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A parent wants to see their kid make it in life. Maybe that’s going to a good school. Maybe it’s curing some disease or making it to the big leagues. And a parent wants to help with that journey—after all, it’s a parent’s obligation to care for their child. But how that care looks like has changed over time. It once simply meant school pickups and weekend soccer games, then college savings and late-night financial advice calls. But for many parents today, that support stretches far beyond childhood, following them well into adulthood.

A new study from financial services firm Northwestern Mutual reveals that parents are stepping in on one essential step for achieving the American dream: the down payment. The survey—conducted through more than 4,300 online interviews in January—found that more than half of parents, or 52%, are open to considering helping their kid buy a home—and 22% have already stepped in. 

Some parents are even rethinking the critical steps to ensuring their children have a shot at generating wealth. Twenty-nine percent of parents think helping their kid buy a home is more important than helping them pay for college, and more than half (55%) say it’s a toss-up for either one.

“A lot of these degrees are maybe not as valuable as they once were,” Ed Amos, wealth management advisor at Northwestern Mutual, told Fortune. “Having flexibility in those dollars is what parents are looking for.”

The value proposition of a four-year college degree is falling. Recent college grads are facing recessionary circumstances: 5.6% unemployment, surpassing the rate for all workers. And underemployment, or the share of graduates working in jobs that typically do not require a college degree sits at 42.5%. 

And the vibes are dire. AI is threatening a white-collar recession, which is expected to hit recent grads hardest. At the same time, home prices are skyrocketing. Homeownership—the ultimate promise of the modern American dream—is growing out of reach for young people. The average age of the first-time homebuyer hit 40 last year, up from the early 30s just a decade ago as the median home price tops $410,000 today.

Betting on bricks, not degrees

As some parents hesitate to shell out the almost $500,000 price tag attached to what a college degree could cost today, others are rethinking how they can position their children for financial success later in life. Amos said some parents he’s worked with are betting on homeownership as a key tool to ensuring their investments are well placed. One family he worked with, for example, helped their child buy a duplex while still in college, allowing their kid to live in one unit and rent out the other to pay down the mortgage, and ultimately build up equity before even entering the full-time workforce.

“The benefits of starting that wealth building early in life has tremendous impacts on where their children will be over the next few decades,” Amos said.

Yet Gen Z is finding itself in an increasingly precarious position. Young people today are left with crumbs of wealth compared to their Boomer and Gen X parents. Boomers today hold more than $86 trillion in assets, according to Federal Reserve data, more wealth than any other living generation. Gen X holds a significant slice of the economic pie too, with close to $44 trillion. That’s more than three-quarters the $167 trillion in total U.S. wealth. 

“It’s becoming less and less accessible to the entry-level employee straight out of college, trying to buy their first home,” Amos said. “It’s just becoming more and more difficult for these newer generations to do it on their own.”

High stakes gambling

With most of the country’s wealth locked away from Gen Z, many in the generation are looking for new and creative entry points into wealth generation. The Northwestern Mutual study found that Gen Zers are turning to high-risk, speculative assets for a shot at generating wealth. Nearly one-third of Gen Z have either invested in, or considered investing in crypto. One-third has also dabbled with the idea of, or are actively engaged in sports betting and prediction markets. And about 14% have placed their bets on meme stocks, or those viral stocks like GameStop popularized by communities like Reddit’s r/wallstreetbets subreddit—which now boasts over 4 million members—infamous after investors drove up the GameStop stock in 2021.

While these speculative bets paint a picture of a generation’s frantic scramble for financial footing, Amos said the most sustainable path to the American dream requires Boomers to hand over their wealth via more traditional assets like real estate. 

“Helping usher in that transfer sooner than passing will allow everyone to be able to share in that American dream,” he said.

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Colombian President Gustavo Petro has been designated a “priority target” by the U.S. Drug Enforcement Administration as federal prosecutors in New York probe his alleged ties to drug traffickers, according to people familiar with the matter and records seen by The Associated Press.

DEA records show Petro has surfaced in multiple investigations dating to 2022, many based on interviews with confidential informants. The alleged crimes the DEA has investigated include his possible dealings with Mexico’s Sinaloa cartel, a scheme to leverage his “total peace” plan to benefit prominent traffickers who contributed to his presidential campaign. The records also suggest the use of law enforcement to smuggle cocaine and fentanyl through Colombian ports.

The “priority target” label is reserved for suspects DEA deems to have a “significant impact” on the drug trade.

An inquiry in early stages

In recent months, prosecutors in Brooklyn and Manhattan have been questioning drug traffickers about their ties to Petro and specifically about allegations the Colombian president’s representatives solicited bribes to block their extradition to the United States, according to a person with knowledge of the inquiry who wasn’t authorized to discuss the ongoing inquiry and spoke to The Associated Press on condition of anonymity.

The person said it wasn’t clear whether federal prosecutors have implicated Petro in any crime.

