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🌎 The Big Picture

The economy is still a pretty split narrative right now.

Doing well:

• Stock market

• Corporations

• Anyone in AI

• Upper income

Not so well:

• Small businesses

• Low income

• Middle income

Some highlights from the week:

Small businesses are getting hit hard by the government shutdown.

According to a new report from the US Chamber of Commerce, more than 65,000 small firms across every state collectively lose $3 billion a week in revenue as government spending on their goods and services dries up. Contractors provide everything from computers to facility services, and in some states like Maryland, Virginia, California, and Texas, thousands of companies have seen their income vanish overnight. What makes this especially tough is that, while furloughed federal workers are likely to get back pay when the government reopens, contractors are not guaranteed the same. Some of their lost business may be delayed, but much of it will never be recovered, affecting families, payrolls, and business stability. With Congress deadlocked over funding bills, the uncertainty could mean more tough choices for business owners, including layoffs and other cutbacks.

Wages are having a hard time keeping up with the rising cost of living.

According to a new analysis from JP Morgan Institute, when adjusting for inflation, incomes for workers aged 25 to 54 have risen by only around 2% over the past year, one of the weakest rates of real income growth since the early 2010s. The newest members of the workforce are getting hit the hardest. People aged 25 to 29, who typically generate a lot more of their salary gains from switching jobs early in their careers, have had especially slow wage growth amidst such a slow hiring market. While headline wage increases still look good on paper, they're not providing as much purchasing power, as faster inflation is taking a bigger slice out of those raises. Business owners may start to see bigger salary demands from younger workers as they try to manage their living costs.

Borrowing costs are coming down slowly. 

The Federal Reserve cut its benchmark interest rate by a quarter point to around 4% on Wednesday, marking the second cut this year. The central bank had hiked the baseline cost of borrowing rapidly over the past few years to slow borrowing and spending to bring inflation under control. Now, the Fed isn't as worried about inflation, but hiring has slowed. So, this rate cut aims to make it a little cheaper for households and businesses to borrow money for things like mortgages, car loans, and credit cards, hopefully stimulating more spending. It also means less income from your savings accounts, encouraging more investment. The Fed also announced it will stop shrinking its massive bond holdings in December, leaving more money to flow through the system to fund the lending and investment. Don't expect rates to keep falling too soon. Policymakers were split on how aggressively to act, with some pushing for a bigger rate cut and others wanting none at all. Chairman Powell implied that we shouldn't assume more cuts will come in December or on any steady path. For now, borrowing gets a bit cheaper, and savings accounts will still pay pretty well.

Childcare costs are climbing far faster than pay and pushing more women out of the workforce.

According to the Bank of America Institute, the average price of childcare has increased 1.5x faster than the broader cost of living. Most significant increases hit families in New England and parts of the Midwest, with some areas seeing costs surge over 8% in the past year. The higher costs have put paid childcare out of reach for more families, particularly lower-income households. An analysis of the bank's credit card data shows that the number of households paying for childcare actually dropped by 1.6% this year, despite the average monthly payment rising by roughly 3.6%, likely signaling a shift to family care or parents leaving their jobs. Women are increasingly impacted, with more leaving the workforce or reducing hours because of unaffordable childcare. Businesses may need to consider childcare benefits to retain talent.

Get the full breakdown of all the trends affecting your home, wallet, and career in the new Weekend Scoop on the Scoops app!

🏭 The Companies Everyone’s Talking About

Dig into more scoops and vote on company approval ratings in the Scoops app!

❔ The Big Question of the Week

Challenge your perspectives and learn from the community voting on the Scoops app!