The Economy

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🤑 Income growth, mapped

Data: U.S. Bureau of Economic Analysis; Note: Data not available for Connecticut; Map: Jacque Schrag/Axios Personal income levels rose 5.6% nationwide from 2023 to 2024, Alex Fitzpatrick reports from new U.S. Bureau of Economic Analysis data. Among counties with more than 500,000 residents, San Joaquin County, California, had the biggest gain (+9.7%). Philadelphia County had the smallest (+2.7%). 💰 Among all counties, Los Angeles County had the highest total personal income in 2024 ($818.5 billion), while Loving County, Texas, had the lowest ($10.6 million). Go deeper.

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🍔 Wendy's is closing hundreds of locations amid frosty sales. The chain is "working with our franchisees to evaluate restaurants on a store-by-store basis," interim CEO Ken Cook (yes, that's his name!) said today. Go deeper.

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👧 The Goldilocks economy

Illustration: Sarah Grillo/Axios

The U.S. economy started 2026 in a state of excellent balance: strong growth, a solid job market and subdued inflation. Just don't look too closely, Axios's chief economic correspondent Neil Irwin writes. There are warnings in the data that the story isn't as rosy as headline numbers might suggest. Catch up quick: Employers added a healthy 130,000 jobs in January, as the unemployment rate edged down to 4.3%. The caveat? Revisions that showed job creation flatlined over the last year, with only 15,000 jobs being added per month, on average. Service sectors that normally power the creation of high-paying office positions have instead been shedding jobs, perhaps reflecting employers' anticipation of AI-related cost savings. A separate report showed a plunge in job openings, which could foreshadow less hiring as 2026 progresses. 📈 By the numbers: On the inflation front, the good news is that consumer prices are up only 2.4% over the last 12 months. Excluding food and energy, inflation is the lowest since the post-pandemic surge nearly five years ago. Yes, but: Sectors with rising prices are crimping family budgets in particularly noticeable ways. 💡 Home electricity prices are up 6.3% in the last year, and natural gas service is up 9.8%. 🍔 Ground beef prices are up 17.2%. Coffee is up 18.3%. Between the lines: The S&P 500 was down a mere 1.4% this week and essentially flat for the year. But you wouldn't guess it from some of the market headlines. Investors have been in a rolling series of freak-outs over the possibility that AI will undermine the profitability of software, trucking and other industries.

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📈 Older Americans power gray economy

Data: Moody's Analytics analysis of Fed, U.S. Bureau of Economic Analysis and Census Bureau data. (Consumer spending is the sum of personal consumption expenditures, non-mortgage interest expense and charitable donations.) Chart: Axios Visuals Older Americans are powering the economy: The changing demographics in the U.S. — more old people, fewer young ones — are reshaping jobs and spending in all kinds of ways, Axios' Emily Peck reports. 👉 Nearly all of January's job growth came from the health care and social assistance sectors. Health care employment also drove much of the labor market growth last year. "As the population ages, you need more doctors and nurses, but you also need more health aides," says Daniel Zhao, chief economist at Glassdoor. "You need more nursing home staff." As people have fewer children, fewer younger Americans are available to care for their elders. 💰 The twist: The senior population is getting bigger as a share of the overall population. They're also getting richer. More than 70% of all wealth in the country is held by those over 55. 🔮 Between the lines: The changing demographics help explain all kinds of new businesses and marketing trends, including longevity startups and the boom in menopause companies.

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📈 WSJ: Inflation is back

Illustration: Brendan Lynch/Axios The holiday "pricing break" is over as costs rise for clothing, gadgets and more, The Wall Street Journal reports. WSJ's Ruth Simon: "Many companies typically raise prices at the start of the new year. Yet increases appeared to be stronger than normal for January for electronics, appliances and other durable goods, said UBS economist Alan Detmeister." (Gift link.) Companies are blaming price increases on President Trump's tariffs, higher wages and steeper health insurance costs. 👖 Among the brands raising prices: Levi Strauss. Some of its latest jeans now cost $5 to $10 more, per WSJ. ☕️ Between the lines: It looks like inflation cooled in January, broadly speaking — but prices are up for several key expenses, Axios' Neil Irwin writes, including beef and coffee. Go deeper.

