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Economics

Is the most powerful teachers union in America overreaching?

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As election-night parties go, the mood was bleak. On March 19th primary-election voters in Chicago were asked to vote on a ballot measure that would have raised the transfer tax on properties worth over $1m so as to generate money to pay for homelessness relief. The measure was backed by the city’s entire progressive establishment. Its opponents, mostly from the real-estate industry, did not even bother to organise a rival event. And yet by 9pm on election night, “No” was leading by around eight percentage points. “Let’s just pretend,” said Myron Byrd, from the Chicago Coalition for the Homeless, an activist group, mournfully, before he belted out a song he had wanted to perform to celebrate victory. The party ended with chants of “we will not give up”, long after most attendees gave up and left.

The defeat of the “Bring Chicago Home” measure was crushing for Chicago’s mayor, Brandon Johnson, who had heavily promoted it. But it is perhaps an even bigger defeat for his former employer, the Chicago Teachers Union (ctu), which put $400,000 and the organising work of its 28,000 members into getting a Yes vote. In the past decade or so, the union has become one of the most powerful in the country by adopting a model of radical left-wing political organising. From 2022 to the end of last year it put $2.3m into Mr Johnson’s campaign fund. Its support helped elevate Mr Johnson, previously an unknown county commissioner, into office. This year it hopes to reap the spoils—the teachers’ contract is up for renewal. But is the union overreaching?

The ctu’s transformation began over a decade ago, when Rahm Emanuel was mayor. On coming into office and discovering a huge hole in the teachers’ pension scheme, Mr Emanuel cancelled a pay rise and took a hardline approach to negotiation. In 2012 incensed teachers went on strike for the first time in 25 years. In 2013 he then began a deeply controversial programme to close 50 of the city’s public schools, further invigorating the union’s organising efforts. After another strike in 2019, by last year it had developed the confidence to help push out Mr Emanuel’s successor, Lori Lightfoot.

With Mr Johnson in office, the ctu is in an enviable position. Instead of dealing with somebody like Ms Lightfoot or Mr Emanuel, this year teachers will negotiate with their own union’s former lobbyist. They expect a payoff. In early March the Illinois Policy Institute (IPI), a right-leaning think-tank, leaked the union’s early negotiating proposals. Among the suggestions were that teachers ought to get “cost of living” pay increases of 9% a year, subsidised housing, more generous pensions, and health insurance with smaller copays. The union also wants every school in the city to be guaranteed a librarian and more staff of all sorts to be hired. “They can demand almost anything under the sun,” says Austin Berg, of the IPI.

Johnson’s choice

The union sees this as only what it is due. At its head is Stacy Davis Gates, a former history teacher who says she was radicalised by school closures. Ms Davis Gates takes a no-compromise approach to politics. In a speech to bigwigs at the City Club on March 5th she told journalists wondering about how the district would pay for her union’s proposals to “stop asking that question”. She also discussed the toll it took on her mental health to have it revealed she sends her teenage son to a private Catholic school, rather than a public one. At the end of the speech she finally offered a figure for the cost of her proposals: “$50bn and three cents”.

The trouble is there is no more money. This year the budget amounts to $29,000 per pupil. Such spending is possible only thanks to a huge slug of federal covid-relief funding. By 2026 the school district projects it will have a deficit of $691m even before the costs of a new contract. It cannot raise its property tax any faster. A state bailout is unlikely, says Hal Woods of Kids First Chicago, a charity. That leaves only the equally cash-strapped city. Even some once sympathetic to the ctu are nervous. “They are trying to solve the bad policy decisions of the past two or three decades by just throwing money at it,” says Stephanie Farmer, an academic at Roosevelt University. “It makes me very disappointed.”

What Chicago’s schools actually need is reform. As things are, even large sums of money do not go especially far. One of the biggest problems is that there are simply too many schools. Over the past two decades enrolment has shrunk by over a quarter, even as new charter schools opened. Over a third of the city’s schools are operating at below 50% capacity. A few high schools have less than 10% of the number of students they were built for. Oversized schools cost huge sums to run even as they have to skimp on services (like librarians). Closing them would be fiercely unpopular, but the ctu’s solution in essence amounts to staffing them all as though they are full.

In the negotiations Mr Johnson has a choice. If he simply pays up, he will have to starve the rest of the city’s services to pay for it. The alternative is defying those who put him into office. And yet in a way, the results of the Bring Chicago Home ballot measure could make that easier. In the mayoral race last year, when asked about how he would negotiate with the teachers, Mr Johnson replied, “who better to deliver bad news to friends than a friend?” That becomes a lot easier if your friend suddenly seems a lot less popular.

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Economics

Consumer sentiment worsens as inflation fears grow, University of Michigan survey shows

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A shopper pays with a credit card at the farmer’s market in San Francisco, California, US, on Thursday, March 27, 2025. 

