average 12-month inflation expectations eased to 6.5% after spiking at 7% in April.

Compared to April, purchasing plans for homes and cars and vacation intentions increased notably, with some significant gains after May 12. Plans to buy big-ticket items—including appliances and electronics—were also up. Likewise, consumers’ intentions to purchase more services in the months ahead, with almost all services categories rising. Dining out remained number one among spending intentions, followed by streaming services, while plans to spend on movies, theater, live entertainment, and sporting events increased the most over last month.

In a special question, consumers were asked if they changed their spending and financial behavior recently. More than a third (36.7%) said they put money aside for future spending. Around a quarter of consumers dug into their savings to pay for goods and services (26.6%) and postponed major purchases (26%). However, there were notable differences between income groups: Consumers in households making over $125K were more likely to say that they saved money while less wealthy households were more likely to have dug into their savings or postponed purchases. In addition, only 19% indicated having advanced purchases ahead of tariffs, but that share was higher for consumers in wealthier households (26%).

This month’s survey also asked consumers how worried they were about being laid off, not being able to afford necessities, and not being able to afford desired goods and services. Overall, they were more anxious about affordability than job security: Nearly half of consumers said they were concerned about not being able to buy the things they need or want, compared to less than a quarter worried about losing their jobs.

Present Situation

Consumers’ assessments of current business conditions improved in May.

21.9% of consumers said business conditions were “good,” up from 19.2% in April.

14.0% said business conditions were “bad,” down from 16.3%.

Consumers’ views of the labor market weakened in May.

31.8% of consumers said jobs were “plentiful,” up slightly from 31.2% in April.

18.6% of consumers said jobs were “hard to get,” up from 17.5%.

Expectations Six Months Hence       

Consumers were less pessimistic about future business conditions in May.

19.7% of consumers expected business conditions to improve, up from 15.9% in April.

26.7% expected business conditions to worsen, down from 34.9%.

Consumers’ outlook for the labor market outlook was also less negative in May.

19.2% of consumers expected more jobs to be available, up from 13.9% in April.

26.6% anticipated fewer jobs, down from 32.4%.

Consumers’ outlook for their income prospects turned positive in May.

18.0% of consumers expected their incomes to increase, up from 15.9% in April.

13.8% expected their income to decrease, up from 17.7%.

Assessment of Family Finances and Recession Risk

Consumers’ assessments of their Family’s Current Financial Situation improved in May. 

Consumers’ assessments of their Family’s Expected Financial Situation also improved.

Consumers’ Perceived Likelihood of a US Recession over the Next 12 Months declined in May.

 

Special Questions, May 2025

Many consumers indicated saving for future expenses, digging into their savings, and postponing major purchases… 

…but there are substantial differences in behavior based on household income

Consumers are more worried about the affordability of goods and services than losing their jobs

The monthly Consumer Confidence Survey®, based on an online sample, is conducted for The Conference Board by Toluna, a technology company that delivers real-time consumer insights and market research through its innovative technology, expertise, and panel of over 36 million consumers. The cutoff date for the preliminary results was May 19.

Source: May 2025 Consumer Confidence Survey

Leading Economic Index

The short-term outlook for the U.S. economy worsened significantly in April, according to the Conference Board's latest Leading Economic Index (LEI).

On Monday, the D.C.-based research said that the index—a closely monitored composite of several economic indicators—had fallen by 1.0 percent to 99.4 in April, registering the fifth consecutive monthly decline and the steepest drop since March 2023. Over the six months ending in April 2025, the LEI fell by two percent, matching the pace of decline posted over the previous six months.

The sharp decline in the LEI is one of the several warning signals that have emerged from the U.S. economy in recent months against the backdrop of trade policy uncertainty and a related weakening in consumer sentiment.

Despite the U.S. and China agreeing to a temporary climbdown on tariffs, set to extend into mid-August, separate consumer surveys suggest that economic anxieties persist. Economists have expressed concerns that the trade dispute may have already done damage to both economies, while cautioning over the strong possibility of a re-escalation.

Seven out of the ten economic components of the LEI declined in April, most significantly consumers' expectations for business conditions. As Justyna Zabinska-La Monica, Senior Manager for Business Cycle Indicators at the Conference Board noted: "Consumers' expectations have become continuously more pessimistic each month since January 2025."

According to the University of Michigan's latest Consumer Sentiment Index, consumer sentiment dropped for the fifth consecutive month in May to 50.8, the second-lowest reading on record.