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Everything you need to know about “no tax on overtime”

The 2025 Republican budget bill (sometimes called the 2025 Trump tax bill or “One Big Beautiful Bill Act”) created a new federal income tax deduction for the premium portion of overtime pay. The Trump administration has trumpeted this policy as a substantial victory for workers—in reality, it is not. Although some workers will have higher after-tax income as a result, most workers will not benefit from this policy whatsoever. In fact, some workers could be harmed by the downward pressure the policy puts on base wages and the incentive it creates for long working hours. More broadly, the 2025 Trump tax bill that created the overtime premium deduction simultaneously enacted massive cuts to health care, energy, and food assistance programs that will cause tremendous harm for millions of low-income households—all to finance tax cuts for the ultrawealthy.

https://www.epi.org/publication/everything-you-need-to-know-about-no-tax-on-overtime/?

Everything you need to know about “no tax on tips”

The 2025 Republican budget bill (sometimes called the 2025 Trump tax bill or “One Big Beautiful Bill Act”) created a new federal income tax deduction for tipped income. The Trump administration has trumpeted this policy as a substantial victory for workers—in reality, it is not. Although some tipped workers will have higher after-tax income as a result, most workers, including a large portion of tipped workers, will not benefit from this policy whatsoever. In fact, many workers will likely be harmed in the long run by the downward pressure the policy puts on employer-paid wages. More broadly, the 2025 Trump tax bill that created the tipped income deduction simultaneously enacted massive cuts to health care, energy, and food assistance programs that will cause tremendous harm for millions of low-income households, including some with tipped workers—all to finance tax cuts for the ultrawealthy.

https://www.epi.org/publication/everything-you-need-to-know-about-no-tax-on-tips/?

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📉 Sorry, job-hoppers

Data: ADP Research. Chart: Axios Visuals Job-hoppers are no longer enjoying fat pay increases. They're seeing the narrowest bumps since 2020, Axios' Emily Peck reports from ADP data. 💰 By the numbers: Median pay rose 4.5% from last year for those sticking with their employer. The pay bump for job-hoppers was 6.4%. Go deeper ...

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US economic growth weaker than thought in fourth quarter with government shutdown, consumer pullback

WASHINGTON (AP) — U.S. economic growth slowed in the final three months of last year, dragged down by the six-week shutdown of the federal government and a pullback in consumer spending.

https://apnews.com/article/gdp-economy-consumer-shutdown-immigration-0e5caca783b93eaf2231496e3e0f54f3?

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Data: Commerce Department. Chart: Axios Visuals

1. 💸 Overall GDP rose at a 1.4% annual rate in the final three months of 2025, far below analysts' expectations. But American consumers keep spending, and American businesses keep investing. Go deeper.
2. 🫏 Rep. Summer Lee (D-Pa.) will deliver the progressive response to this year's State of the Union from the Working Families Party, Axios' Andrew Solender scooped. Her remarks could contrast with the main Democratic response from Virginia Gov. Abigail Spanberger.
3. 🇬🇧 Police searched the former home of ex-Prince Andrew today, after he was released following an arrest on suspicion of misconduct in public office. Go deeper.
4. 🥶 America is shivering: About 6 in 10 adults say they've been personally affected by severe cold weather or severe winter storms in the past five years, according to AP-NORC polling. That's up from nearly 5 in 10 last February. How to be storm-safe.

