Police in Florida are still investigating the death last month of professional wrestling icon Hulk Hogan from what the medical examiner concluded was a heart attack.
The Clearwater Police Department said in a statement Thursday that the “unique nature of this case has required us to interview multiple witnesses and seek medical records from a variety of providers, and our detectives continue to do that.”
Hogan, whose real name was Terry Bollea, died July 24 at age 71 at a hospital after paramedics and police rushed to his beachfront home in Clearwater following a 911 call. That call, and police body camera video of the scene, has not yet been released as the investigation continues.
“All of this takes time,” the police statement said. “Until the investigation is completed, no records related to the case, including body camera footage, can be released.”
Police have previously said there was no evidence of foul play in Hogan’s death, so it’s not clear exactly what the police probe is looking into other than medical records. Hogan previously had leukemia and atrial fibrillation, an irregular heart rhythm, according to the medical examiner’s report that concluded the cause of death was natural.
Investigators have been working with Hogan’s family, including his son Nick and daughter Brooke, the statement said.
“We plan to meet with the family and brief them on the case to this point, and we will share the results of the investigation with the family prior to closing the case and releasing it to the public and media,” the police statement added.
No timetable for public release of the findings was given.
Hogan was perhaps the biggest star in WWE’s long history, known for both his larger-than-life personality and his wrestling exploits. He was the main draw for the first WrestleMania in 1985 and was a fixture for years, facing everyone from Andre The Giant and Randy Savage to The Rock and even WWE co-founder Vince McMahon.
Hogan won at least six WWE championships and was inducted into the Hall of Fame in 2005 and reinstated there in 2018. He had been removed from the Hall of Fame in 2015 after he was recorded making racial slurs against Blacks, for which he apologized.
Hogan was to be cremated but it wasn’t clear Thursday if that had happened yet. A well-attended but private funeral service was held Aug. 5 at a church in Indian Rocks Beach, Florida.
For the Gen Zers fortunate enough to start in today’s white-collar job market, don’t anticipate any raises. Since the pandemic, demand for in-person services has pushed up wages in hospitality and health care, outpacing inflation. Meanwhile, white-collar tech jobs are in a freeze, with AI being one of the culprits.
Gen Z graduates are facing an increasingly tough reality after tossing their caps into the air: Not only are their skills being outpaced by ChatGPT, but they aren’t getting raises consistent enough to splurge on anything more than an oat-milk latte.
But there’s now a new nail in coffin: Their non-degree friends working as bartenders and baristas are seeing bigger pay raises than they are. Wage growth in leisure and hospitality is outpacing white-collar jobs, flipping the script on where young workers can find earning momentum.
A new analysis by Bankrate found hospitality workers’ wages have risen by nearly 30% since 2021, outpacing inflation by more than 4%. Health care workers have similarly outpaced inflation and seen their salaries go up by around 25% in the past four years.
However, those working in professional and business services, the finance industry, and education have not seen wage gains that keep up with inflation. Teachers, for example, are pacing at nearly 5% below inflation.
Yet, Gen Z isn’t likely to flock to work at the local pub or Starbucks.
White-collar jobs such as entry-level tech gigs still come with larger paychecks—averaging at $19.57 an hour in the U.S. But in the hospitality industry, an average barista makes about $16 dollars per hour. Still, since inflation first spiked a few years ago, wages have still been falling behind for white-collar workers. Workers in retail, trade, health care, leisure, hospitality, and food services making less per hour, are watching their paychecks grow more over time.
The white-collar freeze
Across the white-collar job market, workers—especially fresh-faced graduates like Gen Z—are being hit with another tough reality: Workers in white-collar financial activities or professional and business services are encountering a slower pace of hiring.
While entry-level workers crave the glam of tech offices and cold brew on tap, just this week, Meta paused hiring for its new artificial intelligence division, ending a spending spree that saw it acquire a wave of costly AI researchers and engineers, and included signing bonuses of $100 million. Amazon CEO Andy Jassy also has said in addition to “efficiency gains,” he expects AI could mean white-collar job cuts.
And it’s not just desk workers who are being challenged. Education saw the biggest wage gap relative to inflation, followed by construction.
And even if Gen Zers are lucky enough to land that tech job of their dreams, their promotions may not follow. A recent survey found that promotion rates have slowed after surging during the Great Resignation. The overall promotion rate was 10.3% in May 2025, down from a peak of 14.6% in May 2022.
Federal Reserve governor Lisa Cook late Wednesday said she wouldn’t leave her post after Trump on social media called on her to resign over an accusation from one his officials that she committed mortgage fraud.
“I have no intention of being bullied to step down from my position because of some questions raised in a tweet,” Cook said in a statement issued by the Fed.
Bill Pulte, the head of the agency that regulates mortgage giants Fannie Mae and Freddie Mac and a Trump appointee, alleged on the X social media platform early Wednesday that Cook had claimed two primary residences — in Ann Arbor, Michigan and Atlanta — in 2021 to get better mortgage terms. Mortgage rates are often higher on second homes or those purchased to rent.
Trump followed up Pulte’s accusation by calling on Cook to resign, in the latest effort by the administration to exert greater control over one of the few remaining independent agencies in Washington. Trump has repeatedly attacked the Fed’s chair, Jerome Powell, for not cutting its short-term interest rate, and even threatened to fire him.
If Cook is forced off the Fed’s governing board, it would provide Trump an opportunity to appoint a loyalist. Trump has said he would only appoint officials who would support cutting rates.
Pulte urged the Justice Department to investigate Cook, who was appointed to the Fed’s governing board by former president Joe Biden in 2022. She was reappointed the following year to a term that lasts until 2038, the longest remaining term among the seven governors.
Cook also said, “I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”
Pulte, in a letter to Attorney General Pam Bondi, said that on June 18, 2021, Cook purchased a home in Ann Arbor and then two weeks later bought a condo in Atlanta. Before joining the Fed, Cook taught at Michigan State University. Pulte also charged that Cook has listed her condo in Atlanta for rent.
A Justice Department spokesperson declined to comment.
Just last month, Trump blasted Powell for the ballooning cost of the renovation of two of the Fed’s headquarters buildings, even suggesting that the run-up in costs could constitute a firing offense. He backed off his threats to fire Powell after receiving a tour of the project.
Pulte also suggested that Cook’s alleged actions could constitute a fireable offense. Fed officials are protected by law from being removed by a president, except “for cause,” which is generally seen as some kind of malfeasance or dereliction of duty.
Either way, if Trump seeks to fire Cook, it could lead to a court battle over a president’s power to remove Fed governors.
Senate Democrats, including New York Sen. Chuck Schumer, expressed support for Cook and slammed Trump’s actions.
“Trump is a liar. Lisa Cook—stand tough and don’t let Trump intimidate you,” Schumer wrote in a post on social media platform X.
Massachusetts Sen. Elizabeth Warren said in a statement that Trump “has been scrambling for a pretext to intimidate or fire Chair Powell and members of the Federal Reserve Board while blaming anyone but himself for how his failed economic policies are hurting Americans.”
Trump will be able to replace Chair Jerome Powell in May 2026, when Powell’s term expires. Yet 12 members of the Fed’s interest-rate setting committee have a vote on whether to raise or lower interest rates, so even replacing the Chair doesn’t guarantee that Fed policy will shift the way Trump wants.
But the more members of the Fed’s governing board that Trump can appoint, the more control he will be able to assert over the Fed, which has long been considered independent from day-to-day politics.
All seven members of the Fed’s governing board are able to vote on rate decisions. The other five voters include the president of the Fed’s New York branch and a rotating group of four of the presidents of the Fed’s other 11 regional branches.
Trump appointed two members of the Fed’s board in his first term, Christopher Waller and Michelle Bowman. Both dissented July 30 from the central bank’s decision to keep its rate unchanged, in favor of a rate cut.
Another Fed governor, Adriana Kugler, stepped down unexpectedly Aug. 1, and Trump has nominated one of his economic advisers, Stephen Miran, to fill out the remainder of her term until January.
If Trump is able to replace Cook, the first Black woman to serve on the Fed’s board, as well as Kugler, that would give him a clear majority on the board of governors. If Powell leaves the board when his term as chair ends next May, then Trump will be able to fill a fifth spot. However, Powell could stay on the board until early 2028 after finishing his term as chair.
The presidents of the regional Federal Reserve banks are selected by the boards of directors of those banks, but are subject to the approval of the Fed’s board of governors. The terms of all 12 of the regional Fed presidents end next February.
Trump has for months demanded that the Federal Reserve reduce the short-term interest rate it controls, which currently stands at about 4.3%. He has also repeatedly insulted Powell, who has said that the Fed would like to see more evidence of how the economy evolves in response to Trump’s sweeping tariffs before making any moves. Powell has also said the duties threaten to raise inflation and slow growth.
Trump says that a lower rate would reduce the government’s borrowing costs on $37 trillion in debt and boost the housing market by reducing mortgage rates. Yet mortgage borrowing costs and other interest rates, including many of the ones the government pays, do not always follow the Fed’s rate decisions.
The Trump administration has made similar claims of mortgage fraud against Democrats that Trump has attacked, including California Sen. Adam Schiff and New York Attorney General Letitia James.
Crypto investors are holding their breath before Jerome Powell, chair of the Federal Reserve, speaks Friday in Jackson Hole, Wyo. Bitcoin has dipped about 1% over the past 24 hours and almost 5% over the past week to around $112,000, according to data from Binance. Ethereum, the world’s second largest cryptocurrency, is also down 2% over the past day to now $4,240, per Binance.
