Just over a year ago, the US economy was labelled the ‘envy of the world’ by The Economist, but today the country seems to be at a crossroads due to various factors, such as a slowdown in economic growth and a softer job market, which are impacting the growth of the American economy. Additionally, cost-of-living concerns and the Middle East crisis have further complicated the lives of the average American household.

Against this backdrop, Dr Conor O’Kane, Senior Lecturer in Economics at Bournemouth University, offers his assessment of the country’s economic health.

In an exclusive interview with International Finance, Dr Conor O’Kane discusses inflation trends, the role of the Federal Reserve, labour market shifts, and the broader risks shaping America’s economic outlook.

How strong is the United States economy right now, and what indicators best reflect its true health?

Many of the macroeconomic fundaments for the US economy are strong, with the US set to continue leading the G7 in key areas like economic growth and productivity. However, even before the recent outbreak of war with Iran, there was some economic data that would become a cause for concern if the trend should continue.

Economic growth for the 4th quarter of 2025 was revised down to 0.7%, a sharp and unexpected decline from the previous quarter’s 4.4% growth.

Also, the US unemployment rate was 4.3% in January 2026, a slight increase from the 4% rate in January 2025. The US economy added an average of just 49,000 jobs per month in 2025, down from an estimated gain of 168,000 a month the year before.

Inflation has been a major concern for American households. Do you believe current policies are doing enough to bring prices down?

The post-COVID period saw a significant inflation spike in many advanced economies. In the US, inflation peaked at 9.1% in June 2022.

In response, policymakers at the Federal Reserve aggressively raised interest rates with the figure going up from 0.5% in February 2020 to 5.5% in July 2023, which had the desired impact. Since mid-2022, inflation has been on a downward trend and was 2.4% in February 2026, closing in on the Federal Reserve’s target 2% rate.

However, the cumulative inflation increase in the US since 2020 is approximately 26%, so while the rate of annual price increases has indeed slowed down, prices are still significantly higher, and consumers are feeling this cost-of-living squeeze.

Job numbers often make headlines, but are they the best measure of economic success in the US today?

Traditionally, new job creation numbers have been one of the key metrics for the US economy. They are considered a leading indicator in the Federal Reserve’s interest rate-setting policy.

However, in recent years, we have seen periods of relatively strong economic growth figures without the accompanying job creation. One possible explanation for this ‘jobless growth’ is that firms are using AI and automation to improve productivity. For example, the data centres needed to power AI require significant investment expenditure but do not need many employees to actually operate them once up and running.

How much does stock market performance really tell us about the financial well-being of ordinary Americans?

First and foremost, the stock market is not the economy! The best way to think about stock market performance is as a forward-looking snapshot of investor expectations of future corporate profits.

Approximately 50% of US workers have their retirement savings invested in the stock market through their 401(k) savings plans, and hence there is a link between the markets and 401(k) holders’ wealth. However, another 50% of American workers have little or no link to the fortunes of the stock market.

The US stock market gained 19% in the period from January 2025 until February 2026. However, when compared to stock market returns from other advanced economies, the US ranks 21st out of 23 countries, with only New Zealand and Denmark indices doing worse. It is likely that the uncertainty surrounding the US ‘liberation day’ tariffs announced in April 2025 dampened investors’ expectations regarding the future profitability of US firms.

The Federal Reserve has taken several steps to manage inflation. Are its policies helping or hurting economic growth?

Like many central banks, the Federal Reserve focuses on achieving its 2.0% inflation target. When inflation rose to over 9% in 2022, the series of interest rate hikes did seem to get inflation and, more importantly, inflation expectations on a trend back towards its target rate. The expectation was that 2025 would see more rate cuts, but concerns over the potential inflationary impact of the US administration’s tariff policy meant the Federal Reserve adopted a more cautious approach to rate cutting. All things considered, I think the Federal Reserve policymakers have done well over the last few years.

With rapid advances in artificial intelligence, should Americans be excited about new opportunities or worried about job losses?

The answer to this depends on who you are. If AI delivers the kind of productivity improvements and cost savings that it seems to promise, this should improve the profitability of many US firms. This would also likely benefit many US workers with 401(k) savings plans.

However, if you don’t have a 401(k) investment plan, or you have a job that AI can easily replace, well then, you might be a little bit less excited about the potential impact of AI.

A recent Financial Times poll found that about 60% of Trump voters were concerned about AI’s rapid development, and almost 80% believed the technology required more regulation.

Given President Donald Trump’s stated policy goal of establishing US global dominance in AI, these issues have the potential to become a controversial policy objective going forward. I expect this, and the cost-of-living, to be a major policy issue in the 2026 mid-term elections later this year.

How vulnerable is the US economy to global shocks such as conflicts, trade tensions, or energy price spikes?

Many of the US macroeconomic fundaments are in a good place now, and that does provide room in terms of economic resilience. However, history shows us that energy-related supply shocks have often been the trigger for recessions. The current conflict in the Middle East has the potential to develop into a major global energy crisis.

Over the last two decades, the US has become self-sufficient in terms of its oil needs. However, while a spike in energy prices might be good news for US energy producers, the US public will likely bear the brunt of the increase in energy prices.

What are the biggest risks facing the US economy over the next two to three years?

Given where we are today, with the ongoing conflict in the Middle East and the potential for a major energy price spike, you would have to say that the key risk over the next few years is stagflation. This is a relatively rare economic environment, characterised by stagnant economic growth, accompanied by higher inflation and unemployment. We last saw this in the 1970s because of the oil price shocks in 1972 and 1979. There is a risk that this could happen again, which should concern policymakers.

If you had to identify one policy change that could significantly strengthen the US economy, what would it be and why?

The policy change I would recommend is to end the chaotic tariff policy that the current US administration is following. It is causing enormous uncertainty and is damaging to American consumers, who we know are paying most of the tariffs.

It is also damaging to domestic US investment and FDI in the US, as firms are reluctant to invest in an environment where tariffs are regularly changed on the whim of the president or due to Supreme Court rulings.

The institutions that run the global economy were designed and run by the US. The free trade policy pursued since Bretton Woods in 1944 has helped many US firms become globally dominant in a range of industry sectors. Tearing up the global rules-based economic order, from which you have massively benefited, is not sound economic policymaking. It needs to stop.

