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The dollar has weakened in the wake of trade tensions with U.S. allies, Federal Reserve interest rate cuts, and geopolitical uncertainty.

Mareen Fischinger / Getty Images

Key Takeaways

• The dollar's 11% decline over the past year is already driving up costs for imported goods and could push interest rates higher.
• Traditional safe havens are flashing warning signs: gold has surged past $5,500 an ounce, almost doubling from a year ago, as investors flee dollar-denominated assets.

The dollar just hit its lowest level in four years, and you're going to feel it. The U.S. Dollar Index dropped to 96 today, down almost 11% over the past year, but President Donald Trump told reporters Wednesday that he's "not concerned" about the currency's decline.

For you, a weaker dollar means pricier imports, higher fuel costs, and potentially steeper interest rates on your mortgage, car loan, and credit cards. Below, we tell you why and what you can do about it.

A Dollar Short

The dollar weakens when global investors and foreign central banks question the stability of U.S. dollar-denominated assets, and a volatile cocktail of factors set off the recent slide. The Fed cut rates three times in late 2025, and lower rates typically weaken currencies. In addition, concerns over inflation persist, along with geopolitical tensions over Greenland and trade policy, questions about Fed independence following a Department of Justice investigation into Chair Jerome Powell, and speculation about coordinated U.S.-Japan currency intervention to support the yen.

Since the Bretton Woods Agreement of 1944, the U.S. dollar has served as the world's primary reserve currency. Central banks worldwide hold dollars to back their own currencies, and the dollar has long been the dominant medium of exchange in international trade.

As of the third quarter of 2025, about 57% of global foreign-exchange reserves were held in dollars, demonstrating the currency's continued power, even as its share has been declining over time.

But now, analysts say economic and geopolitical uncertainty has sparked what analysts call the "Sell America" trade, where investors simultaneously dump U.S. stocks, bonds, and dollars. Gold topped $5,500 an ounce this week, up about 20% year-to-date, as investors seek a safe haven—something the U.S. dollar used to represent.

A Cheap Dollar Is No Bargain for Americans

When the dollar weakens, you feel the effects in just about every part of your financial life:

• Higher prices for imports: The Trump tariffs have already increased the cost of electronics, clothing, cars, and appliances. A weaker dollar means the vast majority of imported goods would become even more expensive.
• Increased fuel costs: Global oil markets price crude in dollars. When the greenback weakens, oil becomes cheaper for other countries, which can boost global demand and push prices higher at American pumps.
• Higher interest rates: Mortgages, auto loans, and credit cards would become more expensive if foreign investors demand higher yields on U.S. Treasury bonds, which happens when the dollar grows weaker.
• Squeezed retirement savings: Retirees face a double hit: inflation erodes purchasing power, while the value of their bond-heavy portfolios may decline.
• Pricier travel abroad: Your dollars buy less in Europe, Asia, or anywhere else. Foreign vacations, international education, and overseas purchases all become more expensive.

Diversifying into non-dollar assets like international stocks could help protect your finances from dollar instability. The MSCI All Country World ex-USA Index representing stocks worldwide was already riding high since the Trump tariffs were announced last year, gaining 29% in 2025 versus about 17% for the S&P 500 index.

Strategies To Protect Yourself

While you can't control currency markets, you can take steps to cushion the impact:

• Diversify internationally: You can allocate part of your portfolio to foreign stocks and bonds in stable economies with strong currencies. The easiest way is through international exchange-traded funds.
• Consider alternative stores of value: Gold has surged to record highs above $5,500 an ounce and can serve as a hedge against dollar weakness. Silver has climbed even faster, up nearly 60% year-to-date. But those high values could be worrisome should the dollar strengthen and people start selling off these safe havens.
  
• Pay down variable-rate debt: Reducing your debts, especially those with variable rates, would help protect you should interest rates spike.