The pullback of the two largest cryptocurrencies tracks with a broader market decline, with the total market capitalization of all cryptocurrencies down 1% day over day to $3.9 trillion. Meanwhile, the S&P 500 is down 0.3% since markets opened Thursday.
“Investors appear increasingly doubtful that Powell will signal a pivot at Jackson Hole,” James Butterfill, head of research at crypto asset manager CoinShares, told Fortune.
The weeklong pullback in the digital assets market comes as traders try to predict whether the Fed will cut interest rates in September, which will likely prompt money to flow from U.S. Treasury bills into riskier assets with higher potential yields, like crypto.
Since 1982, the Federal Reserve Bank of Kansas City has hosted a conference in Jackson Hole. The Fed chair usually speaks at the event, and, as with any public speech from Powell, investors will pore through his remarks to glean whether the Federal Reserve will cut rates.
Last week, analysts were nearly certain that rate cuts were imminent after the Bureau of Labor Statistics reported only a moderate increase of total inflation in July of 2.7%. That was less than what many expected. Markets surged, and Bitcoin notched another all-time high.
But two days later, the BLS reported that prices for goods made by U.S. producers increased 0.9% in July, the biggest uptick in what’s called the producer price index since June 2022. The news led to a dip in crypto markets, which have traded lower over the past week.
Still, some market observers are optimistic. “This dip looks like a small correction to me, not a trend break,” said Ira Auerbach, head of the venture arm connected to blockchain developer Offchain Labs and the former head of digital assets at Nasdaq Inc.
He said that pro-crypto policy in the U.S., like President Donald Trump’s recent executive order that allows crypto and other private assets into 401(k)s, has stayed intact. Auerbach also pointed to increased adoption of stablecoins, or cryptocurrencies tied to underlying assets like the U.S. dollar.
“I’d expect this pullback to get absorbed,” he added, “and for the trend higher to continue once the macro fog clears.”
Chinese AI startup DeepSeek shocked the world in January with an AI model, called R1, that rivaled OpenAI and Anthropic’s top LLMs. It was built at a fraction of the cost of those other models, using far fewer Nvidia chips, and was released for free. Now, just two weeks after OpenAI debuted its latest model, GPT-5, DeepSeek is back with an update to its flagship V3 model that experts say matches GPT-5 on some benchmarks—and is strategically priced to undercut it.
DeepSeek’s new V3.1 model was quietly released in a message to one of its WeChat groups, China’s all-in-one messaging and social app, as well as on the Hugging Face platform. Its debut touches several of today’s biggest AI narratives at once. DeepSeek is a core part of China’s broader push to develop, deploy, and control advanced AI systems without relying on foreign technology. (And in fact, DeepSeek’s new V3 model is specifically tuned to do perform well on Chinese-made chips.)
While U.S. companies have been hesitant to embrace DeepSeek’s models, they’ve been widely adopted in China and increasingly in other parts of the world. Even some American firms have built applications on DeepSeek’s R1 reasoning model. At the same time, researchers warn that the models’ outputs often hew closely to Chinese Communist Party–approved narratives — raising questions about their neutrality and trustworthiness.
China’s AI push goes beyond DeepSeek: Its industry also includes models including Alibaba’s Qwen, Moonshot AI’s Kimi, and Baidu’s Ernie. DeepSeek’s new release, however, coming just after OpenAI’s GPT-5—a rollout that fell short of industry watchers’ high expectations —underscores Beijing’s determination to keep pace with, or even leapfrog, top U.S. labs.
OpenAI is concerned about China and DeepSeek
DeepSeek’s efforts are certainly keeping U.S. labs on their toes. In a recent dinner with reporters, OpenAI CEO Sam Altman said that rising competition from Chinese open-source models, including DeepSeek, influenced his company’s decision to release its own open-weight models two weeks ago.
“It was clear that if we didn’t do it, the world was gonna be mostly built on Chinese open source models,” Altman said. “That was a factor in our decision, for sure. Wasn’t the only one, but that loomed large.”
In addition, last week the U.S. granted Nvidia and AMD licenses to export China-specific AI chips — including Nvidia’s H20 — but only if they agree to hand over 15% of revenue from those sales to Washington. Beijing quickly pushed back, moving to restrict purchases of Nvidia chips after Commerce Secretary Howard Lutnick told CNBC on July 15: “We don’t sell them our best stuff, not our second-best stuff, not even our third-best.”
By optimizing DeepSeek for Chinese-made chips, the company is signaling resilience against U.S. export controls and a drive to reduce reliance on Nvidia. In DeepSeek’s WeChat post, it noted that the new model format is optimised for “soon-to-be-released next-generation domestic chips.”
Altman, at that same dinner, warned that the U.S. may be underestimating the complexity and seriousness of China’s progress in AI — and said export controls alone likely aren’t a reliable solution.
“I’m worried about China,” he said.
Less of a leap, but still striking incremental advances
Technically, what makes the new DeepSeek model notable is how it was built, with a few advances that would be invisible to consumers. But for developers, these innovations make V3.1 cheaper to run and more versatile than many closed and more expensive rival models.
For instance, V3.1 is huge – 685 billion parameters, which is on the level of many top “frontier” models. But its “mixture-of-experts” design means only a fraction of the model activates when answering any query, keeping computing costs lower for developers. And unlike earlier DeepSeek models that split tasks that could be answered instantly based on the model’s pre-training from those that required step-by-step reasoning, V3.1 combines both fast answers and reasoning in one system.
GPT-5, as well as the most recent models from Anthropic and Google, have a similar ability. But few open weight models have been able to do this so far. V3.1’s hybrid architecture is “the biggest feature by far,” Ben Dickson, a tech analyst and founder of the TechTalks blog, told Fortune.
Others point out that while this DeepSeek model is less of a leap than the company’s R1 model—which was a reasoning model distilled down from the original V3 that shocked the world in January, the new V3.1 is still striking. “It is pretty impressive that they continue making non-marginal improvements,” said William Falcon, founder and CEO of AI developer platform Lightning AI. But he added that he would expect OpenAI to respond if its own open source model “starts to meaningfully lag,” and pointed out that the DeepSeek model is harder for developers to get into production, while OpenAI’s version is fairly easy to deploy.
For all the technical details, though, DeepSeek’s latest release highlights the fact that AI is increasingly seen as part of a simmering technological cold war between the US and China. With that in mind, if Chinese companies can build better AI models for what they claim is a fraction of the cost, U.S. competitors have reason to worry about staying ahead.
U.S. Sen. Bernie Sanders (I-Vt.) has been a longtime political enemy of President Donald Trump. However, in a political plot twist, Sanders, considered a progressive, has lined up behind his foe’s plan to turn multibillion-dollar semiconductor subsidies into government equity stakes in private companies.
The unlikely duo—a self-described democratic socialist from Vermont and a populist-leaning Republican president—now agree on one shift in America’s industrial policy: If the government is going to hand out billions, taxpayers should own a piece of the pie.
“If microchip companies make a profit from the generous grants they receive from the federal government, the taxpayers of America have a right to a reasonable return on that investment,” Sanders told Fortune.
The subject of this unprecedented convergence is Intel, the struggling chipmaker that received $10.9 billion under the 2022 CHIPS and Science Act. The injection was part of a broader $39 billion subsidy designed to lure semiconductor production away from Asia. The Trump administration is now pushing to exchange some of those grants for government ownership stakes, which rattled markets and sent Intel’s stock plummeting 6% since the announcement.
The idea was Sanders’ in the first place, he said.
Sanders has long criticized the CHIPS Act as corporate welfare for some of the world’s most profitable technology companies. Back in 2022, he and U.S. Sen. Elizabeth Warren (D-Mass.) proposed an amendment requiring the Treasury Department to take warrants, equity stakes, or senior debt whenever federal money went to private chipmakers. However, that amendment failed.
Now, three years later, Trump is reviving the idea, and Sanders is applauding.
“I am glad the Trump administration is in agreement with the amendment I offered three years ago,” Sanders said. “Taxpayers should not be providing billions of dollars in corporate welfare to large, profitable corporations like Intel without getting anything in return.”
For Trump, the move represents a dramatic embrace of state intervention in the private sector, a tactic he has increasingly leaned on in his second term. This month, Trump called for Intel’s CEO Lip Bu-Tan’s resignation over past ties to Chinese firms. Earlier this year, the administration struck a deal allowing Nvidia and AMD to sell AI chips to China in exchange for Washington pocketing 15% of the revenues.
It’s an economic strategy that looks less like Reaganism, and more of a mashup between populism and state-capitalism. In that case, Trump and Sanders are two apt representatives for the merging camps.
The White House did not respond to Fortune’s request for comment by press time.
Markets recoil
Investors aren’t thrilled by this new strategy ofpunishing Intel stock for the uncertainty about what government ownership entails for the government. Intel has already been seeking private capital infusions—including a $2 billion injection from Japan’s SoftBank this month—to shore up its balance sheet.
The Commerce Department, led by Secretary Howard Lutnick, is still reviewing how to implement the plan, according to Reuters. But the optics are clear: The United States, it seems, is no longer content to subsidize semiconductor manufacturing without strings attached.
For Sanders, it’s validation; and for Trump it’s a newfound strategy. But for Intel, which was once the undisputed king of U.S. chipmaking, it’s yet another twist in an already turbulent year.
When times are scary, it helps to have a guide who knows the way forward. With a possible recession lurking, we reached out to someone who’s weathered multiple recessions.