The post Tariff fickleness tearing up global economic order tailor-made for US companies: Dr Conor O’Kane appeared first on International Finance.

To excel during the interview and increase your chances of receiving a job offer, prepare in advance. Research the company and the position you are applying for, and ensure you have all the necessary documents and references readily available.

Before the big day, review these tips so you can enter your interview feeling confident and ready to impress your potential new employer.

Do Extensive Research On The Company

Before going for an interview, know about the company. Try to understand what the company does and what type of work they are involved in. You can check their website to see their services, products, and basic information. When you know about the company, it becomes easier to answer questions and show interest.

Research The People You Will Be Interviewing With

Sometimes companies tell you who will conduct your interview. If you know their names, search for them online. This helps you understand their role in the company. It also helps you feel less nervous because you already know a little about the person sitting in front of you.

Anticipate Questions You Might Be Asked

Most interviews ask similar questions about your experience, skills, and plans. Think about these questions before the interview. Try to recall your past work or study experiences so you can explain them clearly. This preparation helps you avoid confusion during the interview.

Practice With A Mock Interview

Practicing before the interview is helpful. You can practice with a friend or family member. Even speaking in front of a mirror can help. This makes you more comfortable while answering questions and improves your speaking.

Use The Company’s Products Or Services

If possible, try to use the company’s products or services. This helps you understand how the company works. You can also share your experience during the interview, which creates a good impression.

Review Your Facebook And Other Social Media Postings

Many companies check social media accounts. Look at your posts and remove anything that looks unprofessional. A clean profile gives a better image.

By preparing in this way, you can attend the interview with more confidence and less stress.

The post Preparing for a job interview: Check out the essential steps appeared first on International Finance.

The new feature will enable professionals to demonstrate their proficiency with various AI tools, rather than merely listing generic skills on their profiles. However, because verification will be based on real usage and not self-reported claims, only a select few partners will be backing up these badges.

Descript, Lovable, Relay.app and Replit have emerged as the first ones in supporting LinkedIn’s initiative, with Gamma and Zapier scheduled to join at a later date, along with Microsoft-owned GitHub.

Partner companies will actually use AI to assess users’ AI proficiency, based on actual product usage and results. The social networking platform says this is a must in today’s labour market, with AI proficiency now the most in-demand skill. LinkedIn also noted that the jobs market is shifting towards this skills-first model, rather than overly focusing on formal degrees.

With the badges, job seekers will be able to stand out, and recruiters will be able to identify genuine capability even more quickly. It’s unclear whether these badges will be factored into filtering tools.

More broadly, LinkedIn says that more than 100 million of its users have now verified their accounts. The Microsoft-owned platform met this target just days before its deadline in December 2025, when the company declared it wants every member, job and company to have at least one type of verification.

According to the company, verified members see close to 60% more profile views, apart from getting up to 50% more engagement on posts compared to their non-verified counterparts. Organisations also see benefits, with verified businesses seeing 10.9 times more views and getting 7.7x more followers.

“When Product VP Oscar Rodriguez first confirmed plans to hit 100 million verified users in October 2023, the company only had around 18 million verified accounts. LinkedIn has also revealed plans to launch a self-serve API to help developers integrate trust signals (like identity and workplace) into apps, sites, and other platforms, which will allow users to display their LinkedIn verification status across other sites,” Techradar Pro reported in December 2025.

The post LinkedIn’s new ‘AI skills’ feature: All you need to know appeared first on International Finance.

In 2020, he posed a question regarding why the economic recovery was being framed as a V or a U when the reality was far more disjointed. Ivan wrote that some would bounce back while others would not recover.

This dynamic is formally known in sociology and economics as the “Matthew Effect.” The term was coined by sociologist Robert Merton in 1968 and describes a process of cumulative advantage.

It traces its sentiment back to the biblical Book of Matthew 25:29, which states that everyone who has will be given more and will have an abundance, but from the one who does not have, even what he has will be taken away. In the economic landscape of late 2025, this ancient text reads less like a parable and more like a precise description of the divergence between capital owners and wage earners.

Mark Zandi, the chief economist for Moody’s Analytics, suggests that this structural divergence began in the 1980s during the Reagan era, when productivity growth began to outpace median wage growth. However, the data from 2025 suggests that this long-standing trend has accelerated into a profound fracture.

The upper arm of this K-shaped economy is being driven by an unprecedented concentration of consumption among the wealthy. Research conducted by Mark Zandi at Moody’s Analytics revealed that in the second quarter of 2025, the top 10% of wealthiest Americans were responsible for 49.2% of all consumer spending. This figure represents the highest level of spending concentration since record-keeping began in 1989.

The economy has become so lopsided that the richest Americans essentially account for half of all economic activity. This concentration distorts aggregate economic data. When the top 10% continue to spend lavishly on luxury goods, travel, and services, it masks the severe contraction occurring in the bottom 90%. High-income households have benefited from a wealth effect driven by soaring asset prices, including record highs in the stock market and continued appreciation in home values.

Lisa Shalett, the chief investment officer at Morgan Stanley Wealth Management, has raised alarms about this disparity. In a research note from November 3, 2025, she described the income inequality data as completely wackadoo and noted that the widening chasm between the haves and have-nots is critical to understanding the current economic cycle.

While the wealthy propel the markets to new heights, the lower arm of the K is extending downward with increasing velocity. This is visibly manifested in the earnings reports of major fast-food and fast-casual restaurant chains, which have historically served as reliable indicators of lower-income spending power.

Chains like McDonald’s and Chipotle have reported softening traffic as their core customers pull back on spending. Since 2019, the price of a chicken burrito at Chipotle has risen from $7.45 to $10.80 in 2025, while a McDonald’s Big Mac combo has jumped from $8.19 to $11.29. These price increases have forced a trade-down behaviour where consumers abandon fast-casual dining for home cooking or discount grocery options.

Dollar General reported a 4.6% increase in net sales in the third quarter of 2025, which executives attributed to share gains in consumables as financially pressured shoppers hunted for value. This shift indicates that the lower-income consumer is not merely cutting back on luxuries but is struggling to afford basic conveniences.

This performative wealth signals a desire to participate in the upper arm of the K even as financial reality confines consumers to the lower arm. Charitable organisations are working overtime, with the Portland Press Herald Toy Fund reporting a notable influx of struggling families trying to keep the Christmas spirit alive despite cutting back on their expenses.

