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🌎 The Big Picture

Some good, some bad, some warnings. All stuff to prepare you and make life easier.

Paychecks aren't keeping up with the cost of living, and the war is why.

The Labor Department reported the Consumer Price Index climbed 4.2% over the past year through May, the worst inflation we've seen since early 2023. And it's almost all about energy: gas prices have shot up 40.5% from a year ago, and energy costs alone drove more than 60% of last month's price increase. The Middle East conflict has thrown global oil supplies into chaos, and those higher fuel costs are showing up everywhere, with tomatoes up 32%, lettuce up 25%, and coffee up 17.5%. Grocery bills grew a little more slowly in May than April, but they're still going up. Since the war began, the overall cost of living has risen more than three times faster than what's considered normal.

Wages just aren't keeping up. After adjusting for inflation, paychecks have lost 0.7% of their purchasing power over the past year. That's a real pay cut for most workers.

Here's the silver lining: the damage is still contained, for now. Strip out food and energy, and core prices rose just 0.2% for the month. That tells us the energy shock hasn't spread widely through the economy yet. New vehicles, furniture, and prescription drugs got cheaper in May, which hints that tariff-driven price pressures might be easing up.

Still, with prices rising this fast, investors now think it's more likely that interest rates go up than down by year's end. That means don't expect it to get cheaper to borrow money anytime soon - mortgages, credit cards, car leases, business loans. It might actually get more expensive.

Social Security's retirement fund is running out of money faster than anyone expected.

The Social Security Administration says the retirement trust reserve is now projected to run dry in late 2032, three months sooner than they thought just a year ago. Every paycheck you get, Social Security taxes come out, and that money goes straight to 70 million retirees, disabled people, and survivors. For years, those tax collections brought in more than the program paid out, building up a healthy reserve. But now there are way more retirees, payouts exceed incoming taxes, and the program is eating through that reserve to cover the gap.

The backup funds are draining faster every year. Falling birth rates, lower net immigration, and recent federal tax cuts have all shrunk the tax revenue flowing into Social Security, forcing deeper and deeper draws on the reserve. If that reserve hits zero, incoming taxes would only cover 78% of scheduled benefits, meaning a 22% cut to monthly checks. For roughly one in four retirees, those checks are their only income. More than 60% rely on them for at least half. Medicare's hospital fund is in a similar spot, projected to cover only 89% of inpatient costs after mid-2033. The disability trust fund is fine through at least 2100, but retirees are in real trouble if Congress doesn't step up.

Congress still has time, but not forever. The fixes are raising payroll taxes, trimming benefits, tightening eligibility, or pulling in other federal revenue. None of those are politically fun, so don't count on an easy solution. Anyone in or approaching retirement can't afford to tune this out.

The housing market had its strongest month in a while this May, but don't get too comfortable.

The National Association of Realtors reported 4.17 million existing home sales, up 3.2% from both April and a year ago. That burst of activity traces back to April, when mortgage rates briefly dipped after spiking in March following the U.S.-Iran conflict. Buyers who'd been sitting on the sidelines jumped at the opening.

Prices are still climbing, just not as fast. The national median sale price hit a record $429,300, but that 1.3% gain is pretty modest compared to recent years, and wages are finally starting to close the gap. Affordability improved the most in the West, up 11%, and the South, up 8.4%. First-time buyers made up 35% of May sales, up from 30% a year ago, though economists say 40% is the benchmark for a truly healthy market. Cash buyers accounted for 25% of sales, a touch lower than last year.

Things could cool off fast. Zillow's data shows new listings are down 4.1% from a year ago, and they're warning that inventory could peak in June, earlier than usual, which would shrink choices and slow sales in the back half of the year. If you're buying, there's more supply than a year ago, but competition is creeping back. If you're selling, prices are still near record highs, just know the window for peak activity may be closing sooner than you'd like.

🏭 The Companies Everyone’s Talking About

❔ The Big Question of the Week

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