Paul Achleitner is former chair of Deutsche Bank’s supervisory board, former CFO of financial services giant Allianz, and a former Goldman Sachs partner, and is now a newly minted author with his first book, Accelerate Your Experience, due out August 21.
To help calm possible CFO anxiety, CFO Brew asked Achleitner about the possibility of recession, how a recession now could differ from past ones, and how CFOs need to be prepared.
This interview has been edited for clarity and length.
I’ll just start with the biggie. Do you think we are on the precipice of a recession?
We all know recessions do come. The timing of them is always relatively uncertain…If everybody says no, then suddenly something happens. I think the risk that we currently have is the next recession will probably be triggered by a political act. We have an environment where regulatory activities, not just regulatory, but government interventions, are actually the rule rather than the exception. And I think some of those have the potential of triggering a recession. So I wouldn’t want to forecast when that happens, but I would say it’s definitely sure that it will.
What are some similarities between this moment and other pre-recession periods that you’ve experienced?
The similarity could be called what people have called in the past irrational exuberance. I think we are again in a situation where market exuberance exceeds the hardcore realities that we actually are experiencing in terms of hard facts and numbers.
What’s different is we are right now undergoing very deep and very significant structural changes globally, in terms of trade policies, in terms of supply chains, but also in terms of technological innovation and disruption. That is in itself already a huge challenge for business, but in a quote unquote “bullish” market environment, you can actually deal with that easier than in a recessionary environment. So the risk…is that those two are overlapping each other, and that could actually put people into quite severe tests.
What could be different about a new recession compared to others we’ve had in the past?
One is the significant technological disruption that we are currently seeing…The second thing that is going to be different is that we are in a world that’s no longer flat. We are in a world that’s fluid. We have governments that will focus on their domestic audiences and interests. And there is therefore a low likelihood that there will be joint, global, well-coordinated efforts that will deal with global economic issues, which we have had in the past and which have been rather beneficial.
And finally, what’s also different is the ubiquity of social media, which will put an enormous pressure on companies.
Is there something CFOs should be doing differently this time around to prepare?
I would argue, flexibility to react to very different kinds of circumstances. And flexibility to build that into your business model, be it supply chain issues; we’ve learned the criticality of not being reliant on just one or two suppliers during the Covid situation.
I think the question of how to continue to attract talent in a very difficult type of environment will continue to be a very important element that will distinguish those people who get through such a crisis in a better fashion than others.
Strategy is a lot about what not to do, rather than just what to do. And I think focus is something that becomes even more relevant in a recessionary environment, because you can’t afford all the niceties.
We also live in a world where everybody is looking for charismatic leadership, and confuses very often charisma with competence. So one of the jobs that CFOs actually have is to keep people under control and not fall for the seductiveness of narrators, and not just go for convincing stories, but look at facts.
President Donald Trumphas reportedly put $100 million into bonds since taking office in January, through a mixed bet on the debt of both big companies like Meta and Home Depot as well as municipal governments and public entities. The move is notable because he has not placed his investments in a blind trust, unlike other presidents, but also because, as one expert believes, it signals that he expects interest rates to fall.
President Donald Trump has gone on a bond-buying spree since taking office, reportedly sinking more than $100 million into debt issued by big companies and municipal governments alike.
Trump put millions of dollars behind his bond strategy in February including between $500,000 and $1 million each into bonds issued by companies such as Home Depot, T-Mobile, and United Healthcare. Another bet of between $250,000 and $500,000 went into debt issued by Meta, based on a CNBC calculation of 690 transactions reported to the Office of Government Ethics since January and published Tuesday. He has also bought debt issued by local U.S. governments, gas districts, water supply districts, hospital authorities, and school boards, according to CNBC.
The White House did not immediately respond to Fortune’s request for comment.
Investors usually turn to bonds because they are less volatile than stocks. A bond is like a loan that pays out interest to an investor, usually semiannually, over a defined period. Once that period ends and the bond reaches maturity, the investor gets their principal investment back.
Trump’s bond-buying binge stands out because he, unlike other presidents, has not put his investments into a true blind trust. Otherwise, Trump’s bond purchases, whether directed by him or the person in charge of his finances, look like the typical bet of a deep-pocketed investor—one who thinks interest rates are set to fall, said Russell Rhoads, a clinical associate professor of financial management at Indiana University.
Because bond prices typically rise when interest rates fall, it’s possible Trump made the bets hoping he could later sell the bonds at a profit. Rates are likely to drop faster for corporate bonds than for government bonds because they are riskier, said Rhoads. Trump’s insistent pressure for the Fed to cut rates could also be akin to him “talking his book,” added Rhoads.
“You could take the way that he’s been pushing so hard for the Fed to cut rates as like a portfolio manager going on CNBC and talking positive about a stock that’s a big holding of theirs to try to get other people to buy it,” Rhoads told Fortune.
The Fed and interest rates
The Fed has held interest rates steady at between 4.25% and 4.5% since late 2024, although some investors are looking to the central bank’s September meeting for a possible rate cut.
Trump’s purchase of municipal bonds, issued by state and local governments, could also be part of the investment strategy, because the interest they yield is generally exempt from federal income taxes. A bond from an investor’s home state will generally be exempt from state taxes. With the stock market near all-time highs, a preference for bonds could be wise.
“It’s just a logical portfolio management move, as opposed to, you know, something that he knows about rates that the rest of us don’t know,” said Rhoads.
Trump has maintained ultimate control over his businesses and investments, while delegating responsibility for his business empire to his sons Donald Trump Jr. and Eric Trump. The president and his immediate family have reportedly seen profits of $3.4 billion months into his term, especially from his crypto dealings, TheNew Yorkerreported. The president and vice president are exempt from the main law aimed at preventing conflicts of interest by government officials.
Millions of airline passengers have lost the opportunity to gaze out their windows at clouds, despite paying extra for it, according to two class action lawsuits. Air travelers are suing Delta and United, alleging the airlines misled passengers and charged them extra for window seats, knowing they would be placed in windowless seats.
Delta Air Lines and United Airlines were sued this week by passengers claiming they paid extra to sit in “window” seats, but were instead assigned to sit next to a windowless wall.
According to the proposed class action lawsuits filed Tuesday in San Francisco federal court and Brooklyn, New York federal court, the two airlines breached their contracts by misleading customers, charging them for window seats but placing them in the gaps between the windows without effectively disclosing the seat placement to the passengers.
“United specifically represented to the Plaintiffs and class members that the particular seats they chose had a ‘window,’ even though United knew full well they did not,” one complaint said. “Nevertheless, United solicited, accepted, and retained cash, points, or other airline benefits that consumers specifically paid to sit next to a window.”
A separate complaint uses similar language to describe customers’ alleged experience with Delta. The lawsuits said that beyond being an amenity passengers paid more for, window seats can help alleviate motion sickness or soothe cranky children, among other benefits.
Of United’s more than 1,000 aircraft, many are Boeing 737-series and Airbus A321-series planes that contain at least one windowless seat—usually 10A, 11A, or 12A—according to the lawsuits. Delta’s smaller fleet has a similar composition of aircraft with these windowless configurations, usually the result of the patterns of internal air conditioning duction or electrical conduits. The lawsuits said each airline sold more than one million windowless seats over the last four years.
United declined Fortune’s request for comment. Delta did not respond to a request for comment.
Grievances toward seat fees
Seat fees—such as having to pay more to sit by a window seat or exit row—among other baggage and flight change fees, are a strategy used by airlines to increase revenue while keeping the base price for flights lower. American, Delta, United, Frontier, and Spirit airlines made $12.4 billion in seat fee revenue between 2018 and 2023, according to a November 2024 report from the U.S. Senate Permanent Subcommittee on Investigations. Delta got 0.3% of its revenue from the fees in 2023; seat fees similarly made up 2.6% of United’s revenue the same year. The investigation was part of a Biden-era push to increase airline transparency of hidden fees.
According to the lawsuits, United can charge $50 for window seat assignment on domestic flights and $100 for some international flights, while Delta passengers must pay up to $40 to reach a higher ticket tier, at which point they would need to pay more than $30 to pick their window seat. These upcharges for features airlines can allegedly not deliver on are part of the larger problem of airlines heaping invisible fees onto passengers, according to Carter Greenbaum, one of the lawyers who filed the two lawsuits
“Consumers are rightfully angry that they continue to be charged for fees and for services that were once free and included and that companies are not up front with how much products cost,” Greenbaum told Fortune. “Consumers are tired of junk fees, and that’s a bipartisan issue.”
Delta has seen the double-edged sword of offering too many amenities to upper-middle-class customers, navigating annoyance from patrons about overcrowded lounges that were freshly updated with fine dining and valet services at the beginning of the year. Legislators have also scrutinized Delta’s move to individually price tickets using AI, warning it could lead to “predatory pricing.” The airline said the pricing would be “publicly filed and based solely on trip-related factors.”
Pushes to increase transparency
While passengers can use sites like SeatGuru to view aircraft seat maps and assess whether their seat will actually be next to a window, Greenbaum said the onus should still be on the airline to be transparent with customers about the reality of their seat conditions.
“A company cannot misrepresent the nature of the products it sells and then rely on third party reviews to say a customer should have known that it was lying,” Greenbaum said. “If third parties are able to effectively crowdsource this information, there’s really no excuse for United and Delta to not be transparent about the nature of the premium upgrade that they’re selling to customers.”