Bloomberg | Bloomberg | Getty Images

The deterioration in consumer sentiment was even worse than anticipated in March as worries over inflation intensified, according to a University of Michigan survey released Friday.

The final version of the university’s closely watched Survey of Consumers showed a reading of 57.0 for the month, down 11.9% from February and 28.2% from a year ago. Economists surveyed by Dow Jones had been expecting 57.9, which was the mid-month level.

It was the third consecutive decrease and stretched across party lines and income groups, survey director Joanne Hsu said.

“Consumers continue to worry about the potential for pain amid ongoing economic policy developments,” she said.

In addition to worries about the current state of affairs, the survey’s index of consumer expectations tumbled to 52.6, down 17.8% from a month ago and 32% for the same period in 2024.

Inflation fears drove much of the downturn. Respondents expect inflation a year from now to run at a 5% rate, up 0.1 percentage point from the mid-month reading and a 0.7 percentage point acceleration from February. At the five-year horizon, the outlook now is for 4.1%, the first time the survey has had a reading above 4% since February 1993.

Economists worry that President Donald Trump’s tariff plans will spur more inflation, possibly curtailing the Federal Reserve from further interest rate cuts.

The report came the same day that the Commerce Department said the core inflation rate increased to 2.8% in February, after a 0.4% monthly gain that was the biggest move since January 2024.

The latest results also reflect worries over the labor market, with the level of consumers expecting the unemployment rate to rise at the highest level since 2009.

Stocks took a hit after the university’s survey was released, with the Dow Jones Industrial Average trading more than 500 points lower.

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Economics

PCE inflation February 2025:

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Core inflation in February hits 2.8%, hotter than expected; spending increases 0.4%

The Federal Reserve’s key inflation measure rose more than expected in February while consumer spending also posted a smaller than projected increase, the Commerce Department reported Friday.

The core personal consumption expenditures price index showed a 0.4% increase for the month, putting the 12-month inflation rate at 2.8%. Economists surveyed by Dow Jones had been looking for respective numbers of 0.3% and and 2.7%.

Core inflation excludes volatile food and energy prices and is generally considered a better indicator of long-term inflation trends.

In the all-items measure, the price index rose 0.3% on the month and 2.5% from a year ago, both in line with forecasts.

At the same time, the Bureau of Economic Analysis report showed that consumer spending accelerated 0.4% for the month, below the 0.5% forecast. That came as personal income posted a 0.8% rise, against the estimate for 0.4%.

Stock market futures moved lower following the release as did Treasury yields.

Federal Reserve officials focus on the PCE inflation reading as they consider it a broader measure that also adjusts for changes in consumer behavior and places less of an emphasis on housing than the Labor Department’s consumer price index. Shelter costs have been one of the stickier elements of inflation and rose 0.3% in the PCE measure.

“It looks like a ‘wait-and-see’ Fed still has more waiting to do,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “Today’s higher-than-expected inflation reading wasn’t exceptionally hot, but it isn’t going to speed up the Fed’s timeline for cutting interest rates, especially given the uncertainty surrounding tariffs.”

Good prices increased 0.2%, led by recreational goods and vehicles, which increased 0.5%. Gasoline offset some of the increase, with the category falling by 0.8%. Services prices were up 0.4%.

The report comes with markets on edge that President Donald Trump’s tariff intentions will aggravate inflation at a time when the data was making slow but steady progress back to the Fed’s 2% goal.

After cutting rates a full percentage point in 2024, the central bank has been on hold this year, with officials of late expressing concern over the impact the import duties will have on prices. Economists tends to consider tariffs as one-off events that don’t feed through to longer-lasting inflation pressures, but the encompassing scope of Trump’s tariffs and the potential for an aggressive global trade war are changing the stakes.

Correction: Consumer spending increased 0.4% in February. An earlier headline misstated the number.

This is breaking news. Please refresh for updates.

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Economics

Young Americans are losing confidence in economy, and it shows online

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For economists, harbingers of a recession can include a slowdown in consumer spending and rising unemployment.

For the chronically online, indicators can range from the perceived fall of fake eyelashes to more commercials for online colleges. Or, maybe, it’s a skin care company selling eggs.

And for Sydney Brams, a Miami-based influencer and realtor, it’s a decline in prices on clothing resale platform Depop.

“I was literally running to my parents and my boyfriend, and I’m like, ‘Look at this. Look, something is very wrong,'” Brams told CNBC after seeing some Depop sellers “come back to Earth,” as she described it. “I feel like Chicken Little.”

Making a joke of so-called recession indicators in everyday life has gained traction in recent weeks as the stock market pullback and weak economic data raised anxiety around the health of the economy. This trend also underscores the uniquely sharp sense of financial dissatisfaction among America’s young adults.