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Everything you need to know about “no tax on tips”

The 2025 Republican budget bill (sometimes called the 2025 Trump tax bill or “One Big Beautiful Bill Act”) created a new federal income tax deduction for tipped income. The Trump administration has trumpeted this policy as a substantial victory for workers—in reality, it is not. Although some tipped workers will have higher after-tax income as a result, most workers, including a large portion of tipped workers, will not benefit from this policy whatsoever. In fact, many workers will likely be harmed in the long run by the downward pressure the policy puts on employer-paid wages. More broadly, the 2025 Trump tax bill that created the tipped income deduction simultaneously enacted massive cuts to health care, energy, and food assistance programs that will cause tremendous harm for millions of low-income households, including some with tipped workers—all to finance tax cuts for the ultrawealthy.

https://www.epi.org/publication/everything-you-need-to-know-about-no-tax-on-tips/?

Workers’ resolve drives increase in unionization in 2025

In 2025, 16.5 million workers in the United States were represented by a union—an increase of 463,000 from 2024 and the highest number of unionized workers in the U.S. in 16 years. These 16.5 million unionized workers account for 11.2% of all wage and salary workers, up from 11.1% in 2024. The increase is a departure from prior years’ downward trend in union density. It demonstrates working people’s desire for greater agency in their workplaces and in shaping the policies that affect their lives. In a time of fear, uncertainty, and hardship, the importance and benefits of unionization are especially clear. Further, this increase occurred despite the nation’s broken system of labor law and the most anti-union president in history. It is a testament to working people’s resolve and the fact that unions are increasingly viewed favorably and recognized as critical instruments for building a just economy.

https://www.epi.org/publication/workers-resolve-drives-increase-in-unionization-in-2025/?

New federal data shows a slowdown in economic growth last quarter. 

Gross domestic product, adjusted for inflation, grew 1.4% in the final three months of 2025, according to a federal report released yesterday. That is down sharply from the 4.4% rate reported in the third quarter, a decline partly attributed to the record 43-day government shutdown that stretched from October to November. On the whole, GDP rose 2.2% last year, compared to 2.8% in 2024.

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Higher prices aren't helping restaurants

Illustration: Sarah Grillo/Axios Restaurant owners say they can't raise prices any further, even as sales and traffic stabilize, per the latest James Beard Foundation report, shared first with Axios' Kelly Tyko. Recent survival tactics — like higher prices and more deliveries — aren't working anymore. 📉 Restaurants that raised prices more than 10% last year were more likely to report lower profits, the group found. Diners are skipping second drinks, sharing desserts and trimming add-ons to keep their bills lower. Anne McBride, VP of impact at the James Beard Foundation: "There's just not a lot of elasticity left." 🚴‍♀️ Delivery hasn't provided relief either. More than 40% of restaurant operators who added online ordering and delivery reported lower profits. Delivery platform fees and packaging costs are eating into restaurants' already thin margins, McBride said. 👩‍🍳 Labor is another worry, with around half of operators saying they're understaffed. The share of restaurants offering big raises plunged from about 70% in 2024 to 15% last year. Nearly 1 in 5 didn't boost pay at all. 👍 Still, most restaurant owners say business conditions improved last year. 62% reported good or excellent performance, up from 54% in 2024. Nearly 75% say they're optimistic about this year. Go deeper ... Read the report.

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The Trump administration’s macroeconomic agenda harms affordability and raises inequality

The Trump administration’s unwise policy agenda has the potential to do great damage to U.S. families—and this is true even if it does not lead to recession or spiking inflation in the near term. While this agenda has heightened the risk of recession in coming years, the greatest future damage will come from slowing growth in the economy’s supply side and raising inequality. Trump’s economic policies will cause incomes and wages for typical families to grow more slowly, and this will lead to a less affordable life for many.  

https://www.epi.org/publication/the-trump-administrations-macroeconomic-agenda-harms-affordability-and-raises-inequality/?