Airlines have previously gotten in trouble for allegedly promising customers services they could not deliver on. In 2018, U.S. Airways paid a $9.85 million settlement to resolve a class action lawsuit alleging the airline did not immediately refund a checked baggage service fee after passenger luggage was lost, damaged, or delayed. The current cases against Delta and United are even more “extreme” than the 2018 lawsuit, Greenbaum said. In each of the lawsuits he filed, there are 100 people in each class with an aggregated $10 million in claims.
“In this case,” he said, “they have quite literally sold customers a window seat without a window.”
Smartmatic, the elections-technology company suing Fox News for defamation, is now contending with a growing list of criminal allegations against some of its executives — including a new claim by federal prosecutors that a “slush fund” for bribing foreign officials was financed partly with proceeds from the sale of voting machines in Los Angeles.
The new details about the criminal case surfaced this month in court filings in Miami, where the company’s co-founder, Roger Pinate, and two Venezuelan colleagues were charged last year with bribing officials in the Philippines in exchange for a contract to help run that country’s 2016 presidential elections. Pinate, who no longer works for Smartmatic, has pleaded not guilty.
To buttress the case, federal prosecutors are seeking to introduce evidence they argue shows that some of the nearly $300 million the company was paid by Los Angeles County to help modernize its voting systems was diverted to a fund controlled by Pinate through the use of overseas shell companies, fake invoices and other means.
Smartmatic itself hasn’t been charged with breaking any laws, nor have U.S. prosecutors accused Smartmatic or its executives of tampering with election results. Similarly, they haven’t accused Los Angeles County officials of wrongdoing, or said whether they were even aware of the alleged bribery scheme. County officials say they weren’t.
But the case against Pinate is unfolding as Smartmatic is pursuing a $2.7 billion lawsuit accusing Fox of defamation for airing false claims that the company helped rig the 2020 U.S. presidential election. Fox says it was legitimately reporting newsworthy allegations.
Smartmatic said the Justice Department’s new filing was filled with “misrepresentations” and is “untethered from reality.”
“Let us be clear: Smartmatic wins business because we’re the best at what we do,” the company said in a statement. “We operate ethically and abide by all laws always, both in Los Angeles County and every jurisdiction where we operate.”
Fox questions Smartmatic’s dealings in LA
Still, Fox has gone to court to try to get more information about L.A. County’s dealings with Smartmatic. The network has long tried to leverage the bribery allegations to undermine Smartmatic’s narrative about its business prospects – a key component in calculating any potential damages — and portray it as a scandal-plagued company brought low by its own legal problems, not Fox’s broadcasts.
South Florida-based Smartmatic was founded more than two decades ago by a group of Venezuelans who found early success working for the government of the late Hugo Chavez, a devotee of electronic voting. The company later expanded globally, providing voting machines and other technology to help carry out elections in 25 countries, from Argentina to Zambia.
It was awarded its contract to help with Los Angeles County elections in 2018. The contract, which Smartmatic continues to service, gave the company an important foothold in what was then a fast-expanding U.S. voting-technology market.
But Smartmatic has said its business tanked after Fox News gave President Donald Trump’s lawyers a platform to paint the company as part of a conspiracy to steal the 2020 election.
Fox itself eventually aired a piece refuting the allegations after Smartmatic’s lawyers complained, but it has aggressively defended itself against the defamation lawsuit in New York.
“Facing imminent financial collapse and indictment, Smartmatic saw a litigation lottery ticket in Fox News’s coverage of the 2020 election,” the network’s lawyers said in a court filing.
Smartmatic has disputed Fox’s characterization in court filings as “lies” and “another attempt to divert attention from its long-standing campaign of falsehoods and defamation.”
LA clerk deposed about trip, gifted meal
As part of its effort to investigate Smartmatic’s work in Los Angeles, Fox has sued to force LA County Clerk Dean Logan to hand over public records about his dealings with Smartmatic’s U.S. affiliate.
Fox’s lawyers also questioned Logan in a deposition about a dinner a Smartmatic executive bought for him at the members-only Magic Castle club and restaurant in Los Angeles and a Smartmatic-paid trip that Logan made to Taiwan in 2019 to oversee the manufacturing of equipment by a Smartmatic vendor. U.S. prosecutors claim that vendor was deeply involved in the alleged kickback scheme in the Philippines. The five-day trip included business class airfare, hotel and numerous meals as well as time for sightseeing, Fox said.
“The trip’s itinerary demonstrates that the trip was not a financial inspection or audit. It was a boondoggle,” Fox said in court filings.
Logan, who did not report the gifts in his financial disclosures, said in his 2023 deposition that the meal at the Magic Castle was a “social occasion” unrelated to business and that he was not required to report the trip to Taiwan because his visit was covered by the contract.
Mike Sanchez, a spokesman for Logan’s office, said in a statement that the bribery allegations are unrelated to the company’s work for L.A. County and that the county had no knowledge of how the proceeds from its contract would be used. All of Smartmatic’s work has been evaluated for compliance with the contract’s terms, Sanchez added, and as soon as Pinate was indicted he and the other defendants were banned from conducting business with the county.
As for the trip to Taiwan, Sanchez said another county official joined Logan for the trip and the two conducted several on-site visits and conducted detailed reviews of electoral technology products that were required prior the start of their manufacturing. Logan’s spouse accompanied him on the trip, but at the couple’s own expense, the spokesman added.
“Unfortunately, this is an attempt to use the County as a pawn in two serious legal actions to which the County is not a party,” Sanchez said.
Smartmatic has settled two other defamation lawsuits it brought against conservative news outlets Newsmax and One America News Network over their 2020 U.S. election coverage. Settlement terms weren’t disclosed.
Prosecutors claim bribe paid in Venezuela
U.S. prosecutors in Miami have also accused Pinate of secretly bribing Venezuela’s longtime election chief by giving her a luxury home with a pool in Caracas. Prosecutors say the home was transferred to the election chief in an attempt to repair relations following Smartmatic’s abrupt exit from Venezuela in 2017 when it accused President Nicolas Maduro ‘s government of manipulating tallied results in elections for a rubber-stamping constituent assembly.
Smartmatic has denied the bribery allegations, saying it ceased all operations in Venezuela in 2017 after blowing the whistle on the government and has never sought to secure business there again.
“There are no slush funds, no gifted house,” the company said. Instead, it accused Fox of engaging in “victim-blaming” and attempts to use “frivolous” court filings “to smear us further, twisting unproven Justice Department allegations.”
A New York appeals court on Thursday threw out President Donald Trump’s massive civil fraud penalty while upholding a judge’s finding that he exaggerated his wealth for decades. The ruling spares Trump from a potential half-billion-dollar fine but bans him and his two eldest sons from serving in corporate leadership for a few years.
The decision came seven months after the Republican returned to the White House. A panel of five judges in New York’s mid-level Appellate Division said the verdict, which stood to cost Trump more than $515 million and rock his real estate empire, was “excessive.”
After finding Trump engaged in fraud by flagrantly padding financial statements that went to lenders and insurers, Judge Arthur Engoron ordered him last year to pay $355 million in penalties. With interest, the sum has topped $515 million.
The total — combined with penalties levied on some other Trump Organization executives, including Trump’s sons Eric and Donald Jr. — now exceeds $527 million, with interest.
An ‘excessive’ fine
“While the injunctive relief ordered by the court is well crafted to curb defendants’ business culture, the court’s disgorgement order, which directs that defendants pay nearly half a billion dollars to the State of New York, is an excessive fine that violates the Eighth Amendment of the United States Constitution,” Judges Dianne T. Renwick and Peter H. Moulton wrote in one of several opinions shaping the appeals court’s ruling.
Engoron’s other punishments, upheld by the appeals court, have been on pause during Trump’s appeal, and he was able to hold off collection of the money by posting a $175 million bond.
The court, which split on the merits of the lawsuit and Engoron’s fraud finding, dismissed the penalty in its entirety while also leaving a pathway for an appeal to the state’s highest court, the Court of Appeals. Trump and his co-defendants, the judges wrote, can seek to extend the pause on any punishments taking effect.
The panel was sharply divided, issuing 323 pages of concurring and dissenting opinions with no majority. Rather, some judges endorsed parts of their colleagues’ findings while denouncing others, enabling the court to rule.
Two judges wrote that they felt New York Attorney General Letitia James’ lawsuit against Trump and his companies was justifiable and that she had proven her case but the penalty was too severe. One wrote that James exceeded her legal authority in bringing the suit, saying that if any of Trump’s lenders felt cheated, they could have sued him themselves, and none did.
One judge wrote that Engoron erred by ruling before the trial began that the attorney general had proved Trump engaged in fraud.
The appeals court, the Appellate Division of the state’s trial court, took an unusually long time to rule, weighing Trump’s appeal for nearly 11 months after oral arguments last fall. Normally, appeals are decided in a matter of weeks or a few months.
James has said the businessman-turned-politician engaged in “lying, cheating, and staggering fraud.” Her office had no immediate comment after Thursday’s decision.
Claims of politics at play
Trump and his co-defendants denied wrongdoing. In a six-minute summation of sorts after a monthslong trial, Trump proclaimed in January 2024 he was “an innocent man” and the case was a “fraud on me.” The Republican has repeatedly maintained the case and the verdict were political moves by James and Engoron, both Democrats.
Trump’s Justice Department has subpoenaed James for records related to the lawsuit, among other documents, as part of an investigation into whether she violated the president’s civil rights. James’ personal attorney Abbe D. Lowell has said investigating the fraud case is “the most blatant and desperate example of this administration carrying out the president’s political retribution campaign.”
Trump and his lawyers said his financial statements weren’t deceptive, since they came with disclaimers noting they weren’t audited. The defense also noted bankers and insurers independently evaluated the numbers, and the loans were repaid.