The labour market mirrors this bifurcation. While the headline unemployment rate remained relatively low at 4.4% in November 2025, beneath the surface lies a story of two distinct job markets. Companies are retaining talent but aren’t hiring anymore, because of which the youth unemployment rate for those aged 16 to 24 reached 10.4% in September 2025.

Gen Z is struggling to find work as entry-level job openings declined 29% since 2024. A part of the reason is that AI is wiping out low-skilled jobs. Now, the American youth from poor and lower-middle-class families can’t even get their foot on the rung of the career ladder. This is an important development, as resentful young people can create significant unrest in a nation.

There is also a white-collar recession. American employers announced 71,321 job cuts in November 2025, a 24% increase from the same month in 2024. Over 153,000 job cuts were announced year-to-date in 2025 in the IT sector as firms pivot toward AI and efficiency.

The disconnect is further highlighted by the fact that despite these layoffs, the broader layoff rate remains historically low because companies are reluctant to let go of workers in a labour-constrained environment.

Policy impact of ‘Big Beautiful Bill’

The policy landscape of 2025 has played a significant role in calcifying this economic divide. The “Big Beautiful Bill” became law on Jul 4, 2025. The bill cuts taxes on overtime pay and tips, provides additional tax deductions for seniors, and introduces a new deduction for auto loan interest. However, it also makes a $3.4 trillion cut to social security for the next ten years, to make up for the lower tax revenue.

Medicaid and the Supplemental Nutrition Assistance Programme (SNAP) will take a huge hit with $1.4 trillion in slashed government funding. The government is cutting social security and lowering taxes for the rich, which is a wealth transfer mechanism from the poorest households to the richest in the country.

Trade policy has further exacerbated the strain on the lower arm of the K. The administration implemented widespread tariffs in 2025 with the stated goal of protecting American industry. However, the Yale Budget Lab estimates that these tariffs function as a regressive tax. The average annual cost of the 2025 tariffs for a household in the bottom income decile is approximately $900. While this is lower in absolute terms than the $3,900 cost for the top decile, it represents a much larger share of income. The burden on the bottom decile is 2.4% of their post-tax income compared to just 0.8% for the top decile. This policy directly erodes the purchasing power of those least able to afford it.

The administration had promised a tariff dividend check of $2,000 to offset these costs for working families. Trump fought his tariff war on the promise that he would give the American people a piece of the tariff dividend and bring jobs back to America. No such dividend arrived in 2025, and Treasury Secretary Scott Bessent clarified that it is unlikely till mid-2026 and that there is also the question of whether the Supreme Court would uphold the legality of the tariffs.

And the math doesn’t add up either. The tariffs generated approximately $120 billion so far, which is not enough to send $2,000 checks to 150 million Americans. It would cost nearly $300 billion to do so. This leaves low-income households paying the higher prices associated with tariffs without receiving the promised financial relief.

The lock-in effect

The housing market stands as perhaps the most formidable barrier between the two arms of the K-shaped economy. A phenomenon known as the lock-in effect has paralysed the market and created a distinct advantage for existing homeowners. As of late 2025, approximately 80% of mortgage holders have interest rates below 6%.

These homeowners are effectively shielded from the current market reality, where the average 30-year fixed mortgage rate hovered around 6.34% in December 2025. This disparity has created a two-tiered housing society. Existing owners are building equity and enjoying low monthly payments that were secured during the pandemic era of cheap money. Aspiring buyers, particularly Millennials and Gen Z, face a market where the income needed to afford a median-priced home has nearly doubled since 2020.

High interest rates have not only made mortgages more expensive but have also suppressed inventory. Homeowners are unwilling to sell and trade a 3% mortgage for a 6% one, which keeps the supply of homes for sale near 30-year lows.

This lack of supply keeps prices historically high despite the elevated rates. Consequently, renters find themselves trapped. The housing ladder, once the primary vehicle for middle-class wealth creation in America, has been pulled up out of reach for those not already on it.

A fracture that deepens

As 2025 draws to a close, the mechanisms driving the K-shaped economy appear to be entrenching themselves further. The Federal Reserve’s restrictive monetary policy, while necessary to fight inflation, disproportionately hurts those who rely on borrowing. The fiscal policies of the One Big Beautiful Bill Act reinforce the advantages of capital owners while fraying the safety net for the vulnerable.

The rich will continue to accumulate wealth through assets and favourable tax treatment, while the poor and the middle class will continue to navigate a landscape of high costs and limited mobility. The question remains regarding how long this divergence can sustain itself before the tension snaps the economy entirely.

With consumer spending so heavily reliant on the top 10%, any shock to asset prices could cause the upper arm of the K to falter. If the wealthy pull back, the illusion of resilience provided by the aggregate data will vanish, revealing the fragile state of the broader economy beneath. Until then, the United States remains a nation of two distinct economies operating in parallel but moving in opposite directions.

The K-shaped economy in 2025 is not a theory or a chart, but a lived reality that shapes everyday life, determining who can buy a home and who must rent, who can retire and who must keep working, and who can afford abundance while others cut back. Wealth, opportunity, and security continue to move upward, while costs, risk, and uncertainty are pushed downward, reinforced by policy choices and a stagnant housing market.

The economy seems strong mainly due to the spending of the wealthiest households. However, this strength is limited and fragile. Without better wages, improved housing access, and a more robust safety net, the divide will deepen, leading to enduring social and political tensions.

The post Rigged economy leaves millions behind appeared first on International Finance.

The Republican, speaking at a Saudi Arabia-backed investment forum in Washington, also urged Treasury Secretary Scott Bessent to accelerate the hunt for a successor for Jerome Powell, whose term as Fed chair ends in May 2026. His term as Fed governor ends in 2028.

“You’ve got to work on him, Scott. The only thing Scott’s blowing it on is the Fed. The rates are too high, Scott, and if you don’t get it fixed fast, I’m going to fire your a**,” Donald Trump said about Bessent, who was in the audience for the event at the Kennedy Centre in Washington.

The next chair is likely to be named to a 14-year Fed governor term that begins February 1. The term that expires then is now held by Stephen Miran, who is on unpaid leave from his role as head of the White House Council of Economic Advisers.