The investigation is focusing at least in part on allegations that representatives of Petro solicited bribes from drug traffickers at the Colombian jail La Picota in exchange for a promise that they not be extradited to the U.S., one of the people said.

A spokesperson for the Colombian presidency declined to comment on the ongoing investigations into Petro or the subsequent legal proceedings.

Petro has consistently denied allegations of drug trafficking, particularly after Trump labeled him an “illegal drug leader” and the Treasury Department sanctioned him in late 2025 for alleged ties to the trade without offering evidence. Petro maintains that, while his administration aggressively targets major cartels, it remains focused on a more lenient, social-based approach for peasant farmers who cultivate coca leaf.

The federal inquiry was reported earlier Friday by The New York Times.

Petro came under scrutiny through the course of drug trafficking investigations by New York authorities that led them to identify him as a subject, according to another person familiar with the matter.

The inquiries into Petro are in the early stages, and it is not clear whether they will result in charges, this person said, adding the White House has had no role in the investigations.

Family members under scrutiny

Petro, a former rebel leader, soared into office promising to reduce the country’s dependence on fossil fuels and reallocate state resources to addressing entrenched poverty.

A leftist politician known for winding sometimes incoherent speeches, he has regularly criticized the Trump administration over its support for Israel, bombing of drug boats in the Caribbean and likened the White House migration crackdown to “Nazi” tactics.

After one such outburst, at a pro-Palestinian demonstration outside the United Nations headquarters in New York, Trump retaliated by revoking Petro’s U.S. visa. He also briefly slapped high tariffs on Colombia over Petro’s refusal to accept deportation flights from the United States.

But more recently the two have shown signs of getting along. After a meeting at the White House in February, Trump described Petro as “terrific.”

Colombian authorities have for years been investigating members of Petro’s family for possible criminal acts.

His son, Nicolás Petro, was charged in 2023 with soliciting illegal campaign contributions from a convicted drug trafficker to fund a lavish lifestyle of expensive cars and homes. The younger Petro has pleaded not guilty and his father has said none of the money was used to fund his campaign.

The president’s brother, Juan Fernando Petro, has also been implicated in secret negotiations that allegedly took place with imprisoned drug traffickers to shield them from extradition to the U.S. in exchange for their disarmament.

Politics and cocaine

Politics in Colombia have long been tainted by cocaine, of which it is the world’s largest supplier. In the 1980s, drug lord Pablo Escobar was elected to the country’s Congress with the support of one of Colombia’s most traditional parties. A decade later, his rivals from the Cali cartel flooded the presidential campaign of Ernesto Samper with illegal donations.

The now defunct urban guerrilla group Petro belonged to, the 19th of April Movement, has long been suspected of taking money from Escobar’s Medellin cartels as part of its deadly siege of the Supreme Court in 1985. Petro did not participate in the attack, which left several guerrillas and around half the high court’s magistrates dead. Leaders of the group have always denied any links to the cartel.

___

Durkin Richer reported from Washington. Goodman reported from Miami. Mike Sisak contributed from New York and Astrid Suárez from Bogotá, Colombia.

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The Middle East’s thriving luxury sector isn’t immune to the war in Iran, and CEOs of top brands have their eyes on the region.

“Clearly, we look close and every day on the situation,” Hugo Boss CEO Daniel Grieder said during an earnings call earlier this month. “It has a direct impact on store opening and store performance because there’s not many tourists or less tourists shopping. That’s clear. That has an effect on the shopping centers and so forth and for all the brands.”

A recent Bernstein Research report forecasted luxury sales in the Middle East would fall by 50% this month, primarily a result of a decline in traffic and tourism.

Still, it’s too early to say what the overall impact of the conflict will be, Grieder said, adding that the German designer brand has not yet seen any fallout. Executives at Prada and Salvatore Ferragamo have shared similar sentiments in recent calls with investors.

The Middle East region makes up about 6% of the world’s luxury market, but is among the fastest-growing geographies, with sales growing 6% to 8% organically, Bernstein reported. That’s compared to an otherwise stagnant sector.

“If the war was to end relatively shortly, this would not be a huge issue for the global luxury goods in the states,” Luca Solca, senior analyst of luxury goods at Bernstein, told Fortune. “If the war was to continue, then I think if oil and gas prices were staying high, then I think there would be a higher probability of a recession.”

The expanding luxury market in the Middle East

Luxury brands have grown deep roots in the Middle East, particularly in airports in Dubai, Doha, and Abu Dhabi. According to Bernstein, Dior and Gucci, which each get 20% of sales, excluding beauty and multi-brand stores, from the region.

The high-end market has grown along with the area’s wealth. From 2019 to 2022, the ultra-wealthy in the Middle East and North Africa saw their wealth double, per a 2023 OxFam report. The richest 106,080 people (making up 0.05% of the population) saw their wealth swell 75% from $1.6 trillion to $3 trillion in that span.