Despite such discrepancies as tripling the size of his Trump Tower penthouse, he said the financial statements were, if anything, lowball estimates of his fortune.
During an appellate court hearing last September, Trump’s lawyers argued many of the case’s allegations were too old, an assertion they made unsuccessfully before trial. The defense also contends James misused a consumer protection law to sue Trump and improperly policed private business transactions that were satisfactory to those involved.
State attorneys said the law in question applies to fraudulent or illegal business conduct, whether it targets everyday consumers or big corporations. Though Trump insists no one was harmed by the financial statements, the state contends that the numbers led lenders to make riskier loans and that honest borrowers lose out when others game their net worth numbers.
The state has argued that the verdict rests on ample evidence and that the scale of the penalty comports with Trump’s gains, including his profits on properties financed with the loans and the interest he saved by getting favorable terms offered to wealthy borrowers.
Legal obstacles
The civil fraud case was just one of several legal obstacles for Trump as he campaigned, won and segued to a second term as president.
And in December, a federal appeals court upheld a jury’s finding that Trump sexually abused writer E. Jean Carroll in the mid-1990s and later defamed her, affirming a $5 million judgment against him. The appeals court declined in June to reconsider. Trump still can try to get the Supreme Court to hear his appeal.
Trump also is appealing a subsequent verdict that requires him to pay Carroll $83.3 million for additional defamation claims.
President Donald Trump sits in the courtroom before the start of closing arguments in his civil business fraud trial at New York Supreme Court, Jan. 11, 2024, in New York.
Jamel Bishop is seeing a big change in his classrooms as he begins his senior year at Doss High School in Louisville, Kentucky, where cellphones are now banned during instructional time.
In previous years, students often weren’t paying attention and wasted class time by repeating questions, the teenager said. Now, teachers can provide “more one-on-one time for the students who actually need it.”
Kentucky is one of 17 states and the District of Columbia starting this school year with new restrictions, bringing the total to 35 states with laws or rules limiting phones and other electronic devices in school. This change has come remarkably quickly: Florida became the first state to pass such a law in 2023.
Both Democrats and Republicans have taken up the cause, reflecting a growing consensus that phones are bad for kids’ mental health and take their focus away from learning, even as some researchers say the issue is less clear-cut.
“Anytime you have a bill that’s passed in California and Florida, you know you’re probably onto something that’s pretty popular,” Georgia state Rep. Scott Hilton, a Republican, told a forum on cellphone use last week in Atlanta.
Phones are banned throughout the school day in 18 of the states and the District of Columbia, although Georgia and Florida impose such “bell-to-bell” bans only from kindergarten through eighth grade. Another seven states ban them during class time, but not between classes or during lunch. Still others, particularly those with traditions of local school control, mandate only a cellphone policy, believing districts will take the hint and sharply restrict phone access.
Students see pros and cons
For students, the rules add new school-day rituals, like putting phones in magnetic pouches or special lockers.
Students have been locking up their phones during class at McNair High School in suburban Atlanta since last year. Audreanna Johnson, a junior, said “most of them did not want to turn in their phones” at first, because students would use them to gossip, texting “their other friends in other classes to see what’s the tea and what’s going on around the building.”
That resentment is “starting to ease down” now, she said. “More students are willing to give up their phones and not get distracted.”
But there are drawbacks — like not being able to listen to music when working independently in class. “I’m kind of 50-50 on the situation because me, I use headphones to do my schoolwork. I listen to music to help focus,” she said.
Some parents want constant contact
In a survey of 125 Georgia school districts by Emory University researchers, parental resistance was cited as the top obstacle to regulating student use of social and digital media.
Johnson’s mother, Audrena Johnson, said she worries most about knowing her children are safe from violence at school. School messages about threats can be delayed and incomplete, she said, like when someone who wasn’t a McNair student got into a fight on school property, which she learned about when her daughter texted her during the school day.
“My child having her phone is very important to me, because if something were to happen, I know instantly,” Johnson said.
Many parents echo this — generally supporting restrictions but wanting a say in the policymaking and better communication, particularly about safety — and they have a real need to coordinate schedules with their children and to know about any problems their children may encounter, said Jason Allen, the national director of partnerships for the National Parents Union.
“We just changed the cellphone policy, but aren’t meeting the parents’ needs in regards to safety and really training teachers to work with students on social emotional development,” Allen said.
Research remains in an early stage
Some researchers say it’s not yet clear what types of social media may cause harm, and whether restrictions have benefits, but teachers “love the policy,” according to Julie Gazmararian, a professor of public health at Emory University who does surveys and focus groups to research the effects of a phone ban in middle school grades in the Marietta school district near Atlanta.
“They could focus more on teaching,” Gazmararian said. “There were just not the disruptions.”
Another benefit: More positive interactions among students. “They were saying that kids are talking to each other in the hallways and in the cafeteria,” she said. “And in the classroom, there is a noticeably lower amount of discipline referrals.”
Gazmararian is still compiling numbers on grades and discipline, and cautioned that her work may not be able to answer whether bullying has been reduced or mental health improved.
Social media use clearly correlates with poor mental health, but research can’t yet prove it causes it, according to Munmun De Choudhury, a Georgia Tech professor who studies this issue.
“We need to be able to quantify what types of social media use are causing harm, what types of social media use can be beneficial,” De Choudhury said.
A few states reject rules
Some state legislatures are bucking the momentum.
Wyoming’s Senate in January rejected requiring districts to create some kind of a cellphone policy after opponents argued that teachers and parents need to be responsible.
And in the Michigan House in July, a Republican-sponsored bill directing schools to ban phones bell-to-bell in grades K-8 and during high school instruction time was defeated in July after Democrats insisted on upholding local control. Democratic Gov. Gretchen Whitmer, among multiple governors who made restricting phones in schools a priority this year, is still calling for a bill to come to her desk.
___
Associated Press writers Isabella Volmert in Lansing, Michigan, and Dylan Lovan in Louisville, Kentucky, contributed.
Hello and welcome to Eye on AI…In this edition:DeepSeek drops another impressive model…China tells companies not to buy Nvidia chips…and OpenEvidence scores an impressive result on the medical licensing exam.
Hi, it’s Jeremy here, just back from a few weeks of much needed vacation. It was nice to be able to get a little distance and perspective on the AI news cycle. (Although I did make an appearance on Rana el Kaliouby’s “Pioneers of AI” podcast to discuss the launch of GPT-5. You can check that out here.)
Returning this week, the news has been all about investor fears we’re in an “AI bubble”—and that it is about to either pop or deflate. Nervous investors drove the shares of many publicly-traded tech companies linked to AI-related trades, such as Nvidia, CoreWeave, Microsoft, and Alphabet down significantly this week.
To me, one of the clearest signs that we are in a bubble—at least in terms of publicly-traded AI stocks—is the extent to which investors are actively looking for reasons to bail. Take the supposed rationale for this week’s sell-off, which were Altman’s comments that he thought there was an AI bubble in venture-backed, privately-held AI startups and that MIT report which found that 95% of AI pilots fail. Altman wasn’t talking about the public companies that stock market investors have in their portfolios, but traders didn’t care. They chose to only read the headlines and interpret Altman’s remarks broadly. As for that MIT report, the market chose to read it as an indictment of AI as a whole and head for the exits—even though that’s not exactly what the research said, as we’ll see in a moment.
I’m going to spend the rest of this essay on the MIT report because I think it is relevant for Eye on AI readers beyond its implications for investors. The report looked at what companies are actually trying to do with AI and why they may not be succeeding. Entitled The GenAI Divide: State of AI in Business 2025, the reportwas published by MIT Media Lab’s NANDA Initiative. (My Fortune colleague Sheryl Estrada was one of the first to cover the report’s findings. You can read her coverage here.)
NANDA is an acronym for “Networked-Agents and Decentralized AI” and it is a project designed to create new protocols and a new architecture for an internet full of autonomous AI agents. NANDA might have an incentive to suggest that current AI methods aren’t working—but that if companies created more agentic AI systems using the NANDA protocol, their problems would disappear. There’s no indication that NANDA did anything to skew its survey results or to frame them in a particular light, but it is always important to consider the source.
Ok, now let’s look at what the report actually says. It interviewed 150 executives, surveyed 350 employees, and looked at 300 individual AI projects. It found that 95% of AI pilot projects failed to deliver any discernible financial savings or uplift in profits. These findings are not actually all that different from what a lot of previous surveys have found—and those surveys had no negative impact on the stock market. Consulting firm Capgemini found in 2023 that 88% of AI pilots failed to reach production. (S&P Global found earlier this year that 42% of generative AI pilots were abandoned—which is still not great).
You’re doing it wrong
But where it gets interesting is what the NANDA study said about the apparent reasons for these failures. The biggest problem, the report found, was not that the AI models weren’t capable enough (although execs tended to think that was the problem.) Instead, the researchers discovered a “learning gap—people and organizations simply did not understand how to use the AI tools properly or how to design workflows that could capture the benefits of AI while minimizing downside risks.
Large language models seem simple—you can give them instructions in plain language, after all. But it takes expertise and experimentation to embed them in business workflows. Wharton professor Ethan Mollick has suggested that the real benefits of AI will come when companies abandon trying to get AI models to follow existing processes—many of which he argues reflect bureaucracy and office politics more than anything else—and simply let the models find their own way to produce the desired business outcomes. (I think Mollick underestimates the extent to which processes in many large companies reflect regulatory demands, but he no doubt has a point in many cases.)