The Bottom Line

The dollar's role as the world's reserve currency has given Americans significant advantages for decades: lower interest rates, cheaper imports, and the ability to finance massive government deficits at relatively low cost. A weaker dollar chips away at all of that.

News of the day for Jan. 29, 2026

The major stock indexes were little changed yesterday after the Fed held rates steady and as investors prepared for the release of earnings from major tech companies.

Michael Nagle / Bloomberg / Getty Images

Stock futures are slightly higher Thursday as investors digest a barrage of earnings reports from major companies; Microsoft stock is down, while Meta Platforms and Tesla are gaining after each of the Magnificent Seven members topped estimates last night with their quarterly results; Tesla announced the end of production for its Model X and Model S vehicles as the EV maker will shift one of its factories to making Optimus humanoid robots; shares of Southwest Airlines and IBM are surging after solid reports last night, while Mastercard, Caterpillar and several others reported this morning; and gold is extending its record run, breaking through the $5,500/ounce mark. Here's what you need to know.

Stock Futures Tick Higher as Investors Digest Big Tech Earnings

Stock futures are pointing to a slightly higher open this morning as investors evaluate a flurry of earnings reports, with a particular focus on results released after yesterday's closing bell by Meta Platforms, Microsoft and Tesla. (see more below) Futures tied to the S&P 500 were up 0.2% recently, while those linked to the Dow Jones Industrial Average and tech-heavy Nasdaq added 0.1%. The major indexes closed little changed on Wednesday after the Federal Reserve held its benchmark interest rate steady after cutting rates three times to end 2025. Crude oil futures were up more than 2% this morning, trading at their highest levels since September at around $64.75 per barrel, amid reports that President Trump is considering military strikes on Iran as negotiations over the country's nuclear program seem to be making little progress. Gold futures also continue to surge amid the geopolitical tensions, surpassing the $5,500/ounce mark for the first time. (see more below) The yield on the 10-year Treasury, which affects borrowing costs on a wide array of loans, is holding steady at 4.25. Bitcoin is trading around $87,800 after briefly breaking the $90,000 mark on Wednesday.

Microsoft Stock Tumbles While Meta, Tesla Gain After Earnings Last Night

Big tech dominated the earnings report headlines after the closing bell yesterday, as Microsoft (MSFT), Meta Platforms (META) and Tesla (TSLA) released quarterly results. Each of the Magnificent Seven members surpassed Wall Street estimates with their top and bottom line numbers, but investors keyed on different elements. Meta shares were up more than 9% in premarket trading after the Facebook parent reported revenue and capital expenditures that were well above analysts' expectations. Tesla shares were up 2% recently as the company announced it would discontinue the production of two EV models as part of its ongoing transition to a company that's more than just a carmaker. (more on that below) Microsoft shares were down 7% ahead of the opening bell amid concerns about slowing growth for the Azure cloud platform and the heavy concentration of business with OpenAi. Fellow Mag 7 member Apple (AAPL) is due to release results after today's closing bell, with the smartphone giant expected to report record revenue and rising profits.

Tesla Ending Production of Model S and X to Ramp Production of Robots

In Tesla's earnings call, CEO Elon Musk announced that the company is stopping production of two vehicle models, the Model S and Model X. Musk said the decision was made to allow the company's Fremont, California factory to be repurposed to make Optimus humanoid robots. Tesla is in the midst of a transition from a carmaker into a business focused on autonomous driving, robotics and artificial intelligence. "It's part of our overall shift to an autonomous future," Musk said on the call. The models being discontinued didn't account for a large portion of Tesla's EV sales; the S, X, and Cybertruck combined for 50,850 deliveries last year, a fraction of the nearly 1.6 million combined Model 3 and Model Y vehicles Tesla sold last year. Meantime, Optimus robot sales are one of the metrics that need to increase for Musk to earn the full value of his stock compensation package. Tesla also announced Wednesday that earlier this month it had agreed to invest about $2 billion in xAI, the artificial intelligence company that Musk controls and the maker of the controversial Grok chatbot.