The wealth from these high-net-worth individuals has helped to drive the expansion of luxury sectors in the area. RBC Capital analyst Tom Narayan told Fortune these wealthier buyers are willing to splurge on the more expensive, top-of-the-line models, such as luxury supercars, making them a lucrative customer base for high-end brands.

“It’s certainly the high-margin region,” Narayan said, “meaning the cars they sell in the Middle East are more profitable versus the cars they sell outside that region.”

When luxury brands should begin to worry

Some brands are already shifting focus away from their usually reliable Middle East buyers. Ferrari and Maserati have temporarily halted shipments to the region, the companies said earlier this week.

To be sure, the Middle East accounted for just 4.6% of Ferrari’s 2025 global shipments, and Narayan said the automakers should be able to make up for lost deliveries in other markets, such as in Europe.

Still, consequences of a prolonged war loom. Bernstein said an ongoing conflict could throttle travel to the region, which is responsible for 30% of sales. Higher oil and gas prices, as well as concerns of a recession or fear of terrorist threats could also drive lower sales.

While President Donald Trump has signalled the conflict could last about a month, some analysts predict oil prices could remain elevated through 2027, making travel more expensive and adding economic pressures on consumers.

“Higher energy prices could potentially make global recession more likely,” Solca said. “If that materialized, then, of course, we would have a ricochet on discretionary sectors, and luxury is one of those. So we cannot take a global recession lightly.”

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Chuck Norris, dead at 86, was a certain type of hairy 1980s American man. For the uninitiated, here are a few jokes that Gen Xers and millennials used to make in middle school about the all-American martial arts star of their youth. You can still see some shared on social media: The flu gets a Chuck Norris shot every year. The chief export of Chuck Norris is pain. There is no chin behind Chuck Norris’ beard, only another fist. And perhaps most timely for our world today: Chuck Norris doesn’t worry about high gas prices, his vehicles run on fear.

The legendary martial arts master and actor died on Friday, after years of being the epitome of toughness and dodging death with jokes that ludicrously snowballed with higher stakes of death-defying physical and mental fortitude.

The Walker, Texas Ranger star first gained notoriety for his physical command as a martial artist, eventually working his way into Hollywood as an action film star in the late 1970s. Outside of playing the title character on Walker, Texas Ranger on CBS from April 1993, to May 2001 (in which he played a gun-totting, no-nonsense lawman), he was the lead in a string of action movies, famously starring opposite Bruce Lee in The Way of the Dragon—his debut screen role, where he played a thug opposite Lee’s hero trying to save his family’s restaurant in Rome) and even turned to thrillers before he took a break from acting. But he still maintained his tough persona throughout the years, posting on Instagram just 10 days ago “I don’t age. I level up,” and sharing a video of him boxing on his 86th birthday. 

But his physical and mental fortitude weren’t the only things the action star is known for: he’s amassed a $70 million fortune in his five-decade long career, and has poured significantly into giving back to the community. But most strikingly, he stayed true to his ever-increasingly tough-guy persona by offering CBS an offer they couldn’t refuse after taking on the network for refusing to honor their contract.

A $70 million fortune

Norris built one of Hollywood’s most unlikely financial empires— starting with nothing and eventually amassing an estimated net worth of $70 million. His rise from a $12-a-week laborer to a global action icon tracks as closely with discipline as it does with dollars.

His early film paychecks were modest by any standard. Norris earned just $10,000 for his 1976 debut Breaker! Breaker!, which jumped to $40,000 for Good Guys Wear Black the following year, then $125,000 for A Force of One in 1978, and $250,000 for An Eye for an Eye by 1980. His salary exploded, however, when he landed the starring role in Walker, Texas Ranger, where he commanded $375,000 per episode across 203 episodes—a figure that dwarfed every other cast member on the show.

Despite that hefty per-episode rate, Norris alleged he wasn’t getting his full cut. In 2018, he filed a lawsuit against CBS claiming the network owed him more than $30 million in profits from Walker, Texas Ranger. His contract had entitled him to 23% of all profits, but Norris argued CBS structured the show’s distribution deals—including streaming revenue going back to 2004—in ways that deliberately avoided triggering the profit-sharing clause. At the time of the suit, the series had generated over $692 million in total revenue, making the alleged shortfall all the more striking. The case was settled in July 2023 for an undisclosed amount, with CBS issuing only a brief statement that “the parties have resolved the dispute”.

Beyond the courtroom, Norris’s current income draws from a wide range of sources—including endorsement deals, real estate, and his brand ventures—putting his estimated annual earnings at around $30 million.

Off the balance sheet, Norris has poured significant energy into giving back. In 1990, he founded Kickstart Kids, originally called the Kick Drugs Out of America Foundation, which provides free martial arts and character development programs to middle and high school students. Launched in four Houston-area schools with the support of President George H.W. Bush in 1992, the program now operates in 58 schools across Texas, has served over 120,000 students since its inception, and currently enrolls approximately 8,349 students annually. Norris himself has said the program teaches kids “how to make good decisions,” and research tied to it shows participants demonstrate higher self-esteem, lower drug use, and less violence.