This phenomenon may also explain why the MIT NANDA research found that startups, which often don’t have such entrenched business processes to begin with, are much more likely to find genAI can deliver ROI.
Buy, don’t build
The report also found that companies which bought-in AI models and solutions were more successful than enterprises that tried to build their own systems. Purchasing AI tools succeeded 67% of the time, while internal builds panned out only one-third as often. Some large organizations, especially in regulated industries, feel they have to build their own tools for legal and data privacy reasons. But in some cases organizations fetishize control—when they would be better off handing the hard work off to a vendor whose entire business is creating AI software.
Building AI models or systems from scratch requires a level of expertise many companies don’t have and can’t afford to hire. It is also means that companies are building their AI systems on open source or open weight LLMs—and while the performance of these models has improved markedly in the past year, most open source AI models still lag their proprietary rivals. And when it comes to using AI in actual business cases, a 5% difference in reasoning abilities or hallucination rates can result in a substantial difference in outcomes.
Finally, the MIT report found that many companies are deploying AI in marketing and sales, when the tools might have a much bigger impact if used to take costs out of back-end processes and procedures. This too may contribute to AI’s missing ROI.
The overall thrust of the MIT report was that the problem was not the tech. It was how companies were using the tech. But that’s not how the stock market chose to interpret the results. To me, that says more about the irrational exuberance in the stock market than it does about the actual impact AI will have on business in five years time.
An MIT study that found that 95% of AI pilot projects fail spooked the stock market this week, driving the shares of many tech companies sharply lower. But the reasons for the failures the research highlighted were less about the underlying tech and more about the poor choices companies are making in using it.
“The nation’s finances have deteriorated” since President Trump took office, driven by sweeping legislative and trade policy changes, according to the Committee for a Responsible Federal Budget (CRFB). The nonpartisan watchdog noted that the Congressional Budget Office’s January 2025 budget outlook “already showed a worrisome fiscal outlook,” but developments since mean a widening deficit. The CRFB gamed out several scenarios, including an adjusted baseline which accounts for “most legislative and administrative changes but not economic and technical changes.” The CRFB also included an alternative scenario in which the U.S. Trade Court’s ruling that many of Trump’s tariffs are illegal is upheld; temporary provisions of the One Big Beautiful Bill Act are made permanent; and yields on Treasury securities remain at their current level.
The adjusted baseline shows cumulative deficits are forecast to reach $22.7 trillion, amounting to 6.1% of GDP, with annual deficits climbing from $1.7 trillion in 2025 to $2.6 trillion in 2035. Meanwhile, it sees debt held by the public rising from about 100% of GDP—currently $30 trillion—to 120% of GDP ($53 trillion).
Under the CRFB’s alternative scenario—where key OBBBA provisions are made permanent, tariff revenues fall owing to legal setbacks, and interest rates remain elevated—debt could climb to 134% of GDP by 2035 and the 10-year deficit would exceed $28.5 trillion. Over fiscal years 2026 through 2035, net interest payments alone are set to total $14 trillion over the decade, nearly doubling from $1 trillion this year to $1.8 trillion by 2035.
Expenditures are expected to grow, totaling $88 trillion (23.6% of GDP) for the decade, while revenues—spurred on by tariffs replacing some lost tax receipts—will reach $65 trillion (17.5% of GDP). This persistent gap between spending and revenue underpins the widening deficit. The CRFB has previously weighed in on the tariffs’ impact on deficits, calling them both “significant” and “meaningful.”
Policy changes: OBBBA and tariffs feed fiscal imbalance
Central to the deteriorating outlook is enactment of the One Big Beautiful Bill Act (OBBBA), which the CRFB projects will increase deficits by $4.6 trillion over the next decade and push debt up by more than 10% of GDP by 2035.
Meanwhile, a surge in tariffs following administration policies is expected to offset some costs, saving $3.4 trillion in deficits and reducing debt by 8% of GDP over the same period. These savings are, however, at risk: The U.S. Court of International Trade ruled much of the tariff regime illegal in May, and if that decision stands, tariffs could produce less than $1 trillion in deficit reduction—adding $2.4 trillion to the federal deficit and increasing debt by 5.7% of GDP.
Under the alternative scenario, annual deficit growth would be exacerbated by extensions of tax cuts and spending increases, combined with higher interest on the rapidly rising debt load. Also under this scenario, interest payments on the national debt, already surging from less than $500 billion in 2022, could hit $2.2 trillion (5.1% of GDP) annually by 2035 if interest rates stay high. The CRFB warns the outlook could be even worse if offsets built into OBBBA are delayed and new deficit-increasing proposals—like tariff rebates—are implemented, or if economic headwinds slow revenue collection. A recession or financial crisis over the next decade could further deepen deficits and add to the debt burden.
The CRFB calls for lawmakers to prioritize revenue and spending options that put the federal budget on a sustainable path, emphasizing that any changes to tax and spending policies should be paid for at a minimum under a “pay-as-you-go” approach, and ideally under its own bespoke recommendation of “Super PAYGO,” which would require offsets that exceed new costs twofold. With debt heading toward record levels, the group argues for proactive solutions to trust fund solvency and corrective fiscal action.
Republican leaders and Trump officials argue the OBBBA will reduce the deficit via two mechanisms:
“Historic spending reductions,” credited in GOP Senate and administration releases with $1.5 trillion to $1.6 trillion in mandatory spending cuts, mainly in social programs.
Economic growth projections: The White House and GOP claim the bill’s “pro-growth tax reforms” will unleash enough economic expansion to boost tax revenues by $4 trillion, turning a static deficit increase into a dynamic deficit reduction.
No concrete detailed plan has been laid out that would balance the budget if the bill’s tax cuts are extended and the dynamic growth does not materialize.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
The late billionaire Steve Jobs is known for being cofounder and CEO of Apple—and introducing the iPhone, iPad, and iMac to the world. However, his time at the computer company wasn’t what helped strike gold for his net worth. Jobs actually made the billions in 1995—three years before the iMac hit shelves—after using an unexpected career roadblock to his advantage, with a little help from Tom Hanks and Tim Allen.
“To infinity and beyond!” wasn’t just the catchphrase of Toy Story’s Buzz Lightyear—it was the turning point that turned Steve Jobs into a billionaire.
After a power struggle that forced Jobs out of Apple in 1985, Jobs bought Lucasfilm’s computer graphics division the next year for $10 million. The seller was George Lucas, fresh off creating the Star Wars empire. That small acquisition would soon be renamed Pixar—and would change both Hollywood and Jobs’ fortune forever.
The company got off to a rocky start, with Jobs questioning whether to sell it multiple times, thanks in part to having to personally cover its monthly cash shortfall. But by 1995, Jobs believed Pixar was ready for primetime. In a week’s span in November, it would release its first major film, Toy Story, as well as launch an IPO.
Lawrence Levy, the company’s then-CFO, wrote that it reminded him of the 100-meter sprint in the Olympic Games: a lifetime of training that comes down to a snapshot performance.
“If the world fell in love with Toy Story, Pixar would have a chance to usher in a new era of animated entertainment,” he said in his book, To Pixar and Beyond: My Unlikely Journey With Steve Jobs to Make Entertainment History.
“If it didn’t, Pixar might be written off as another company that tried but never quite hit the mark.”
The IPO that made Jobs a billionaire
As the 80% owner of Pixar, the IPO stakes were even higher for Jobs. If everything went well, he was hoping to finally see some return on his Pixar investment. If everything went south, it might have shut the door on any future collaboration with Disney and led to the waste of a decade of his entrepreneurial life.
Luckily, all expectations were shattered. Pixar’s initial stock price was predicted to reach between $12 and $14, but at the end of the first day of trading, it was worth 175% more, at $39 a share. This was thanks largely to Toy Story, with Tom Hanks and Tim Allen as lead voices, nearly doubling its box office expectations. Jobs’ stake sent his net worth soaring to over $1 billion.
Jobs would later rejoin Apple in 1997, but he remained involved in Pixar as it churned out hit after hit, including Finding Nemo, The Incredibles, and Ratatouille—each bringing in hundreds of millions of dollars worldwide. Disney fully acquired Pixar for about $7.4 billion in stock in 2006. Jobs’ stake was worth about $4.6 billion.
Overall, Jobs’ willingness to follow his instincts with Pixar proves the age-old advice that one key to success is finding your passion—and putting all of your energy into it.
“No matter what you do next, the world needs your energy, your passion, your impatience with progress,” Apple CEO Tim Cook said in 2015. “History rarely yields to one person, but think and never forget what happens when it does.”
Finding fortune beyond their main companies
Jobs isn’t alone in being a business leader who gained significant wealth outside of what they’re primarily known for. Elon Musk has a similar story.
While the world’s richest person is known today for being the leader of Tesla and SpaceX, that’s not how he first amassed his fortune. Musk sold his first company, Zip2, to AltaVista for more than $300 million. He also made millions through the creation of PayPal, which formed from a merger of Musk’s online financial services company, X.com, with software company Confinity, cofounded by billionaire Peter Thiel.
Similarly, billionaire Richard Branson did not make all his money from being focused on his air and space companies, Virgin Atlantic and Virgin Galactic. The75-year-old British serial entrepreneur actually became a billionaire in part thanks to his chain of record stores called Virgin Records. It launched in 1971 and later expanded into a music label that featured artists like the Rolling Stones and Janet Jackson. Branson later sold Virgin Records in 1992 to British conglomerate Thorn EMI for $1 billion.