Earnings Season Rolls on With Southwest Airlines, IBM, Mastercard, and More

Shares of Southwest Airlines (LUV) and International Business Machines (IBM) are each surging this morning after the companies posted solid results last night. Southwest shares were up more than 5% in premarket trading after the carrier projected profits well above what analysts had been expecting, as new policies like baggage fees and assigned seating are now fully in effect. IBM shares jumped 8% as AI demand drives growth in the tech giant's software business. Shares of heavy Caterpillar (CAT) were up 2% recently after the heavy equipment manufacturer released its results this morning, while Honeywell (HON) and Mastercard (MA) also gained ground following their earnings releases.

Gold Surpasses $5,500 for First Time

Gold's record hot streak shows no signs of slowing, as the precious metal has surged past the $5,500 mark for the first time. Gold futures were up nearly 4% at $5,510 an ounce in recent trading, after rising as high as $5,586 overnight. The record run has been fueled by geopolitical uncertainty amid tensions between the Trump administration and foreign countries including Greenland and Iran, as investors have turned to safe-haven assets. Gold prices have doubled over the past 12 months, and other precious metals are showing even bigger gains. Silver futures were up nearly 5% this morning, trading at $119 an ounce, and have gained about 275% over the past year.

Apple is seen posting record revenue for the holiday quarter

Costfoto / NurPhoto / Getty Images

Key Takeaways

• Apple is slated to post its latest quarterly earnings after the market closes Thursday, with the iPhone maker expected to report record revenue.
• Options pricing suggests traders expect the stock could moving about 4% in either direction following the results.

Apple is slated to report its fiscal first-quarter earnings after the closing bell Thursday, with traders anticipating a sizable move in the iPhone maker's stock following the results.

Based on current options pricing, traders expect Apple's (AAPL) stock could move about 4% in either direction by the end of the week. A move of that size from Wednesday's close around $256 could lift the stock to $266 at the high end, 7% off its December record, while the low end would put shares around $247.

Apple shares are currently about 11% below their early December highs reached amid positive signals about the global smartphone market and demand for the iPhone 17. The tech giant topped estimates in its last report in October, when CEO Tim Cook said Apple looked to be on track for its best-ever holiday season for iPhone sales.

Why This Matters to Investors

Apple typically reports its strongest results of the year in the quarter that includes the holiday season, and strong iPhone sales could be enough to boost the stock. Many investors and analysts may also be looking for updates from Apple on its AI efforts amid worries it has lagged behind other tech giants.

Apple is seen posting record revenue of $138.11 billion, while earnings per share are projected to come in at $2.67, each up 11% year-over-year, according to Visible Alpha estimates.

Analysts at JPMorgan, UBS, and Morgan Stanley recently said that an ongoing memory chip shortage has raised some concerns about Apple's margins, however. Though they suggested the impact on Apple may be limited, they warned solid iPhone results could potentially be overshadowed by worries about rising memory costs.

Wall Street analysts lean more bullish than bearish on Apple's stock. Of the eight analysts with current ratings tracked by Visible Alpha, four have recommended buying the stock, compared to three neutral ratings and one "sell." Their average price target around $291 would imply 14% upside from Wednesday's level and is about $5 above the stock's closing record.

Tesla CEO Elon Musk said the company will stop making two of its car models this year, and repurpose the factory space to make robots instead.

Frederic J. Brown / AFP / Getty Images

Key Takeaways

• Elon Musk said Tesla would stop making the Model S sedan and Model X SUV later this year, freeing up factory space to make robots.
• The news for now means a smaller lineup of Tesla consumer vehicles—which Musk said was "part of our overall shift to an autonomous future."

Elon Musk wants investors to think of Tesla as more than a car company—and it looks like he means business.