“He lived his life with faith, purpose, and an unwavering commitment to the people he loved,” wrote his family in an Instagram post announcing his death. “Through his work, discipline, and kindness, he inspired millions around the world and left a lasting impact on so many lives.”

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On March 18, the U.S. House voted 211–207 to advance a Balanced Budget Amendment — far short of the two-thirds majority required to pass it. The same day, total federal debt surged past $39 trillion, or 125% of GDP. That’s up from $5.7 trillion, or 55% of GDP in 2000. On March 19, the Trump administration confirmed plans to seek up to $200 billion in supplemental funding for its war against Iran.

In the face of such numbers, the U.S. House of Representatives failed on March 18 to pass a proposed Balanced Budget Amendment, and the Trump Administration announced its plans to seek major supplemental funding for as much as $200 billion to support its war efforts against Iran.

America has been adding to its record debt at record rates, and Congress has become addicted. Absent a change in course, the nonpartisan Congressional Budget Office (CBO) projects that Uncle Sam’s debt will soar to 175% of GDP in 30 years. And those projections were made before the U.S.-Israeli war against Iran began.

If that’s not bad enough, the federal debt is just the tip of Uncle Sam’s financial iceberg. Total liabilities and unfunded social insurance promises exceed $125 trillion. That is a stunning 3.2 times higher than the current federal debt. Despite the federal government’s fiscal time bomb, the U.S. Congress and the President remain with their heads in the sand.

The Swiss model Washington rejected

The U.S. House’s failed Balanced Budget Amendment proposal (H. J. Res. 139) was based on a modified version of the Swiss Debt Brake, a constitutional amendment that was passed in a Swiss national referendum with overwhelming support in 2001.

The Balanced Budget Amendment proposal would limit federal spending to an average of federal receipts over a three-year period, adjusted for population increases and inflation. Its primary object is to achieve a primary budget balance––a balance of receipts and expenditures, excluding interest payments. The legislation includes a release valve that would be triggered by a supermajority vote in Congress for declarations of war and other selected events. Since Switzerland adopted its Debt Brake, the country’s federal debt has remained below 30% of GDP — a stark contrast to America’s trajectory.

While the balanced budget amendment proposal failed, it did properly recognize, in our view, that only a constitutional amendment can force current and future Congresses to restore and sustain fiscal sanity. The problem is that, given the current political environment, there is virtually no chance that Congress will revisit the Balanced Budget Amendment. Therefore, it is time to let the states initiate a change to the U.S. Constitution via the utilization of Article V of the Constitution. Such a fiscal amendment to the U.S. Constitution would ensure fiscal sanity.

The constitutional backdoor that’s been waiting since 1979

Our nation’s founders recognized that Congress might be unwilling or unable to propose a path forward for needed constitutional amendments. Therefore, the founders provided a second way to propose constitutional amendments. Specifically, if two-thirds of the states file an application for a convention to propose one or more amendments to the Constitution, Congress is mandated to call the convention. Importantly, unlike the Convention in 1787, this would be an amendments convention, not a convention to rewrite the Constitution.

Shockingly, about three years ago, we at the Federal Fiscal Sustainability Foundation (www.FFSF.US) discovered that there were enough active state applications for a single-issue convention to propose a fiscal responsibility amendment to the U.S. Constitution. Indeed, the required number of applications has existed since 1979 and remained in limbo because the U.S. Congress has failed to act. In September 2025, our findings were confirmed by none other than the National Federalism Commission, an official interstate governmental body.

House Budget Committee Chairman Jodey Arrington (R–TX) has sponsored H.C.R. 15 to right this congressional wrong. However, it looks like Congress plans to stiff the states and fail to discharge its express and mandated constitutional duty.

The time has come for one or more state attorneys general to sue Congress for failing to act. If the states fail to do so, they will effectively be mooting the states’ rights to propose amendments under Article V. The time for the states to assert their constitutional rights is now! The future of America’s fiscal health is at stake.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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Job seekers are up against a brutal labor market, sending thousands of applications out to no avail, and resorting to in-person stunts to get an employer’s attention. And a new report is confirming their suspicions: hiring managers are ghosting their candidates, and it’s getting worse for talent every year. 

More than half, 53%, of job seekers experienced ghosting within the last year, according to a new report from pre-employment testing company Criteria. And that number just reached a three-year peak, as 48% of applicants were ignored by employers in 2025, and 38% were ghosted in 2024. 

Job seekers may point the finger at lethargic hiring managers, but in actuality, the worrying trend might chalk up to an overwhelming hiring process “increasingly ineffective” at finding the right match. 

“We’re seeing a surge in application volume, largely fueled by AI tools that make it easier than ever to apply and tailor résumés at scale,” Josh Millet, the cofounder and CEO of Criteria, tells Fortune. “The result is that hiring teams are spending more time reviewing applications, but getting less meaningful signals from each one.”