The good news? Walmart Inc. on Thursday reported another quarter of healthy sales growth. The bad news: Its profit fell short of Wall Street forecasts, in part because of how it is managing all the tariff uncertainty.
The massive big-box chain said that comparable U.S. sales in the quarter ended July 31 rose 4.6%, more than analysts expected and certainly much better than the 1.9% drop at its struggling rivalTarget. Still, its profit missed the mark slightly for a variety of reasons, including its decision to absorb the costs of tariffs on some items (though certainly far from all).
“With regards to our U.S. pricing decisions, given tariff-related cost pressures, we’re doing what we said we would do,” CEO Doug McMillon told investors on the company’s earnings call. “We’re keeping our prices as low as we can for as long as we can.” Also helping is that consumers have proved quite resilient, he added. “Their behavior has been generally consistent. We aren’t seeing dramatic shifts.”
To be sure, the impact of higher tariffs is just beginning to kick in at Walmart and other retailers. It’s still early, and tariff hikes are more likely to be felt later in 2025 as Walmart replenishes inventory. Walmart’s finance chief, John David Rainey, told investors that, in all, prices rose 1% in the U.S. during the quarter, and the retailer decided to take the hit to its margins on some goods, but pass them to consumers in the form of higher prices on others.
Rainey told CNBC that Walmart has been managing tariff hikes by accelerating imports from abroad and also offering temporary items, which the retailer calls “Rollbacks.” “This is managed on an item-by-item and category-by-category basis,” he told the news outlet. “There are certainly areas where we have fully absorbed the impact of higher tariff costs. There are other areas where we’ve had to pass some of those costs along.”
Indeed, Walmart is doing what McMillon said it would. In April, at its annual investor day in Dallas, the CEO said Walmart’s buyers know how to navigate periods of cost increases. “Some of the confidence that we’ve been expressing is really founded on: We know who these buyers are,” said McMillon at the time. “They have great tools to manage this long-standing supplier relationship, and we believe that they will execute well.” It helps that Walmart has enormous clout with vendors, which rely on the retailer for a big portion of their sales, and can persuade them to shoulder some of the burden.
That ability to shield customers and keep prices low are key reasons Walmart has been a top-performing retailer since President Trump announced higher tariffs on many trading partners this spring. (Tariff rates and target countries have shifted many times, adding to Walmart’s operational complexity.)
Walmart Inc., which also operates the Sam’s Club warehouse clubs and a big international business, raised its full-year sales forecast on the strength of the second quarter, and now expects sales to rise 3.75% to 4.75% this year, compared with a previous forecast of a 3% to 4% increase. And that will include the crucial holiday season.
That seems to confirm McMillon’s pledge in April that “there will be a Christmas, and people will celebrate Christmas, and they will buy items, and we will sell them those items.”
On a sweltering mid-August day in New York City, Eric Trump and Donald Trump Jr. swung open the doors to a boardroom at the Trump Organization. The two sons of President Donald Trump sat around a polished black stone table on the 25th floor of the Trump Tower. In between them sat Zach Witkoff, the son of real estate magnate Steve Witkoff who is serving as Trump’s special envoy to the Middle East.
They had assembled for a rare media interview. Alongside other advisors and executives, the trio wanted to promote World Liberty Financial, the company at the center of the Trump family’s lucrative crypto business, and its latest $1.5 billion deal. But first they had to rag on each other.
“He’s a man that I look up to,” Zach said of the 47th President. “He’s a man that I’ve named my first son Don after.”
Donald Jr. responded with mock outrage. “Wait, I thought it was…” he said, trailing off, implying that he thought it was he, not his father, that had inspired Zach’s name choice.
The banter continued as Chase Herro, a cofounder of the Trump family’s crypto business, weighed in with feigned sympathy: “It’s terrible that that’s how you find that out—in an interview.”
Jokes aside, the Trump sons, Zach, Herro and his business partner Zak Folkman occupy big shoes as the leaders of the Trump family’s crypto braintrust. Their job is to build out World Liberty Financial, which launched in October 2024, into a crypto behemoth—despite a deluge of apparent conflicts of interest.
As of now, World Liberty Financial has three main ventures: a stablecoin pegged to the U.S. dollar called USD1, a cryptocurrency called WLFI, and a publicly-traded company that holds WLFI. Those who purchase WLFI can help make future decisions about the development of World Liberty Financial products. The public company, meanwhile, was created by partnering with a onetime biotech firm, and exists primarily as a way for traditional investors who don’t use crypto exchanges to gain exposure to WLFI by buying shares.
The whole enterprise is a hit-spinning mix of tokens and financial alchemy. It’s also printing cash. World Liberty Financial announced in March that it had raised $550 million through direct sales of the WLFI token, while its USD1 stablecoin has reached a market capitalization of $2.2 billion—a pool of capital on which the Trump family business earns interest. Then there was the deal with the former biotech company, which resulted in investors raising another $1.5 billion to purchase WLFI tokens, a price that valued the overall token supply at a reported $20 billion.
Eric and Donald Jr. relayed details of these ventures in the spacious 25th floor boardroom overlooking Central Park. They have clearly become fluent in crypto, slinging around references to Bitcoin, Ethereum, and payment rails. More striking, though, was the sight of the polished Eric and Donald Jr. side-by-side with tattooed crypto natives.
Eric and Donald Jr., along with Zach, wore suits and blue ties. Then there was Herro, the crypto venture’s co-founder, who sported a light beige t-shirt and olive jeans, with what appeared to be a Greek statue inked on his right bicep and plenty of other tattoos. Folkman, wearing a black long sleeve shirt and sleek sweatpants, was likewise tatted up with an ink butterfly gracing his left hand along with other marks. World Liberty Financial, it seems, favors two uniforms: business formal or crypto leisure.
‘A little different than us’
The details of how the Trumps teamed up with a group of crypto veterans are still fuzzy, but the story begins on a golf course.
About two years ago, in the summer of 2023, Herro, a longtime crypto entrepreneur who once described himself as a “dirtbag of the internet,” scored an invite to the Shell Bay Club outside of Miami, a private golf club owned by the Witkoffs. Herro wouldn’t say who invited him but described his host as “a great young man” and friend of Donald Jr.
While Herro, clad in tattoos, was on the green, Zach happened to be driving by. “He could tell I was a little, like, out of my realm,” said Herro. “And he’s like, ‘Listen, you come ride with me.’ And literally, on the golf cart, we just started shooting the shit.”
The chance meeting blossomed into business ties. The Witkoffs introduced Herro and his longtime business partner Zak Folkman, who once ran a company called Date Hotter Girls, to the Trumps. And then the two families teamed up with Herro and Folkman, whom the moderator of a September livestream described as “two crypto punks” while announcing the venture.
Zak Folkman (left) shows off his World Liberty Financial tattoo next to Chase Herro (right).
Adam Gray—Bloomberg/Getty Images
During the same livestream, Zach’s father, Steve Witkoff, sought to reassure the audience, urging them not to judge this book by its cover.
“They look a little different than us. They dress a little different than us,” he said. “I met traders from all over the world and these guys are as smart as any currency traders I’ve ever met.”
Any unease over the contrasting sartorial standards of Trump-world and the crypto punks has, however, disappeared amid a rush of flourishing new business ventures. The Trumps and Witkoff brag that their stablecoin, USD1, is the “fastest growing stablecoin ever.” That may be true, though more than 90% of the stablecoin’s market cap was the result a mammoth deal with the world’s largest crypto exchange Binance. That deal entailed Binance receiving a $2 billion investment from an Abu Dhabi venture firm, and taking the payment in USD1. Zach announced the deal on May 1, and Binance has yet to convert the USD1, meaning World Liberty Financial continues to earn interest on the proceeds.
Now, the Trump family crypto venture, which numbers between 20 and 30 employees, has its sights on the launch of a crypto lending and borrowing protocol and an app for decentralized finance, or what those in crypto call DeFi. Folkman declined to say when those products would launch.
The rush of capital and Trump-branded crypto products has raised alarm bells among ethics experts, who argue that World Liberty Financial gives would-be seekers of presidential favor a direct line to his family’s pocketbook. When asked previously about the ethical quagmires, Eric Trump dismissed them. “I keep separation between the two,” he said, referring to his business relationships and relationship with his father. “But, I think he’d be proud of what we were doing.”
Zach, Herro, and Folkman are also proud of their crypto company. On the back of Herro’s neck was a tattoo of World Liberty Financial’s logo, a geometric eagle. Folkman had a similar tattoo on his left forearm. And Zach admitted he, too, had the tattoo. Apparently, it stemmed from a night out on the town, according to Matt Morgan, an advisor to the Trump family crypto project who was also in the boardroom.
When asked where his tattoo was, Zach was cagey. “He may or may not have a tramp stamp!” wisecracked Folkman, referring to a tattoo just above one’s backside.
Palantir Technologies has created one of the most dramatic stories on Wall Street this year, defying conventional investment narratives. In 2025, it became the top-performing stock in the S&P 500, surging over 106% and at points climbing 144% from the start of the year—outpacing even AI heavyweights like Nvidia. This explosive growth was fueled by its robust financial performance, notching its first billion-dollar quarter and momentum from government and commercial AI contracts.
However, Palantir’s meteoric rise has been followed by a brutal reversal. Over the last six trading sessions, Palantir shares plunged more than 17%, wiping out $73 billion in market capitalization and marking the largest drop since April. This tumble handed short sellers $1.6 billion in profits, Bloomberg reported, citing data from S3 Partners. (That figure is still dwarfed by the $4.5 billion paper losses that shorts racked up earlier in the year, S3 says.) In recent days, Palantir has also been the worst performer in the S&P 500, illustrating an extreme swing from hero to villain in the market.