Bessent, who is leading the search for a new Fed chair, recently told Fox News that Donald Trump is slated to meet the three finalists for the job after Thanksgiving, November 27, with a new pick likely to be announced before Christmas. Bessent has named five finalists: White House economic adviser Kevin Hassett, former Fed Governor Kevin Warsh, current Fed Governor Christopher Waller, Fed Vice Chair for Supervision Michelle Bowman, and BlackRock executive Rick Rieder.

Donald Trump has repeatedly praised Bessent’s work and has said the US Treasury secretary would be his pick for the Fed chair job, although Bessent has told him he would rather remain at his current role, overseeing both the Treasury and Internal Revenue Service (IRS).

Trump, during one of his media interactions, reiterated that Bessent did not want the job and continued to berate Jerome Powell, whom he nominated for the job during his first term.

The US President has hammered Jerome Powell since before taking office in January about his Fed leadership, describing him as incompetent and questioning his handling of a Fed renovation project that he says is billions of dollars over budget.

Jerome Powell rejected that claim, arguing that Trump is adding the renovation cost for another central bank office that was completed five years ago.

The post Donald Trump attacks Fed Chair again, complains about higher interest rates appeared first on International Finance.

The higher tariffs on imports have already kicked in, raising the average US import duty to its highest in a century, while creating unrest among major trade partners such as Switzerland, Brazil, and India. The tariffs now range from 10% to 50%. Trump’s rates will now face the challenge of shrinking US trade deficits without causing massive disruptions to global supply chains or provoking higher inflation, while dealing with retaliation from trading partners.

Then arrived the latest US job growth data, which showed a trend much slower than expected in July. The data was revised sharply lower, indicating the labour market could be showing signs of stalling. Nonfarm payrolls increased by 73,000 jobs in July, after rising by a downwardly revised 14,000 in June, according to the Labour Department. This led to a furious Trump tapping an economist from a conservative think tank for the crucial role of BLS boss, with the responsibility of publishing employment figures—figures that will parrot (as per detractors) Trump’s stance on the American economy, which believes it is booming and requires “HONEST and ACCURATE NUMBERS.”

Talking about inflation, the ratio held steady in July despite import tariffs, bolstering bets that the Federal Reserve may cut interest rates in the coming days. Consumer prices rose 2.7% in the year to July, the same pace as in June, as lower energy costs offset price rises for items such as coffee, tomatoes, and tools. Analysts now see the relatively contained pace of price rises strengthening the Fed’s case for lowering borrowing costs to support the economy as job growth slows. However, an underlying inflation measure—which is seen as a better indicator of economic trends—showed prices rising at the fastest pace since February.

So, amid a volatile situation (poor job data and moderate inflation), Wall Street is holding its own. However, the question is, how long can this resilience last?

Finding The Optimism

In the opinion of Christopher Smart, managing partner of the Arbroath Group and a former economic policy advisor in the Obama Administration, “Lately, companies have been delivering good news on the earnings front. An unusually large number of firms beat their second-quarter profit forecasts, prompting analysts to nudge up estimates for the months ahead.

This wave of strong results, combined with excitement over artificial intelligence, has fuelled investor optimism. Money has poured into tech giants poised to lead an ‘AI revolution,’ helping drive the market’s price-to-earnings ratio to about 22 times forward earnings. Bulls argue that such rich valuations are justified by the promise of AI-driven future growth.”

Recent economic trends have largely vindicated investor confidence. US GDP has grown at an average of 2.8% over the past five years, thanks to a strong post-COVID rebound. The economy has kept on powering (sometimes through the sharpest interest rate increases in 40 years) as the Trump administration keeps on fundamentally redesigning the global trading order. Generous checks and rock-bottom interest rates following the pandemic may explain at least some of this remarkable performance.

Yet Trump’s economic policies send mixed signals. His major tax overhaul slashed corporate taxes and boosted defence spending, injecting stimulus but adding roughly USD 3.4 trillion to federal deficits. The White House insists these moves will turbocharge growth, but many economists warn any fiscal boost will be outweighed by the drag from tariffs. The International Monetary Fund (IMF) expects US growth to dip below 2% in the next two years, even as global growth nears 3.1%.

“Still, stocks are all about future expectations, and none of this history reveals much about the impact of the Trump Administration’s dramatic policy departures. The ‘One Big Beautiful Bill’ locked in lower corporate tax rates and delivered a massive boost to defence spending, adding some USD 3.4 trillion to the deficit over the next decade, according to the Congressional Budget Office. The administration promises, however, that together with a wave of deregulation, growth rates will be more than 1% higher over the next four years,” noted Smart.

Tariffs: A Stealth Tax On Americans

“Most independent economists expect more headwinds from tariffs than tailwinds from tax cuts and deregulation. The International Monetary Fund recently raised global growth forecasts to 3.1% this year—but doesn’t expect more than 2% in the US in 2025 or 2026,” remarked Smart.

Trump’s tariffs have effectively become a hidden tax on American businesses and consumers. The average American tariff on imports has jumped from around 2.5% before the trade war to nearly 20% with the latest duties. Not every cost will jump that much; many companies will absorb some of the increase, but consumers will still feel the pinch. The Treasury expects to collect roughly USD 300 billion in tariff duties, a bill ultimately paid through higher prices.

“Worse than this one-off blow, however, is the lingering uncertainty for investors and corporate strategists. Even as Trump’s tariffs went into effect on August 7, crucial details of the deals he has announced remain unknown,” Smart opined.

Even more unsettling is the uncertainty around Trump’s trade manoeuvres. As one round of tariffs took effect this August, with key details still unclear, Trump was already vowing new levies on products like pharmaceuticals and semiconductors. He has even wielded tariffs as leverage in unrelated disputes (including geopolitics), deepening the unpredictability.

Market Confidence Faces A Major Test

So far, Wall Street has mostly shrugged off the tariff chaos. Trump’s surprise “Liberation Day” tariff announcement in April sent stocks, bonds, and the dollar tumbling, but the panic proved short-lived. Markets quickly rebounded as investors bet the economy could weather higher costs or that the Federal Reserve would cut rates if needed.

Yet that confidence faces a test in the coming months. By autumn, American shoppers will start feeling the full impact of tariffs as higher-cost imported goods hit store shelves. This could reignite inflation just as the Fed hoped to ease monetary policy, potentially forcing a delay in rate cuts.