And as job seekers and hiring managers both increasingly use advanced technology, it’s muddying the best way to pick talent. Millet explained that the résumé, once the benchmark of a job application, is now becoming a “weaker signal” because it can be easily generated by AI. As more people highly tailor their résumé with AI tools, it then becomes harder to differentiate the frontrunner in a pool of polished applications. As a result, employers aren’t always answering back to the thousands of candidates who applied to an open role within the span of just hours. 

“Recruiters are inundated, screening methods are less reliable, and communication suffers,” Millet continued. “In many ways, ghosting is less about intent and more about a hiring process that hasn’t caught up to how candidates are applying today.”

‘Ghost jobs’ are also flooding the market, and job-seekers are losing faith 

AI has undoubtedly upended the hiring process and turned it into a numbers game; job-seekers send out a deluge of applications until something sticks, while managers are stuck sifting through thousands of candidates for every open role. The trend has been intensifying for years, leaving many job-hunters out in the cold—and sometimes, employers are intentionally ghosting.

About 81% of recruiters said that their employer posts “ghost jobs,” or roles that either don’t exist or have already been filled, according to a 2024 report from MyPerfectResume. 

Unlike conventional ghosting, these fake postings are created for a purposeful reason: about 38% of recruiters reported that they post fake positions to maintain a presence on job boards when they aren’t hiring, 36% did so to assess the effectiveness of their job postings, and 26% hoped gain insight into the job market and competitors. 

Jasmine Escalera, a career expert for MyPerfectResume, told Fortune in 2024  that another big reason is wanting to improve their employers’ image; nearly a quarter said that fake jobs help their company look like they’re not freezing hiring, and one fifth fessed up to posting ghost jobs to improve the reputation of their business.

“Companies are trying to project ‘We’re okay, we’re still maintaining hiring, that we’re still moving in a growth-oriented trend. In this market, our organization is doing well.’ That ties into why these fake jobs might be appearing more from a comforting perspective,” Escalera explained. “It really is about the business, the bottom line, showing growth, showing trends, and how that can connect to maintaining profit.”

But the trend is discouraging for candidates vying to land a new role.

“We often hear job-seekers saying, ‘I’m tired, I’m depressed, I’m desperate,’ using these very harsh words when it comes to the job market,” the career expert continued. “This is one of the reasons why they are losing faith in organizations and companies.”

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White-collar tech roles have faced waves of layoffs in recent months, as companies like Amazon, Meta and Oracle trim headcounts in the name of efficiency. But the same firms culling workers are running into a roadblock with their AI ambitions: a severe shortage of skilled workers needed to build and maintain data centers. And the talent shortfall is in the hundreds of thousands. 

Demand for robotics technicians has jumped 107%, HVAC engineers increased 67%, and construction roles grew by 30% since late 2022, according to an analysis of more than 50 million job postings by Randstad. Roles like welders and electricians are also on the rise, up 25% and 18% over the past three years, respectively.

But supply has yet to keep up. In the manufacturing space in particular, for every 100 young people entering the manufacturing sector, 102 leave, according to the report. Randstad CEO Sander van’t Noordende said the imbalance is creating a major opening for Gen Z workers to step into lucrative, AI-resilient careers.

“For a long period, societies generally pushed a narrative that the ultimate marker of success is a four-year university degree and a desk job,” Noordende told Fortune in an emailed statement. “This outdated perception led to skilled trade work becoming overlooked. However, AI is now revealing just how critical these roles are and how elevated they are becoming.”

Unlike many white-collar paths, these roles often don’t require a four-year degree. Instead, workers can enter through apprenticeships and training programs that allow them to earn while they learn—offering a faster, and often cheaper, route into the workforce than going to college.

Some trade workers’ salaries are soaring past $250,000 thanks to the AI data center boom

The lack of supply of skilled workers to build America’s rapidly growing AI infrastructure is actually pushing blue-collar wages to new highs.

Construction workers on data center projects currently  earn an average of about $81,800 annually, or $39.33 an hour—roughly 32% more than those on non-data center builds—according to data from Skillit, an AI-powered hiring platform for construction workers.

“Because of the huge demand and the nature of this construction work, which is fueling the arms race of AI… the budgets are not as tight,” Skillit CEO Fraser Patterson told Fortune last year. “I would say they’re a little more frothy.”

Industry leaders indicate the trend is only accelerating. Nvidia CEO Jensen Huang called the AI boom “the largest infrastructure build-out in human history that’s going to create a lot of jobs” for professions like plumbers, electricians, and steel workers. At the World Economic Forum in Davos earlier this year, he also added that salaries are climbing into the six figures.

Electricians, in particular, are emerging as one of the most-in-demand, and best-paid,  jobs on the market. Electrical work accounts for an estimated 45% to 70% of total data center construction costs, according to the International Brotherhood of Electrical Workers. The U.S. will need roughly 300,000 new electricians over the next decade, in addition to replacing the 200,000 expected to retire.