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Radical workforce cut may embolden CEOs

Illustration: Natalie Peeples/Axios

It was only a matter of time before a future-thinking CEO took the leap and replaced thousands of workers with AI, Axios' Dan Primack writes. Why it matters: Block chair Jack Dorsey did just that yesterday. Wall Street's standing ovation — the fintech company's shares soared more than 20% in today's premarket trading — gives other CEOs permission, even incentive, to consider the same thing. 🚨 Dorsey, an iconoclast who co-founded and once led Twitter, was blunt in announcing via X that Block will say goodbye to 40% of its 10,000-person workforce, cutting the company to just under 6,000. Block, based in Oakland, Calif., includes Square, Cash App, Afterpay and the Tidal music platform. Dorsey wrote on X that "something has changed. we're already seeing that the intelligence tools we're creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company. and that's accelerating rapidly." He said he "had two options: cut gradually over months or years as this shift plays out, or be honest about where we are and act on it now. i chose the latter." 🖊️ Dorsey added in a shareholder letter: "We're already seeing it internally. A significantly smaller team, using the tools we're building, can do more and do it better. And intelligence tool capabilities are compounding faster every week." 📈 Zoom in: The fintech's stock rallied as much as 25% on the news, after having been down more than 16% over the past year and 76% over the past five years. Block's declining stock price put Dorsey under pressure to make changes, although he denied that the layoffs were related to Block's financial performance. 💡 Reality check: CEOs will look to see if they can follow Dorsey's lead, and most will realize they don't have the talent to do it. This would destroy most companies — it's very hard to do. 🖼️ The big picture: Wall Street was captivated early this week by a viral doomsday scenario for AI's coming effect on white-collar work. But the stated reasons for most other big AI-related layoffs so far have been much less explicit than Dorsey's. Many AI executives and investors insist that the tech will lead to temporary labor dislocations rather than net job loss, echoing the Industrial Revolution. The bottom line: It's one thing to replace people with machines. It's quite another to prove that it makes business sense. If Block can grow its top line with a much smaller headcount, the rest of corporate America will take notice. Dorsey's 600-word post ...

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Fintech company Block lays off 4,000 of its 10,000 staff, citing gains from AI

BANGKOK (AP) — Shares in the financial technology company Block soared more than 20% in premarket trading Friday after its CEO announced it was laying off more than 4,000 of its 10,000 plus employees, reconfiguring to capitalize on its use of artificial intelligence.

https://apnews.com/article/block-dorsey-layoffs-ai-jobs-18e00a0b278977b0a87893f55e3db7bb?

Sweeping layoffs

Block, the company behind Square, Cash App and Afterpay, is cutting its staff by 40% because of AI. Its CEO thinks most companies will do the same in the near future.

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👩‍⚕️ Charted: Job market winners

Data: Bureau of Labor Statistics via Bank of America Institute. Chart: Axios Visuals Women were the big gainers in the job market last year, Axios' Emily Peck writes. That's because the strongest areas for job growth were in health care and education — two areas where women dominate. On the flip side, male-dominated sectors, like construction, saw little to no growth. Zoom in: Last year, the number of jobs added by women was nearly three times that of men, according to data from the Bureau of Labor Statistics, highlighted in a new report from Bank of America Institute.

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Jobs snap back to reality

Illustration: Sarah Grillo/Axios Today's jobs report snaps back to the reality of a labor market at a standstill, with little net job creation, Axios' Courtenay Brown reports. Even before the potential for fresh turbulence from the Iran war, the labor market was on weak footing due to AI adoption, trade chaos and immigration crackdowns. 📉 By the numbers: The economy lost 92,000 jobs in February, the biggest bust since October. The jobless rate ticked up to 4.4%. 👩‍💻 Hiring at the end of 2025 was also much worse than initially reported. Employment fell by 17,000 in December, a sharp reversal from the most recent estimate of 48,000 jobs added. All told, employers added only 6,000 jobs each month over the last three months — negligible in an economy with 158 million total jobs. Data: Bureau of Labor Statistics. Chart: Axios Visuals 🏥 The February jobs number may have been affected by temporary factors, including a Kaiser Permanente strike that took out 28,000 health care jobs, but is now over. That will likely be reversed in the March report. Still, it underscores the peril of ultra-concentrated hiring lately. Health care has been the engine of U.S. job growth. If it falters, other sectors may be too weak to pick up the slack. Case in point: Manufacturing, a politically vital sector that President Trump promised to revive, returned to shedding mode last month. Manufacturers cut 12,000 jobs in February, a sign that January's gains — the sector's first since late 2024 — may have been a blip. 📝 Fitch Ratings economist Olu Sonola wrote in a memo: "Just when it looked like the labor market was stabilizing, this report delivers a knock-down blow to that view." Go deeper.