Meanwhile, pricier goods could erode household purchasing power and dampen spending, raising the risk of a downturn. In a worst-case scenario, a mix of rising prices and slowing growth, which is a bout of 1970s-style “stagflation,” could finally bring the stock market’s remarkable run to a halt.

The post IF Insights: Test for Wall Street as Trump’s ‘tariff chaos’ becomes new normal appeared first on International Finance.

“And trust starts with truly knowing your customer: not just what they buy, but who they are, what keeps them up at night, and what they need from you that they can’t get anywhere else. I started with a beat-up pickup and a boom truck, hustling for jobs in an industry where everyone was at least 30 years older than me. Back then, getting a customer’s trust was as much about showing up as it was about doing a good job,” he added.

“I was young, green, and in a world where relationships mattered. Some customers would throw me a bone—let me fix a sign, see if I could handle it. If I did, maybe they’d trust me to build or install one next time. But that first job always came down to trust: if you don’t have it, you don’t get the business. Looking back, those early days taught me the fundamentals of customer trust. It’s a relationship, person to person. You have to earn it, and you do that by being reliable, honest, and present. If you want to know your customer, you have to be willing to listen, to show up, and to care about their problems as much as your own,” King remarked.

Moving Up The Value Chain: Trust And Complexity

As King’s businesses grew, the stakes got higher. He ran a financial services business for Spanish speakers, selling insurance, tax prep, and mortgages.

“That was still a face-to-face business. It’s a lot easier for someone to trust you with their Social Security number when they’re sitting across from you in a respectable office, sipping free coffee, maybe referred by a friend. They know you’re real. You’re part of their community,” he said.

However, as the world shifted online, everything changed. At Nav, most of King’s customers are not interested in knowing his name or caring about any other details about him.

“Yet we’re asking for their Social Security number, EIN, asking them to connect their checking accounts, trusting our recommendations on loans and credit cards, decisions that could mean tens of thousands of dollars in interest. The stakes are higher, and the opportunities for trust are fewer. In a digital world full of scams and fraud, earning trust is more important and more difficult than ever,” he said.

Building Trust With Customers Sans Handshake

At Nav, King and his team give small business owners free access to the data lenders use to judge them—personal and business credit scores, cash flow analysis. It doesn’t just provide data; it helps them understand it and improve their profiles.

“We use our love for data to make recommendations that save them time and money, sometimes even doing the hard stuff for them,” he stated.

King also advocates businesses to beef up their online presence, suggesting, “These days, if someone hears about your business, the first thing they do is Google you or check LinkedIn to see if you’re legit. That means your online presence—such as your articles, your reputation, and your reviews—matters as much as any handshake ever did. If people see you’re regularly producing content, being quoted by trusted outlets, and sharing your expertise, it builds credibility. It’s the digital version of being “belly-to-belly,” or in other words, showing up in the modern village square.”

Listen First, Sell Second

Getting to know your customer isn’t just about what you say; it’s about what you hear. Some of the best feedback King’s ever got came from listening in on customer calls or reading their suggestions.

Nav had customers telling the venture that the latter needs to do a better job showing what the average Nav customer is like, what they go through.

“That’s gold. If you want to know your customer, you have to be humble enough to listen and adapt,” King noted.

Authenticity Is Non-Negotiable

People can smell a discrepancy a mile away, especially small business owners. They’re used to being sold to, used to people overpromising and under delivering. If a business wants to build trust, it needs to show up as its authentic self.

“That means being honest about what you can and can’t do, owning your mistakes, and being willing to say ‘I don’t know’ when you don’t have the answer. I’ve learnt that customers don’t expect perfection. They expect honesty and effort. If you’re real with them, they’ll be real with you,” King concluded.

The post Building trust with customers: Hearing out the entrepreneur’s perspective appeared first on International Finance.

According to the latest figures from job search platform Adzuna, the average advertised salary hit £42,278 in April 2025, a rise of 8.9% year-on-year, marking the steepest annual increase since June 2022. Every month, salaries rose by 0.75%, further complicating the central bank’s efforts to justify additional interest rate cuts.

The Monetary Policy Committee (MPC) of the Bank of England is now witnessing its key members, including the Bank’s chief economist Huw Pill, expressing concern about elevated wage growth, warning that loosening monetary policy too quickly could reignite inflationary pressures.

According to Adzuna, vacancies rose slightly by 1% year-on-year to 862,876, but were down 0.95% compared to March, suggesting a mixed picture for hiring momentum.

What’s going on?

Sectors seeing the strongest demand for workers included healthcare, which hit its highest vacancy level since January 2023, as well as hospitality, logistics, teaching, and retail. The construction and trade sectors recorded a sharp 15.2% decline in vacancies, reflecting cooling activity in those industries.

The BoE had been hoping for a clearer signal that inflationary pressures were easing before committing to a series of rate cuts in the second half of 2025. However, April’s inflation surprise, which saw the consumer price index jump to 3.5%, up from 2.6% in March, has prompted fresh caution.

Although the ONS reported a slight slowdown in overall wage growth, down to 5.6% in Q1 from 5.9% in Q4, starting salary trends suggest that employer competition for skilled staff remains high, particularly in regions with labour shortages. The MPC has a dilemma: to stay with rate reductions to stimulate growth, or pause to prevent an inflationary rebound.

A Chartered Institute of Personnel and Development (CIPD) study paints a different yet painful picture.

The report, titled “Labour Market Outlook – Spring 2025,” found employer confidence declining again this quarter, with the net employment balance falling to +8 — the lowest level recorded outside of the pandemic. Hiring intentions have softened, and one in four employers now plan redundancies, rising to 27% in the private sector.

Rising employment costs, including increases in National Insurance and the National Living Wage, are forcing many organisations to scale back recruitment, limit training investment, and consider price increases. Uncertainty around the Employment Rights Bill and global events adds to employers’ caution.

“The further softening in employment in April suggests businesses continued to respond to the rise in business taxes and the minimum wage by reducing headcount,” said Ruth Gregory, deputy chief UK economist at Capital Economics.

She also stated that despite a deceleration in wage growth, it remained relatively strong, meaning the Bank of England will remain cautious over future interest rate cuts.

For BoE, the key concern is that if earnings grow quickly, firms will seek to push up prices, thereby putting up the inflation rate.