In some cases, the pay is already reaching eye-popping levels. TV star Mike Rowe, known for his stint hosting Dirty Jobs, recently said he met three electricians under the age of 30 making between $240,000 and $280,000 per year at a data center in Plano, Texas.  They each had no college debt, and companies are regularly trying to poach them.

The skilled trade trade-off: high pay, but demanding work

For all the upsides, careers in the skilled trades also come with clear drawbacks.

The work is often physically demanding, requiring long hours on your feet in unpredictable environments. One day might mean working indoors with air conditioning; the next could involve pulling cable through mud or working in extreme heat or cold.

Hours can also be inconsistent. Because many roles are tied to large-scale construction projects, workers may face intense schedules as deadlines approach—followed by gaps between jobs or the need to relocate to wherever the next project is underway. 

There are also long-term uncertainties. Some business leaders, including Elon Musk, have suggested that advances in robotics could eventually automate aspects of skilled trade work—though that shift, if it comes, is likely years away.

Still, for many young workers, the trade-offs are worth it. For Gen Zer Jacob Palmer, skipping college in favor of an electrician apprenticeship quickly paid off. By 21, he launched his own business, grossing nearly $90,000 in 2024 and surpassing six figures the following year. Unlike many of his peers burdened by student debt and an uncertain job market, he told Fortune simply: “I don’t owe anybody anything.”

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Government bonds, especially Treasuries, have long been seen as a safe haven during recessions, geopolitical calamities, and other market-moving disasters that create uncertainty.

But after looking at 300 years of U.S. and U.K. history, the Center for Economic Policy Research found that wars and pandemic-scale emergencies have pummeled holders of debt.

“The historical evidence reveals a striking pattern: government bonds have repeatedly generated substantial real losses during these extreme episodes,” authors Zhengyang Jiang, Hanno Lustig, Stijn Van Nieuwerburgh, and Mindy Xiaolan wrote. “They have even underperformed equities and real estates which are traditionally regarded as risky assets.”

That’s because wars typically triggered large increases in government spending, averaging about 7% of GDP annually during the first four years, and tax hikes alone were rarely sufficient for financing needs, they added.

The finding comes as the U.S. is waging war on Iran while the national debt has exploded to $39 trillion. The Pentagon is seeking more than $200 billion in a budget request for the conflict, sources told the Washington Post.

Across their dataset, the CEPR authors calculated that bondholders suffered average real losses of roughly 14% during the first four years of conflicts. The losses were so steep that they reduced the real value of government debt outstanding.

To add insult to injury, cumulative bond returns were more than 20% below the cumulative returns on stocks and real estate, the opposite of how those assets perform during financial crises or recessions.

“Whenever there is a major war, we observe a sharp decline in the bond performance — wars are always disaster times for bondholders,” they warned. “Similarly, the bondholders also suffered large losses during the ‘war on Covid-19.’”

Center for Economic Policy Research

A key factor in bond losses is inflation, according to CEPR, which said the cumulative rate averaged about 20% in the first four years of wars.

In fact, during the current U.S.-Israel war on Iran, Treasuries and government debt from other countries have sold off sharply as surging oil prices have raised expectations for elevated inflation while budget deficits are also seen worsening. Since the war began three weeks ago, the U.S. 10-year yield has soared more than 40 basis points.

But profligate spending wasn’t the only way inflation weighed on bonds. The think tank said it was often the result of policy choices to reduce debt burdens without explicitly defaulting, such as by suspending gold standard commitments.

Another reason bonds perform so poorly during wars is so-called financial repression, or government policies that curb borrowing costs by influencing financial markets. That prevents bond yields from keeping pace with inflation.

For example, the Federal Reserve implemented yield-curve control, capped Treasury rates, and launched massive bond buying during World War II.

CEPR’s findings have particular relevance for U.S. debt as Treasuries continue to form the foundation of the global financial system with the dollar serving as the world’s reserve currency.

That status has allowed the U.S. to borrow more cheaply than investors would otherwise allow. Meanwhile, the interest on U.S. debt is now the fastest-growing budget item and is already at $1 trillion a year. CEPR said its report presents governments with an important tradeoff.

“Protecting taxpayers from large spending shocks may require shifting part of the burden onto bondholders through inflation or financial repression,” it said. “Economic theory suggests that such policies may be optimal when taxation is highly distortionary. However, they also reduce the safety of government debt and may raise borrowing costs over time if investors anticipate these risks.”

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It all began with an anonymous Twitter handle named “Ivan the K.” The self-appointed “Lead Independent Director of Finance Twitter” had a dark theory in the depths of the pandemic. In 2020, they asked the universe, “Why is no one talking about a K recovery?” since there was much discussion at that time about an economic bounceback in the shape of either a U, an L, or, most bullish of all, a V. “Some things will bounce back,” Ivan wrote, “some will not recover. Think about it.”