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🤖 Most & least endangered jobs

Data: Anthropic. Chart: Axios Visuals Computer programmer, customer service rep, data-entry keyer and medical record specialist rank among the most AI-vulnerable occupations, Axios' Courtenay Brown writes from a new Anthropic study of "AI displacement risk." Among the jobs least susceptible to AI disruption, given how human-intensive they are: cooks, lifeguards, dishwashers. Explore the data.

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Once a beacon of cheap homes, Nevada has become a symbol of America’s struggle with high costs

Many voters are frustrated by rising prices for essentials like housing. And Democrats are aiming to channel this anger into support against Republican control of Washington. Housing affordability is a growing issue nationwide, not just on the coasts. Once a beacon of cheap homes, Nevada has become a symbol of America’s struggle with high costs. Home prices in Las Vegas rose 64% from early 2020 to last year, despite recent declines. Large investors buying homes are becoming bipartisan targets. Read more.

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📈 AI hiring surprise

Illustration: Rebecca Zisser/Axios

Just 9% of CEOs at large U.S. companies ($500+ million in revenue) plan to cut jobs due to AI this year, Axios' Nathan Bomey writes from a new KPMG survey. 55% expect to increase hiring in 2026 because of AI, while 36% expect no change. KPMG CEO Tim Walsh tells Axios: "The majority of companies right now are not actually realizing, nor can they see, the return on investment of the AI they're deploying." Keep reading.

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The "s" word is back

Illustration: Sarah Grillo/Axios 1970s-era stagflation talk is rising on Wall Street, Axios' Emily Peck reports. Investors fret a comeback for the dreaded pairing of high inflation and high unemployment. The fear is being fueled by a lousy jobs report and rising oil prices. ⚠️ Yesterday alone, at least six investment managers and Wall Street analysts warned of "stagflationary" concerns. Chicago Fed President Austan Goolsbee noted Friday that rising unemployment on top of an oil price shock creates "exactly the kind of stagflationary environment that's as uncomfortable as any that faces a central bank." 📺 Analysts and media last tossed out the "s" word when inflation revved up in 2021. The term "stagflation" really took off the next year, when Russia invaded Ukraine, spiking energy prices. Many pundits predicted a recession that never materialized. Today is different for two reasons: The job market is more sluggish than it was a few years ago. The oil shock from the Iran war is potentially magnitudes larger than that from Russia's invasion, taking 20% of the global oil supply off the board. 🕺 Reality check: It's not the '70s. Economists believe the Iran war will slow economic growth and cause an increase in inflation — but not to the extremes seen back then. The bottom line: Michael Madowitz, principal economist at the progressive Roosevelt Institute, said this shock is "probably just going to slow the economy down, rather than trigger some long wave of inflation." Go deeper.

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‘Uncharted territory’

Inflation held firm last month — but the war with Iran could change that. The two-week conflict has already pushed up energy costs and raised prices at the pump for Americans.