Sentiment has dropped by nearly 30 percent since January, with Republicans contributing significantly to the decline seen this month. Meanwhile, year-ahead inflation expectations rose from 6.5 percent in April to 7.3 percent in May, while long-run inflation expectations were pushed up to 4.6 percent, "reflecting a particularly large monthly jump among Republicans."

Many of those surveyed mentioned the impact of tariffs in their responses, though the University of Michigan notes that most were gathered prior to last week's joint announcement of a temporary reduction in tariffs by the U.S. and China. The reaction to this pause assessed so far, it added, "echoes the very minor increase in sentiment seen after the April 9 partial pause on tariffs, despite which sentiment continued its downward trend."

While the Conference Board's forward-looking LEI serves as a potential warning signal, the Coincident Economic Index (CEI)—which reflects current conditions—edged up by 0.1 percent in April to 114.8, following a 0.3 percent gain in March.

What People Are Saying

Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, The Conference Board, said: "The U.S. LEI registered its largest monthly decline since March 2023, when many feared the US was headed into recession, which did not ultimately materialize.

"Most components of the index deteriorated. Notably, consumers' expectations have become continuously more pessimistic each month since January 2025, while the contribution of building permits and average working hours in manufacturing turned negative in April. Widespread weaknesses were also present when looking at six-month trends among the LEI's components, resulting in a warning signal for growth."

Federal Reserve Chair Jerome Powell, during a press conference on May 7, said: "Despite heightened uncertainty, the economy is still in a solid position. The unemployment rate remains low, and the labor market is at or near maximum employment. Inflation has come down a great deal but has been running somewhat above our two-percent longer-run objective."

Powell continued: "The new Administration is in the process of implementing substantial policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation. The tariff increases announced so far have been significantly larger than anticipated. All of these policies are still evolving, however, and their effects on the economy remain highly uncertain."

Political economist Veronique de Rugy told Newsweek that despite the 90-day pause in U.S.-China tariffs, "the economic disruptions caused by the trade war have had tangible impacts, and the temporary nature of the agreement means that uncertainties persist."

Sean Metcalfe, associate director at Oxford Economics, said: "The effective tariff rate is still noticeably higher than that seen prior to President Donald Trump's inauguration. Over the span of several weeks, the US effective tariff rate skyrocketed to its highest since the late 1890s before settling slightly lower at a rate comparable with the 1930s. The bottom line is the US economy is still going to take a hit from the tariffs that remain in place."

Metcalfe told Newsweek that the tariff de-escalation would "boost GDP growth this year (relative to our previous forecast) by several 10ths of a percentage point, reduce the boost to y/y growth in consumer prices from tariffs by 0.2ppts, and nudge the unemployment rate lower by 0.1ppt-0.2ppts."

The Conference Board currently projects U.S. GDP to increase by 1.6 percent in 2025, slowed from 2.8 percent in 2024. It cited the adverse impacts of tariffs on America's growth prospects, with Zabinska-La Monica saying that the "bulk" of these will be felt in the third quarter of the year.

Source: Hugh Cameron, Newsweek

Moody’s Downgrading the U.S. Credit Rating

     

Moody’s has followed in the footsteps of credit rating agencies S&P Global and Fitch Ratings, downgrading the United States from their highest triple A rating.

The move comes amid ongoing challenges associated with mounting U.S. debt and little sign of significant debt reduction in Congress, despite recent actions from the Department of Government Efficiency, or DOGE.

Moody’s decision to lower the U.S. credit rating to Aa1 from Aaa follows similar decisions by Fitch Ratings in 2023 and S&P Global in 2011. It also adjusted its outlook to stable from negative to reflect the downgrade.

“While we recognize the US’s significant economic and financial strengths, we believe these no longer fully counterbalance the decline in fiscal metrics,” said Moody’s statement.

The federal budget deficit totals nearly $2 trillion annually, accounting for roughly 6.4% of gross domestic product (GDP).

The move isn’t likely to have a big impact on debt markets, given Fitch and S&P Global’s downgrades did little to slow down demand for Treasuries. The 10-Year Treasury Note currently yields 4.44%, up from 3.62% last September. That's about where it was in the mid-2000s.

Nevertheless, the downgrade reflects growing concern that sky-high deficits and government spending will put upward pressure on Treasury yields, forcing rates on everything from credit cards to mortgages higher over time.