As per Gregory, sticky wage growth (a situation where wages do not immediately adjust up or down in response to changes in labour market conditions) may mean the bank remains uneasy about inflationary pressures in the near term.

Wage hike: A new battlefield?

The Bank of England has noted that wages have quietly continued to rise, raising concerns that this could indicate a seismic and more long-lasting shift in the relationship between workers and employers. In May, the European country announced its public sector pay awards, which were higher than ministers had previously said they could afford and outstripped higher-than-expected inflation.

Still, it failed to please the disgruntled doctors. In fact, the latter threatened to protest against the new pay structure. After teachers were awarded a 4% increase, teaching unions also responded angrily to the Keir Starmer government’s refusal to fully fund the deal and warned that it would damage the quality of education that pupils received. The largest union plans to take the first step towards possible industrial action.

The decision to award 1.4 million NHS staff, including nurses, midwives and ambulance workers, a smaller rise (3.6%) also met with anger. The Royal College of Nursing (RCN) said it was “grotesque” to hand doctors a bigger increase than nurses who earned less than them.

Wes Streeting, the health secretary, and Bridget Phillipson, the education secretary, sought to defend the rises by highlighting that they represented the second time public sector personnel had received above inflation pay rises since Labour took power in 2024.

Are we seeing a 2022 scenario being played out all over again? Back then, inflation not only rocketed, it led to a situation where, in a desperate scramble to keep pace with rising prices to protect their incomes, British private and public sector workers took widescale industrial action in a way that brought back memories of the 1970s. What followed was a series of pay deals thrashed out between bosses and employees, with unions often arguing they had been due pay increases for years.

When considering the British private sector, relations between bosses and the rank and file have already been redefined by a shift towards remote working caused by the COVID-19 pandemic, and then companies’ increasing insistence on more regular attendance at work. Despite the volatile background, Threadneedle Street policymakers now ask whether the wage increases indicate that the power balance has moved back in the direction of workers, allowing them to protect their finances. Data from the Office for National Statistics (ONS) has gone some way to justifying the BoE view.

According to payroll data from the ONS, wages in the hospitality sector rose sharply, with hotels and restaurants increasing staff pay by 8.5% in the year to April, well above the 3.5% inflation rate. Retail workers also saw gains, with median pay rising by 6.9% over the same period. Across the economy, average wage growth reached 6.4%.

Recently, BoE chief economist Huw Pill said the UK’s labour market was becoming less flexible, suggesting employers were no longer able to freely hire and fire as they once could. Businesses, charities and public sector organisations have been laying off staff and freezing job adverts, but those staff who stay behind are well rewarded.

Ben Caswell, an economist at the National Institute of Economic and Social Research (NIESR), said, “Wages adjusted for inflation have returned to where they were before the cost of living crisis began in 2021. And the share of overall national income that is secured by workers rather than firms has also recovered to 2021 levels. While the average pay figures disguise many winners and losers, the aggregate figure showed most workers had benefited from inflation-busting pay rises to recover lost ground.”

He also focused on a slightly less up-to-date measure of pay based on employees’ average regular earnings over a rolling three-month period. This showed a rise in Great Britain that was still well above inflation at 5.6% in January to March 2025, though not as much as the PAYE data shows.

Caswell sees a series of minimum wage increases, closing the gap with the average wage, which is likely to fuel further pay rises as companies attempt to maintain a significant difference between the salaries of those on the bottom rung and the semi-skilled workers and middle managers above them.

What to expect next?

James Smith, research director at the Resolution Foundation, said that the weakening economic outlook worked against a prolonged recovery in pay.

He noted, “If we believe that wages consistent with the Bank of England’s 2% target would be about 3.5%, then we are well above that level at the moment. And that would give the Bank good reason to be cautious about cutting interest rates. However, other pay surveys are showing earnings rising at a much slower rate, so the official figures might be a bit like Wile E Coyote and about to be brought down to earth.”

Emphasising the likely short-term nature of the current bumper pay rises, the bank’s regional agents say employers are limiting pay rises to between 3% and 4% by the end of 2025. The Starmer government is not planning to pay more than 4% to public sector workers on average, and more departmental budget squeezes may be coming up.

Talking about other industries, take the hospitality sector, for example, which is known to employ a high proportion of minimum wage workers, and the same applies to the retail industry, boosting pay in 2025.

Senior journalist Phillip Inman claimed that most likely not next year or the year after, the legal minimum salaries will start rising more slowly.

Seemanti Ghosh, principal economist at the Institute for Employment Studies, sees the significant return to office-related demands from the companies as direct evidence of worker power reaching its limits. There has also been a gold rush for digital skills, which will result in another paradigm shift in the labour market.

Employers had to pay higher wages this time around, as they needed to retain skilled staff and pay them more while they embarked on a search for workers who were more adaptable in an ever-changing work environment.

“If wage increases are not driven by negotiations with unions, then they are due to employers wanting to hang on to skilled staff. This matters for all companies that increasingly rely on soft skills for things like project management and tech skills in other areas. We also see it in the green sector, where there is a shortage of people with the skills the industry needs,” Seemanti remarked.

How much of this dislocation is systemic and will keep wages higher for longer will be a subject of debate for the rest of the year. Pill advocated for keeping interest rates elevated while the trends become clearer, believing there is less damage from higher rates than letting inflation run away again.

Other MPC members disagree, arguing that businesses cannot invest in skills training while borrowing costs are prohibitively high.

It reflects a starkly different view of the labour market, one that emphasises the lasting damage caused by rising job losses and prolonged economic stagnation.

Swati Dhingra and Alan Taylor want rates to come down quickly. Who wins the argument inside the central bank could dictate whether workers or bosses have the whip hand in the great tussle over pay.

The post UK wage hikes: Who dictates terms? appeared first on International Finance.

The reason for this could be that generative AI was first marketed as a productivity tool, which made it closely linked to workforce and cost reductions. Recognising the danger, 42% of workers polled in 2024 expressed concern that their position might disappear within the next ten years.

It makes sense that there would be more opposition than excitement if there was no training or upskilling to fully utilise the technology. An “immune response” may occur in organisations, where managers and staff alike oppose change and seek explanations for why AI “won’t work” for them, much like antibodies fending off a foreign body.