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🔮 Fears of a food shock

Illustration: Sarah Grillo/Axios

It's not just oil: The Iran war is threatening to reignite food inflation — the price shock voters feel most directly — at the worst possible time for President Trump and Republicans, Axios' Nathan Bomey writes. Why it matters: The Strait of Hormuz — paralyzed by Iranian threats and potentially mines — carries a third of the world's fertilizer. For many American farmers, spring planting season is just weeks away. Threat level: The American Farm Bureau Federation warned in a letter to Trump this week that "supply chain shocks are expected to drive already record-high input prices even higher." Gulf states now menaced by war produce nearly 49% of the world's urea, a critical solid nitrogen fertilizer, and about 30% of its ammonia, according to AFBF. The U.S. also gets about 97% of its potassium from foreign sources, plus 18% of its nitrogen and 13% of its phosphate. "Fertilizer's not an option to farmers — it's a critical input that determines the crop yield and ultimately the food supply for the American people," said AFBF president Zippy Duvall. "It's not just a farm issue — it's a food security issue and an economic issue for the entire country," Duvall added. "When farmers face supply shortages or price increases, those impacts ripple through the entire food chain." 🔭 Zoom out: Food inflation, driven in part by the disruption to grain exports from Russia's 2022 invasion of Ukraine, weighed heavily on President Biden's approval ratings. Now a new war is threatening the same chain reaction: surging commodity prices, disrupted supply chains, higher grocery bills. The timing is especially perilous for Trump, who campaigned explicitly on lowering grocery prices — but has faced criticism for not doing enough to address affordability concerns. Republicans are already defending a war many voters see as a betrayal. Spiking grocery bills would give Democrats another potent weapon.

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Cracks emerged in a resilient US economy before war in Iran sent oil prices rocketing

WASHINGTON (AP) — The highly resilient U.S. economy was already showing signs of strain even before the launch of the Iran war, data released Friday showed, underscoring the risks that rising gasoline and energy prices may pose.

https://apnews.com/article/economy-gdp-consumer-spending-trump-government-shutdown-3172b6d0023717644c173cee94d44a79?

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🤖 1 fun thing: Humanoid robots

Illustration: Sarah Grillo/Axios

If you look even further into the crystal ball, humanoid robots could one day be living in your house — cooking dinner, folding laundry and putting Grandpa to bed, Joann writes. The Jetsons, set in 2062, had a robot maid. That's about the right timeline, Wall Street figures.

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💡 War tests America's economic superpower

Illustration: Aïda Amer/Axios

If panicky headlines caused you to predict the U.S. would fall into recession, the last few years have made you look dumb. Through interest rate increases, armed conflict in Europe and a trade war, America's economic engine has proven stunningly resilient, Axios' Neil Irwin writes. America's economic superpower has been its scale, diversity and adaptability, which have allowed the world's largest economy to keep chugging whenever crises arise. Now, the Iran war will test again how much the U.S. economy can absorb. State of play: With Iran threatening attacks on ships that pass through the Strait of Hormuz, the price of oil is up 43% this month. Middle East exports of other key commodities, including the raw ingredients for fertilizer, are also being throttled. 🔭 Zoom out: Based on all the historic measures, all the hand-wringing, all the chaos, the economy should be tanking or tormented. Yet it keeps snapping back, even growing. In Trump 2.0, the global trade order has been upended, the independence of America's central bank has been put in doubt, and an AI boom has erupted that threatens millions of jobs. Yet the economy has kept growing throughout, with the unemployment rate a manageable 4.4% last month. It was higher than that in 72% of months dating back to the 1940s. ☝️ This all reflects the inherent strength and adaptability of the U.S. economy, which becomes most evident at moments of strain. The U.S. is now a net oil exporter, which wasn't true during major Middle East wars of the past. Last April, there were widespread predictions of a recession and high inflation due to new tariffs. But President Trump backed off on some of the most extreme levies, and importers have proven creative about rerouting supply chains and absorbing costs, limiting the negative effects. Between the lines: So what could go wrong? The likeliest contenders include two-sided risks from the AI surge and from geopolitics. A rapid displacement of millions of workers by generative AI would create mass unemployment, at least temporarily. If the Iran war chokes off the shipment of oil and natural gas through the Persian Gulf for a sustained period, that could create a global recession and much higher energy prices. The bottom line: The natural state of the $30 trillion U.S. economy is forward momentum. It'll take more than a bunch of adverse headlines to stop it.