Economists seem to have thunk on it and agreed: The K is real. It bears similarities to another saying, invented nearly 200 years earlier by the great English romantic poet Percy Bysshe Shelley: “The rich get richer, the poor get poorer.” 

This is also called “the Matthew effect,” as some trace the sentiment all the way back to the bible’s Book of Matthew 25:29: “For to everyone who has, more will be given, and he will have abundance; but from the one who does not have, even what he has will be taken away.”

If you ask Mark Zandi, chief economist for Moody’s Analytics, this old-time religion got a new lease on life in the Reaganomics of the 1980s. “You really start to see this in the Reagan era,” Zandi told Fortune. “That’s when you get a structural divergence between productivity growth and median wage growth.” 

Zandi argued many elements combined then to weaken labor in favor of capital income: globalization, the decline of unions and manufacturing and major tax reforms. “The share of national income going to labor has been trending down since the early 1980s,” he said, “and the share going to capital owners—those who already have wealth—has gone up.”

So what is it about 2026, six years after the pandemic severed something economically, that accelerated both sides of the “K” for the wealthy and the poor?

Data doesn’t lie

First, consider the extraordinary surges in economic data seen, halfway through the 2020s. The stock market rallies have led to several record highs in 2025, incentivizing the (wealthier) Americans with money in the markets to loosen their purse strings. But the bottom half of the K is extending downwards, with fast-casual restaurants like Chipotle and Cava, and fast-food joints like McDonald’s, noting that lower-income customers, especially young people, are pulling back and preferring to dine at home.

Zandi’s own research has turned up some stunning results, notably that in the second quarter of 2025 the top 10% of wealthiest Americans were responsible for a whopping 49% of consumer spending. That means the economy has grown so lopsided—or K-shaped—that the richest Americans are responsible for half the economy. The K-shape is creating the illusion in economic data that despite sticky inflation and tariff-related sticker shock, consumer spending remains “resilient.” 

Morgan Stanley Wealth Management’s Lisa Shalett has increasingly been sounding the alarm from her perch as chief investment officer. She told Fortune in an October 2025 interview “the income inequality stuff is really getting like completely wackadoo,” specifically citing Zandi’s research: “That means 90% of the country is only half the consumption, I mean holy cannoli.” 

Shalett covered the K-shaped economy specifically in a November 2025 research note, in the context of whether 2026 marks an early or late stage of the economic cycle for investors. “Decoding this conundrum may hinge on the so-called K-shaped economy,” she wrote, “a concept that captures the widening chasm between the ‘haves’ and ‘have-nots.’”

Then Shalett said the situation is actually even worse than what Zandi produced: “For the U.S. consumer, wealth concentration has produced a situation where the top 40% of households by income account for approximately 60% of all spending; those households, in turn, control nearly 85% of America’s wealth, two-thirds of which is directly tied to the stock market, which has climbed more than 90% in three years.” She calculated that spending by the wealthiest households was growing 6x-7x faster than for the lowest cohort. 

Even Federal Reserve chair Jerome Powell talked about seeing the pattern at last December’s Federal Open Market Committee meeting. “We hear about this a lot,” Powell said. “If you listen to the earnings reports for consumer-facing companies that tend to deal with low- and moderate-income people, they’ll all say that we’re seeing people tightening their belts, changing products that they buy, buying less, and that sort of thing. And so it’s clearly a thing.”

When did the K-shaped economy emerge?

The concept of a bifurcated economy has been baked into American society longer than even the days of Reagan, according to Tyler Schipper, associate professor of economics at the University of St. Thomas.

“There’s this underlying thing that has been true for decades and decades and decades,” Schipper told Fortune. “Number one, lower income households always struggle more in the economy. They tend to be more impacted by price changes because they’re spending a higher percentage of their income. 

“And second, that it tends to be that after each recession, lower income workers fall further behind in the income distribution,” he added.

Today, conversations around the shape of the American economy are more urgent because more of the middle class—and those making about $100,000 per year—are getting pushed into the lower half of the K, Schipper said. This can be seen in mid-income and higher-income earners flocking to discount retailers like Walmart and Dollar General. It can even take on more absurd forms, with “Ralph Lauren Christmas” trending at unprecedented levels during the projected $1 trillion 2025 holiday season, but TikTok and Instagram full of tips on how to achieve the look of red-tartan-plaid and cozy sweaters on a budget—in other words, not at an actually expensive Ralph Lauren store. 

Why is this happening?

That lower half of the K is extending ever downward as the consumer encounters a unique set of challenges, including the inflationary impact of tariffs, according to Schipper. Lower-income households tend to spend more on essential goods more likely to be impacted by tariffs. The Yale Budget Lab calculated that the levies impact the bottom of the income ladder more than three times more than the top.