Read more CNBC analysis on culture and the economy

Many of today’s young adults experienced childhood during the Great Recession and came of age as the pandemic threw everything from in-person work to global supply chains out of orbit. Now, they’re concerned about what’s been deemed a white-collar job market slowdown and President Donald Trump’s on-again-off-again tariff policies — the latter of which has battered financial markets in recent weeks.

To be clear, when they share their favorite recession indicators, they’re kidding — but they don’t see the future path of the U.S. economy as a laughing matter.

“It’s gallows humor,” said James Cohen, a digital culture expert and assistant professor of media studies at Queens College in New York. “This is very much a coping mechanism.”

These omens can be found across popular social media platforms such as X, TikTok and Instagram. Some users see cultural preludes to a recession in, say, Lady Gaga releasing her latest album or the quality of the new season of HBO’s “The White Lotus.” Others chalk up social trends such as learning to play the harmonica or wearing more brown clothing as forewarnings of a financial downturn on the horizon.

Social media users Sydney Michelle (@sydneybmichelle), left; Celeste in DC (@celesteiacevedo), and Sulisa (@ssclosefriendstory) share their personal “recession indicators” on TikTok.

Courtesy: Sydney Michelle | Celeste in DC | Sulisa | via TikTok

Just last week, several social media users saw a slam-dunk opportunity to employ variations of the joke when DoorDash announced a partnership with Klarna for users to finance food delivery orders. A spokesperson for Klarna acknowledged to NBC News that people needing to pay for meals on credit is “a bad indicator for society.”

Some content creators have made the humor an entry point to share budget-friendly alternatives for everyday luxuries that may have to go if wallets are stretched.

“We are heading into a recession. You need to learn how to do your nails at home,” TikTok user Celeste in DC (@celesteiacevedo) said in a video explaining how to use press-on nail kits as opposed to splurging at a salon.

Declining confidence

These jokes don’t exist in a vacuum. Closely followed data illustrates how this trend reflects a growing malaise among young people when it comes to the economy.

At the start of 2024, 18-to-34-year-olds had the highest consumer sentiment reading of any age group tracked by the University of Michigan. The index of this group’s attitude toward the economy has since declined more than 6%, despite the other age cohorts’ ticking higher.

This switch is particularly notable given that young people have historically had stronger readings than their older counterparts, according to Joanne Hsu, director of the Surveys of Consumers at Michigan.

A typically cheerier outlook can be explained by younger people being less likely to have additional financial responsibilities, such as children, Hsu said. But she added that this age bracket is likely grappling with rising housing costs and debt right now, while also feeling uncertainty tied to economic policy under the new White House.

“I have a suspicion that young people are starting to feel like — or have been feeling like — many markers of the American dream are much more difficult to reach now,” Hsu said.

Young people are also less likely to have assets such as property or investments that can buoy financial spirits when the economy flashes warning signs, according to Camelia Kuhnen, a finance professor at the University of North Carolina.

The potential for a recession, which is broadly defined as at least two consecutive quarters of the national economy contracting, has been on the minds of both Wall Street and Main Street. A Deutsche Bank survey conducted March 17-20 found the average global market strategist saw a nearly 43% chance of a recession over the next 12 months.

An index of consumer expectations for the future released Tuesday by the Conference Board slid to its lowest level in 12 years, falling well below the threshold that signals a recession ahead. Meanwhile, Google searches in March for the word “recession” hit highs not seen since 2022.

This onslaught of news comes after Treasury Secretary Scott Bessent said on March 16 that there were “no guarantees” the U.S. would avoid a recession. Bessent said a “detox” period is needed for the national economy, which he and other Trump administration officials have argued is too reliant on government spending.

‘The vibes are off’

Though the recession humor has had a yearslong history online, it’s gained momentum in recent weeks as the state of the economy has become a more common talking point, according to Cohen, the Queens College professor. While a recession indicator entry was added to the digital culture encyclopedia Know Your Meme only this month, the jokes have tracked back to at least 2019.

“Especially with Gen Z, there’s a lot of jokes with never being in a stable economic environment,” said Max Rosenzweig, a 24-year-old user experience researcher whose personal recession indicator was the number of people he’s seen wearing berets. “It’s funny, but it’s like, we’re making light of something that is scary.”

Cohen said he heard from Gen Z students that this type of humor helped them realize others are experiencing the same uncertainty. These students may not feel control over the country’s economic standing, he said, but they can at least find community and levity in a precarious moment.

Cohen sees the recent surge of this humor as a sort of “barometer” for what he calls the vibes around the economy. His conclusion: “The vibes are off.”

Brams sees a similar story playing out in South Florida and on social media. “I’m not going to lie, it just feels really grim,” the 26-year-old said.

But, “it’s not anything that me or my friend or my boyfriend or my parents can really do anything about,” she said. “There’s no choice but to just stay in your lane, try to keep your job, try to find joy where you can and just stay afloat.”

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