The vicious short-seller report
Palantir’s dramatic stock moves followed fresh fire from short sellers, particularly Citron Research, led by Andrew Left. In a scathing report, Citron argued that Palantir’s stock was detached from its business fundamentals and sound analysis. It included a caricature of Palantir CEO Alex Karp in the royal court of OpenAI, titled “Your highness’s multiple,” laying out the case for Palantir having much farther to fall.
Citron’s thesis is that OpenAI, widely recognized as the leader in AI, is about to receive a $500 billion valuation with projected revenue of $29.6 billion in 2026, resulting in a price-to-sales ratio of nearly 17. By contrast, Palantir is forecasted to deliver $5.6 billion revenue in 2026. Applying OpenAI’s valuation multiple to Palantir would yield a stock price of just $40. (Citron showed their math, calculating that $5.6 billion multiplied by 17 would shoot up to a roughly $95 billion market cap, divided by 2.37 billion shares outstanding, yielding a $40-per-share valuation.) “It should be noted,” Citron writes, “that even at a 17x sales multiple, OpenAI has the highest multiple of any scaled SaaS stock in the world, and that number in itself is extreme. This means that at $40, PLTR would still be expensive.”
Short sellers like Left insist that Palantir’s business isn’t as scalable or as subscription-based as Wall Street prefers, in stark contrast to OpenAI. Palantir’s dependence on government deals introduces uncertainty and volatility, leading Citron to claim that the stock is unjustifiably expensive even after recent losses.
“OpenAI is creating a flywheel that Palantir lacks,” the report says, adding that the widening moat and cycle of growth, data, and scale is “reminiscent of Google in its prime.” Palantir, on the other hand, is more like a defense contractor, with real “stickiness,” but growth hinging on slow, customized contracts that don’t compound. “OpenAI is a self-reinforcing growth engine, while Palantir is essentially locked-in consulting wrapped in software.” Citron contrasted a chart of Palantir’s impressive, steady revenue growth with OpenAI’s skyrocketing results.
Best of times, worst of times
Palantir’s story in 2025 is a case study in market euphoria versus valuation reality. Fueled by speculative optimism about AI, its share price rapidly baked in years of expected growth. But as profit-taking sets in, momentum evaporates, and critical reports highlight the mismatch between price and fundamental value, fortunes can reverse just as quickly.
Even now, contrarian trading remains high—if Palantir rebounds, short interest is expected to return as investors closely watch future earnings, contract renewals, and the sustainability of its growth strategy. This extraordinary volatility means that Palantir, in 2025, is the top-performing and worst-performing stock—at the same time.
Palantir’s swings also come against the backdrop of a wider “tech sell-off” in markets following reports that the AI revolution isn’t materializing as planned. A sweeping MIT report found that despite tens of billions of investment, 95% of generative AI pilots at companies are failing.
OpenAI CEO Sam Altman himself rattled markets by using the B-word: bubble. Citron remarked with interest: “This morning, we read that Sam Altman stated the AI market is in a bubble. Altman isn’t shorting Palantir—he’s simply telling the truth. The market is frothy, and no one knows it better than the man who built the most valuable AI company in the world.”
Palantir did not immediately respond to a request for comment.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
OpenAI is on the brink of becoming the world’s most valuable private company, anticipated toreach a $500 billion valuation after a $6 billion planned shares sale. But its cofounder and CEO, Sam Altman, won’t be shooting up the billionaire list for the major accomplishment—he currently holds zero equity in the AI company, earning an annual salary of $76,001. Instead, the bulk of his $1.9 billion fortune comes from his early investments in industry titans, including Reddit, Uber, Asana, and Airbnb.
The AI race is one of the hottest business wars this decade, with the market expected to be worth $4.8 trillion by 2033. And OpenAI has been a front-runner in the fierce battle, with ChatGPT amassing a staggering 800 million active users, according to CEO Sam Altman.
It’s now on the cusp of becoming the world’s most valuable company, with talks to sell $6 billion in shares that would push its valuation to $500 billion—up from its $300 billion appraisal in March after a $40 billion infusion from backers like Microsoft and SoftBank. That leap would see OpenAI overtake Elon Musk’s SpaceX, which currently tops all other private companies at $350 billion.
However, even if OpenAI pulls off the envy-worthy valuation, you probably won’t catch Altman shooting up the billionaires list off the back of it. The CEO currently earns a salary of $76,001, up slightly from $73,546 in 2022, for leading the pioneering tech company. The billionaire tech boss said he makes “whatever the minimum for health insurance is,” according to the New York Times—but more surprisingly, owns zero equity in OpenAI.
At one point he owned a “quite insignificant” indirect stake in the company through a Sequoia-backed VC fund associated with Y Combinator. But an OpenAI spokesperson told TechCrunchthat the share was reportedly less than a fraction of a percent, and has already been sold for an undisclosed amount.
Altman’s lack of equity is quite unusual; most CEOs have some skin in the game, standing to make big wins or crushing losses depending on how they lead their companies. But he has other tricks up his sleeve to bring home the bacon.
Fortune reached out to OpenAI for comment.
Altman is a billionaire with a $76,001 salary. Here’s how he makes his fortune
Just because Altman doesn’t own a part of OpenAI, doesn’t mean he’s living paycheck-to-paycheck on his modest CEO salary. The 40-year-old tech entrepreneur currently boasts a net worth of $1.9 billion—starkly lower than the CEO of the company he’s trying to outpace, as Musk sits on a $410 billion fortune. But he’s still amassed a sizable nest egg thanks to his diverse investments across several industries.
Altman is a major backer of Helion Energy, a nuclear fusion startup where he poured in a $375 million personal investment and currently serves as chairman. He’s supported biotech company Retro Biosciences with a $180 million investment, and also participated in funding rounds for Musk’s brain-computer interface maker Neuralink.
Aside from these science- and tech-focused firms, Altman was also an early backer of productivity management platform Asana and Reddit, serving as a board member of the latter until 2022. His stake in Reddit was estimated to be worth $600 million after the platform’s IPO.
The OpenAI CEO also made a lucky early infusion of $100,000 in Airbnbback in 2008 when the company was in its short-term-rental infancy. Plus, there was his early $100,000 investment in Uber—which today is worth $194 billion.
Altman also financially supported creator monetization platform Patreon, even putting his money toward other AI-focused companies including $35 billion titan Humane.
After nearly a decade of steering Y Combinator from 2011 to 2019, Altman got firsthand insight into what gets funded, what crashes out, and what can actually scale. The millennial billionaire’s diverse portfolio of investments spans transformational technology, nuclear energy, fintech, and social platforms. All the holdings he controlled up to early 2024 were estimated to be worth at least $2.8 billion, according to reporting from the Wall Street Journal. The OpenAI CEO said his venture funds had invested in more than 400 companies, as of last year.
OpenAI CEO Sam didn’t build his fortune off his modest CEO salary—the tech titan’s $1.9 billion net worth is thanks to early investments in Uber, Airbnb, Reddit and more.
McDonald’s has been criticized in recent years by price-conscious customers. CEO Chris Kempczinski recently admitted the menu has gotten too expensive. The fast-food chain reached an agreement with its U.S. franchises to price eight popular combo meals at 15% less than the total cost of buying the items separately, which will go into effect next month.
McDonald’s has been struggling to hold on to its low-cost image. Now fast food’s largest brand is trying to fix what many of its customers have been saying for months: Combo meals cost too much.
The global fast food chain that built its customer base on affordability is slashing its combo meal prices. The move comes just weeks after CEO Chris Kempczinski admitted the menu has gotten too expensive.
McDonald’s and its U.S. franchises reached an agreement to price eight popular combo meals at 15% less than the total cost of buying the items separately, The Wall Street Journal first reported, citing people involved in the discussions. The lower prices will go into effect next month. McDonald’s will also reintroduce its “Extra Value Meals” branding with a $5 breakfast deal and an $8 Big Mac and McNugget special later this year, according to the report.
McDonald’s did not immediately respond to Fortune’s request for comment.
On a recent earnings call, Kempczinski said consumers’ value perceptions are most influenced by core menu pricing.
“Too often… you’re seeing combo meals priced over $10, and that absolutely is negatively shaping value perceptions,” Kempczinski said.
Kempczinski added the “single biggest driver” of what shapes a consumer’s overall perception of McDonald’s value is the menu board.
“We’ve got to get that fixed,” he said.
Over the past couple years, McDonald’s has been criticized online for its prices by value-conscious customers. A 2023 post on X about an $18 Big Mac combo meal went viral, igniting debate that the fast food chain had become too expensive. The post even elicited a response from the president of McDonald’s USA, who said the price of the meal was an “exception,” and the chain’s prices haven’t outpaced inflation.
McDonald’s decision to slash prices on core combo meals signals more than a marketing shift as the brand recognizes economic strains are affecting business.
In May, Kempczinski said the company’s U.S. first quarter traffic this year from low-income consumers declined by “nearly double digits,” and middle-income consumer traffic fell by almost the same amount. He added traffic growth from high-income consumers “remains solid, illustrating the divided U.S. economy where low- and middle-income consumers, in particular, are being weighted down by the cumulative impact of inflation and heightened anxiety about the economic outlook.”
Despite the company’s U.S. comparable sales falling 3.6% in the first quarter—its worst showing since the pandemic—winning strategies like themed meals, including a recent collaboration with “A Minecraft Movie,” have lifted sales in the second quarter after two consecutive quarters of decline.
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