One possible explanation for this could be that generative AI was initially promoted as a tool for increasing productivity, which strongly associated it with workforce and cost savings. 42% of workers surveyed in 2024 acknowledged the risk and voiced worry that their job might be eliminated in the ensuing decade.

“If there was no training or upskilling to make the most of the technology, it makes sense that there would be more resistance than enthusiasm. In organisations, managers and employees may have an immune response in which they resist change and look for reasons why artificial intelligence won’t work for them, like how antibodies protect against an alien invader,” say Vinciane Beauchene, Managing Director and Partner at BCG (where she serves as Global Lead on Human x AI) and Allison Bailey, a senior partner and Managing Director at BCG (where she serves as Global Vice Chair for People and Organisation Practise).

However, study reveals that regular users of generative AI can already save five hours per workweek, which they can use to pursue new projects, continue experimenting with the technology, work with colleagues in novel ways, or just finish earlier. Therefore, the task for company executives is to highlight these possible advantages and offer advice on where to reallocate one’s time to optimise value creation.

“A global healthcare provider recently implemented generative AI for all 100,000 of its employees. For all employees to benefit from the technology, it developed a scalable AI learning programme with three goals: compliant usage; a wide range of artificial intelligence tools for all work scenarios; and high AI literacy throughout the company. Because of this all-encompassing strategy, the business quickly increased both employee satisfaction and productivity,” Beauchene and Bailey stated.

However, adopting artificial intelligence is about more than just saving time. It’s about reimagining work for the good of the company and its workers. Businesses that view generative AI as a time-saving tool are more likely to pursue piecemeal use cases, such as “10 minutes saved here, 30 minutes saved there,” which won’t have a significant effect on the company’s overall operations. Small-scale AI applications that result in diffuse productivity gains are, after all, challenging to reinvest in or record on a profit and loss statement.

Instead of radically enhancing the way work is done, organisations run the risk of optimising discrete tasks if they don’t have a comprehensive plan to restructure their core processes around artificial intelligence.

Too frequently, the outcome is that bottlenecks are merely moved to different stages of the value chain or process, which reduces overall productivity increases. In software development, for instance, an AI that expedites coding may result in more difficult debugging or other delays, offsetting any efficiency gains.

Using AI throughout the whole development lifecycle yields real benefits. An even more significant problem is brought up by this example: Too many businesses aim for scale without first rethinking the workflows and structures required to capitalise on cumulative gains.

The usual outcome is a lost chance since time savings that are not carefully reinvested eventually evaporate. Companies should pursue a few major transformational projects aimed at reimagining work for people instead of taking a let-a-hundred-flowers-bloom approach.

To realise the “golden triangle” of value—productivity, quality, and engagement/joy—generative AI holds great promise. Rethinking workflows to remove inefficiencies, enhancing decision-making and processes to promote creativity and innovation, and improving work rather than automating it are all important components of an AI strategy.

Artificial intelligence is more likely to be enthusiastically embraced by workers when it reduces monotony, stimulates creativity, and speeds up learning. When upskilling is properly addressed, technology will enhance human potential, increasing job satisfaction and workplace engagement.

By prioritising engagement and experience quality in addition to productivity, organisations can shift from a cost-driven viewpoint to one that adds greater value for the company, its workers, and its clients. If businesses implement a thorough plan for implementing AI, it can be much more than just an automation tool.

There are five imperatives that company executives should remember. Prioritising the largest value pools with the most clearly defined business cases for incorporating artificial intelligence is the first step. The second is not just optimising work, but reimagining it. AI should not only automate a few steps but also completely change workflows.

Third, managers need to spend money on upskilling so that everyone is aware of the capabilities of the technology. Fourth, the golden triangle should be the golden rule for businesses because it strikes a balance between quality, productivity, and employee happiness.

Finally, companies ought to gauge value in ways other than cost reductions. The most successful companies using generative AI will monitor how it affects not only operating expenses but also employee empowerment, agility, and new revenue streams.

By following these guidelines, businesses can use artificial intelligence as a tool for innovation rather than merely increasing productivity. They will also set the standard for the upcoming business era in the process.

The post IF Insights: How companies should & should not deploy artificial intelligence appeared first on International Finance.

As the world’s largest economy in the post-COVID years fought with headwinds like high inflation, not everything was bad. While a section of analysts has been talking about a potential downturn in the world’s largest economy, they have been proven wrong time and time again.

Take the December report for example, where the job gains were much higher than what the roughly 160,000 analysts had expected. American employers added 256,000 workers and the unemployment rate dropped from 4.2% in November to 4.1%. One of the positives of “Bidenomics” was the steady pace in the number of jobs added. In 2024, the tally was 2.2 million, with a monthly average of 186,000.

With a new administration taking over the proceedings, we will talk about what lies ahead for the American economy in 2025.

Where do things stand now?

The US Federal Reserve, charged with keeping both prices and employment stable, cut interest rates for the first time in more than four years in September 2024. While the move boosted hopes of the would-be borrowers in the world’s largest economy, as they were facing the highest borrowing costs in roughly two decades, the latest data on the job market now removes pressure on the Fed to act.

Investors had already been paring back bets on cuts in 2025, worried by signs that the bank’s progress on stabilising prices was stalling. There are also risks associated with policies proposed by Donald Trump, such as extensive border taxes and the deportation of migrants, which could increase prices or wages, thereby exerting pressure on inflation.

The interest rates set by the US central bank have a powerful influence over borrowing costs for many loans, and not only in America. Borrowing costs globally have increased, responding to expectations that American rates are likely to remain higher for longer. Expect the trend to continue for a few months more.

Biden administration’s Achilles’ heel has its over-the-top spending binge. The deficit for the fourth quarter of 2024 has reached a record $711 billion, $200 billion more than for the same period in FY2023-24. Revenues reached only $1.08 trillion and would have to be increased by two-thirds to match spending ($1.79 trillion). There was a decline in corporate income tax ($110 billion instead of $150 billion), while spending soared by more than 10%, or around $176 billion.

This increase leads to a record estimate of the next annual budget deficit, which would reach $1.88 trillion, above the $1.83 trillion of 2023-2024. It is the highest deficit in history (excluding the COVID period), or 6.2% of GDP. Such a figure during a time of growth, full employment and non-deployment of American troops abroad is a major signal that the world’s largest economy is in an untenable fiscal situation.