Moody’s decision coincides with President Trump’s cornerstone tax and spending bill, which is currently under consideration by the House of Representatives.

The bill extends President Trump’s 2017 tax changes, while also including new provisions, such as increasing the Social Security income tax deduction and eliminating taxes on overtime and tips.

While the bill is popular among many eager for additional tax relief, some GOP members have blocked the bill, hoping for steeper cost cuts to offset the tax breaks. In the crosshairs is Medicaid, which is already the subject of cost-cutting in the bill.

The tax proposals could boost long-run GDP by 0.6% but reduce federal tax revenue by $4.1 trillion from 2025 through 2034, according to the non-partisan Tax Foundation.

The proposed tax cuts boost deficits by $3.8 trillion over the same period, or by 1.1% of GDP.

Five republicans voted against advancing the bill out of the Budget Committee and to the House floor for a vote.

“Republicans MUST UNITE behind, ‘THE ONE, BIG BEAUTIFUL BILL!’,” wrote Trump in a post on Truth Social. "We don't need 'GRANDSTANDERS' in the Republican Party. STOP TALKING, AND GET IT DONE!"

Source: Todd Campbell

Inflation

Inflation was slightly lower than expected in April as President Donald Trump’s tariffs just began hitting the slowing U.S. economy, according to a Labor Department report Tuesday.

The consumer price index, which measures the costs for a broad range of goods and services, rose a seasonally adjusted 0.2% for the month, putting the 12-month inflation rate at 2.3%, its lowest since February 2021, the Bureau of Labor Statistics said. The monthly reading was in line with the Dow Jones consensus estimate while the 12-month was a bit below the forecast for 2.4%.

Excluding volatile food and energy prices, the core CPI also increased 0.2% for the month, while the year-over-year level was 2.8%. The forecast was for 0.3% and 2.8%, respectively.

The monthly readings were a bit higher than in March though price increases remain well off their highs of three years ago.

Markets reacted little to the news, with stock futures pointing flat to slightly lower and Treasury yields mixed.

“Good news on inflation, and we need it given inflation shocks from tariffs are on their way,” said Robert Frick, corporate economist at Navy Federal Credit Union. “Non-tariffed goods are still in the pipeline, and perhaps some importers have absorbed their tariff costs for now.”

Shelter prices again were the main culprit in pushing up the inflation gauge. The category, which makes about one-third of the index weighting, increased 0.3% in April, accounting for more than half the overall move, according to the BLS.

After posting a 2.4% slide in March, energy prices rebounded, with a 0.7% gain. Food saw a 0.1% decline.

Used vehicle prices saw their second straight drop, down 0.5%, while new vehicles were flat. Apparel costs also were off 0.2% though medical care services increased 0.5%. Health insurance increased 0.4% while motor vehicle insurance was up 0.6%.

Egg prices tumbled, falling 12.7%, though they were still up 49.3% from a year ago.

With the increase in CPI, real average hourly earnings were flat for the month and up 1.4% from a year ago.

While the April CPI figures were relatively tame, the Trump tariffs remain a wild card in the inflation picture, depending on where negotiations go between now and the summer.

In his much-awaited “liberation day” announcement, Trump slapped 10% duties on all U.S. imports and said he intended to put additional “reciprocal” tariffs on trading partners. Recently, though, Trump has backed off his position, with the most dramatic development a 90-day stay on aggressive tariffs against China while the two sides enter further negotiations.

Economists figure that even with the easing of the 145% reciprocal tariffs against China, inflation numbers could perk up again in the summer months, though the degree to which that will happen is an open question. Trump left in place the across-the-board tariffs.

“Overall, there was no sign of the tariff impact in the April CPI. Although we expect higher tariffs will likely exert upward pressures on core CPI, starting in May, weakening of consumer demand and an inventory drawdown might mitigate the inflationary pressure,” Nomura economist Aichi Amemiya said in a note.

Markets expect the president’s softening position to lead to less of a chance of interest rate cuts this year. Traders had been expecting the Federal Reserve to start easing in June, with at least three total reductions likely this year.

Since the China developments, the market has pushed out the first cut to September, with just two likely this year as the central bank feels less pressure to support the economy and as inflation has held above the Fed’s 2% target now for more than four years.

The Fed relies more on the Commerce Department’s inflation gauge for policymaking, though the CPI figures into that index. The BLS on Thursday will release its April reading on producer prices, which is seen as more of a leading indicator on inflation.

Source: Jeff Cox, CNBC