A low-fire, low-hire labor market has also contributed to evidence of a two-tiered economy, said Claudia Sahm, chief economist at New Century Advisors and a former Federal Reserve economist. While tech layoffs have been top of mind following massive cuts from Amazon, layoff rates are still low, Sahm told Fortune, meaning if you have a job, you may feel more financially secure. If you’re just entering the job market like Gen Z is, you may have a hard time finding a job as firms contract following a post-COVID hiring spree, and as AI begins to displace entry-level jobs. To be sure, January 2026 data from Challenger, Gray & Christmas found U.S. employers cut more than 108,000 jobs in January, the largest January reduction since 2009.

But another part of the resurgence of discussions about a bifurcated economy comes from the relative nature of a K-shaped economy, according to Schipper. While the economy has historically been two-tiered, diverging consumer sentiment has also contributed to a narrative that two income groups are moving away from each other. 

For example, in 2022 when the stock market declined, consumer sentiment in both the top-third and bottom-third of income levels converged, according to data from the University of Michigan’s Survey of Consumers. A similar pattern occurred last April, when the announcement of Liberation Day tariffs spooked Americans across income levels, Schipper noted. Last year, however, consumer attitude toward the economy saw a greater split, with low-income Americans feeling far less confident about the economy than those high-income, a trend continuing into 2026.

How monetary policy created the two-tiered economy

Some economists point to the widening divide between the rich and the poor as a consequence of monetary policy. The Fed, over the past few years, has had a historic tightening cycle—11 rate hikes between 2022 and 2024—which was meant to pare down inflation. However, it also reinforced the split since wealthy households, flush by years of asset appreciation, could weather the slowdown better than lower income households facing higher mortgage rates and shrinking credit, Zandi said.

Cheap money in the 2010s and early pandemic years boosted stocks and home values, but the 2022-and-on tightening squeezed borrowers and renters without necessarily reversing those gains. That means even as inflation has cooled, the damage lingered as asset holders retained their windfall but wage earners bore the brunt of disinflation. 

“Folks in the top third of the income and wealth distribution are doing well, but the remaining two-thirds of Americans are struggling… they borrowed during the pandemic when rates were low, and now they’re having to pay on that debt at a higher rate,” Zandi said.

How can the economy become less bifurcated?

Though Fed chair Powell has acknowledged today’s K-shaped economy, a more restrictive monetary policy is helping keep it in place, Sahm argued, making it unlikely for the two diverging K lines to come any closer together.

“We have a Fed that’s still trying to fight inflation that’s been elevated, and part of the tool that they have for fighting inflation is interest rates are elevated, and they’ve been elevated for some time,” Sahm said. “This is the way restrictive monetary policy works: It’s going to hit households hardest who are more financially constrained.”

Zandi had a different perspective. He argued the gap will require policy changes far beyond the Fed’s remit.

“The Fed can’t fix the K-shaped economy,” he said. “It can only stabilize prices and employment. The distributional effects are up to fiscal policy.” Instead, Zandi argued for a reversal of some choices made on the fiscal side that would “do no harm” to lower-and-middle-income Americans.

“Don’t impose tariffs—that exacerbates inequality,” he said. “Lower- and middle-income households spend a much higher share of their budget on imported products like food, clothing, and cars.” 

He also criticized President Donald Trump’s “highly restrictive” immigration policy, which he said hurts jobs for industries that rely on immigrants, such as construction, agriculture and manufacturing broadly. 

Beyond just addressing self-inflicting wounds, Zandi argued that progress depends on both structural and cyclical forces: raising productivity through education, broad-based jobs creation, and ensuring that gains from AI will be equally shared. “If the benefits of AI are distributed more broadly,” he said, “and if job losses are offset by new opportunities, we’ll be fine.”

What’s so bad about a K-shaped economy?

Clear evidence of a two-tiered economy doesn’t mean a recession is imminent, economists said. It does, however, mean that if economic indicators were to take a nosedive, the risk of a recession would increase.

“The K-shaped economy, the bifurcated economy, is potentially a more vulnerable economy,” Sahm said.

Though layoff rates are still relatively low, if the rate of job cuts increased, there would be many more people in a job market where there’s not much hiring. The labor market today doesn’t look like it did in the job-hopping era of 2023, even when interest rates were still high, Sahm noted. Right now, only the healthcare and hospitality sectors are adding jobs in earnest, creating a concentration of growth not optimal for economic stability.

“Anytime you have that, you’re more vulnerable if something bad happens,” Sahm said.

A version of this story was published on Fortune.com on Nov. 7, 2025.

More on the K-shaped economy:

• Welcome to the ‘E-shaped’ economy: Wealth gap is no longer between just high and low earners, the middle class is also struggling
• McDonald’s newest $3 value menu is sounding an alarm about America’s K-shaped economy
• Economist behind K-shaped economy sees a ‘sea of despair’ for the bottom 90% and a ‘crisis of confidence’ in the American dream

This story was originally featured on Fortune.com

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