However, as per Biden’s Council of Economic Advisers (CEA), the country had become a magnet for foreign investment given the resilience of its post-pandemic recovery. The push for new investments in infrastructure, clean energy and semiconductor technology attracted global inflows, especially from close allies including Canada, Japan, South Korea and Britain.

The CEA report also noted the world’s largest economy receiving 41% of global gross capital inflows in 2022-23, the highest share of any country, and nearly doubling its pre-pandemic share of 23%. The dollar also remained the world’s biggest reserve currency and accounted for an outsized share of global trade and cross-border financial transactions.

Under Biden, the US also saw high levels of business investment, one-third of which has gone toward factory construction, thereby resulting in rising productivity and high rates of business formation driven in part by international financing. While total capital inflows remained below the peak of $2 trillion in 2007 just before the global financial crisis, portfolio investment in equity and debt markets totalled a record $1.23 trillion in 2023.

What awaits in 2025?

As per Brian Blank, Associate Professor of Finance, Mississippi State University and Brandy Hadley, Associate Professor of Finance and Distinguished Scholar of Applied Investments, Appalachian State University, the American economy did a great job in 2024 by displaying strong economic growth, moderating inflation, and efficiency gains, amid a global high-interest rate regime.

While the world’s largest economy is expected to continue its positive momentum in 2025, there will be some caveats. Both Blank and Hadley see interest rate cuts as short-term ones, as the policymakers are now bringing things like inflation and unemployment into the play, based on which they will take calls on whether to stimulate the economy or pump the brakes. The interest rate that neither stimulates nor restricts economic activity, often referred to as R* or the neutral rate, is unknown, which makes the Fed’s job challenging.

“However, the terminal rate – which is where Fed policymakers expect rates will settle in for the long run – is now at 3%, which is the highest since 2016. This has led futures markets to wonder if a hiking cycle may be coming into focus, while others ask if the era of low rates is over,” both analysts stated.

While some economists are concerned the recent uptick in unemployment may continue, others worry about sticky inflation. The Fed’s challenge will be striking the right balance, continuing to support economic activity while ensuring inflation, currently hovering around 2.4%, doesn’t reignite.

While GDP growth for Q3 was revised up to 3.1% and Q4 is projected to grow similarly quickly, in 2025 it could finally show signs of slowing from its recent pace. However, Blank and Hadley expect it to continue to exceed consensus forecasts of 2.2% and longer-run expectations of 2%.

The main concern here is the current average effective tariff rate, which stands at 2%. If this rate increases fivefold to 10%, it could cause significant disputes between Washington and its trade allies. Such a change would lead to economic challenges and complicate inflation forecasts.

Blank and Hadley expects tariffs to serve as more of a negotiating tactic for the “Trump 2.0” than an actual policy proposal. Also, stricter immigration policies can also create labour shortages and increased prices, while government spending cuts could weigh down economic growth.

Donald Trump has also promised tax cuts, which may offset some risk and spur growth, especially if coupled with productivity-enhancing investments. However, tax cuts may also result in a growing budget deficit, which is another risk to the longer-term economic outlook.

Talking about the labour markets, hiring rates are normalising, while layoffs and unemployment, 4.2%, up from 3.7% at the start of 2024, remain low despite edging up. The American economy, as per Blank and Hadley, could remain resilient into 2025, with continued growth in real incomes bolstering purchasing power. This income growth has supported consumer sentiment and reduced inequality, since low-income households have seen the greatest benefits.

Overall, the 2025 outlook remains promising, with continued economic growth driven by resilient consumer spending, steadying labour markets, and less restrictive monetary policy. However, higher-for-longer interest rates could put pressure on corporate debt levels and rate-sensitive sectors, such as housing and utilities.

Trump 2.0 and US economy

Trump 2.0 inherited vastly different economic circumstances than the one Republican witnessed while beginning his first term in 2017. Yes, the inflation has slowed down, but hasn’t completely disappeared. Then there are larger federal deficits and higher government borrowing costs than before, and a labour force that has grown faster than expected due to immigration, something he wants to curb.

In 2017, the economy had been growing steadily since the end of the 2007-2009 financial crisis, but the pace was often slow and employment had not fully recovered. There was room for the boost of Donald Trump’s signature Tax Cuts and Jobs Act, and while the import tariffs that followed dealt a blow to the global economy, the United States proved largely resilient.

Inflation was a distant concern during that period, seemingly anchored below the Federal Reserve’s 2% target. Homebuyers could find 30-year fixed-rate mortgages at about 4%, and the government was funding its operations with long-term Treasury bond rates at about 3%. In 2025, inflation is dependent on the Fed’s target, mortgage rates are close to 7%, something which is making the market doubt about whether inflation is contained.

While Donald Trump has created an unofficial Department of Government Efficiency (DOGE) to find savings, there is no plan to address the main drivers of the deficit: the health and retirement benefits for seniors. Key data like employment, inflation, consumer spending and overall growth may not offer much room for improvement without risks.

Analysts’ views on Trump’s road map for American economy are mixed: they see massive tariffs and deportations reigniting inflation and dampening economic growth. Yet they see the Republican’s pledge of expanding the sweeping tax cuts passed in his first term and easing the regulatory burden on businesses potentially juicing the economy.

Forecasters see 2025 as a transition year as the economy continues its post-pandemic recovery but at a lower temperature before Trump’s policies fully take effect. For workers, healthy wage growth is likely to keep outpacing slowing inflation, fuelling consumer spending and job gains. The Federal Reserve’s interest rate cuts, set to continue this year assuming inflation eases further, should provide a boost to growth.

Instead of the recession Moody’s Analytics forecast a few months ago, the research firm foresees a more slowly growing economy in 2025. Donald Trump promised to impose 60% tariffs on Chinese imports and 10% levies on shipments from all other countries to prod manufacturers to move production back to the United States. Recently, he threatened 25% tariffs on Canada and Mexico and 10% fees on China to pressure the countries to curtail the flow of illegal drugs and unauthorised immigration to the US.

By contrast, tax cuts likely won’t stoke growth until 2026 since the tax reform Trump spearheaded in his first term expires at the end of 2025. He and a Republican Congress, however, are expected to extend lower tax rates for all income levels, possibly increase immediate write-offs for business capital investments, and lower the corporate tax rate from 21% to 15%.

The post The return of Trump: Economy faces new tests appeared first on International Finance.