The Tesla (TSLA) CEO on Wednesday said the company would stop producing two of its EV models—the Model S sedan and the Model X small SUV—by the end of the first half of 2026. The change will for now leave the company's consumer lineup with the Model 3 sedan, it's most affordable vehicle at present; the Model Y SUV; and the Cybertruck. (Tesla also alluded to progress on a new high-end Roadster earlier today.)

Why This Matters to Tesla Investors

Elon Musk expects Tesla to ramp up production of its Optimus robots this year. To do that, he needs factory space—and that led him to decide to stop making two Tesla car models, including its well-known Model S sedan. The decision illustrates his determination to transition the company into much more than a carmaker.

The decision, Musk said during a Wednesday conference call, was "slightly sad. But it is time to bring the S [and] X programs to an end. It's part of our overall shift to an autonomous future." (The call was associated with Tesla's latest results; read more Investopedia coverage of today's Magnificent Seven earnings here.)

Musk is in the process of leading Tesla through a high-stakes—for both him and the company—transition from a carmaker into a business he hopes to position at the forefront of autonomous driving, robotics and artificial intelligence. Its auto deliveries fell year-over-year in 2025, and Musk among other things wants to start producing its Optimus robots at scale this year.

That's part of the reason he's ending the S and X programs: Musk on Wednesday said he would take Fremont., Calif., factory space currently used to make them and repurpose it to make the robots instead.

Musk did say the company will support the S and X "for as long as people have the vehicles." But ending their production has another side effect: The jocular observation that, taken together, one could use the names of four Teslas to spell "S3XY" won't work for much longer.

In the meantime, you can still buy the Teslas that will soon be American automotive history. The company's web site shows the S starting at around $95,000 and the X at close to six figures. The Model 3 starts at about $35,000.

"We’re really moving into a future that is based on autonomy," Musk said. "So if you’re interested in buying a Model S and X, now would be the time to order it."

With Wednesday's gains, shares of Intel have added nearly a third of their value in 2026 so far.

Justin Sullivan / Getty Images

Key Takeaways

• Intel shares soared Wednesday, amid a broader rally for chip and AI-exposed stocks.
• Nvidia and Apple are planning to shift some 2028 chip production to Intel, DigiTimes reported Wednesday, adding to fuel to earlier rumors they could become clients.

Could Intel be closer to winning new chipmaking contracts from Nvidia and Apple?

On a day when chip stocks were rising broadly, helped by strong orders and a rosy outlook from semiconductor-equipment maker ASML (ASML), Intel (INTC) shares were among the biggest gainers. The stock jumped 11% Wednesday as a report suggested the struggling chipmaker could be set to win some new clients for its manufacturing business.

Nvidia (NVDA) and Apple (AAPL) are planning to shift some 2028 chip production to Intel, while still maintaining their relationships with current supplier Taiwan Semiconductor Manufacturing Co. (TSM), according to a report from Taiwan-based DigiTimes.

Intel declined to remark on the report. TSMC, Apple, and Nvidia did not respond to Investopedia's requests for comment in time for publication.

Why This Is Significant

Chipmaking deals with Nvidia and Apple would represent a major step forward for Intel, which has struggled to win new customers for its manufacturing business, and could boost confidence in its stock.

During Intel's earnings call last week, CEO Lip-Bu Tan said the company has been engaging a few prospective customers that are in the process of evaluating its manufacturing processes, according to a transcript provided by AlphaSense. It's unclear whether they included Apple and Nvidia.

The report from DigiTimes, which has added fuel to earlier rumors that Nvidia and Apple are considering new contracts with Intel, nodded to U.S. manufacturing mandates and tariff pressures as forces in Intel's favor.

Some Wall Street analysts have also previously suggested a deal with Intel could be seen as a way to win some political goodwill, after President Donald Trump brokered a deal last year that saw the U.S. government take a 10% stake in the chipmaker.

Meanwhile for TSMC, the word's largest chip manufacturer, "the anticipated order diversions to Intel may represent more opportunity than threat," DigiTimes wrote, as such moves could ease regulatory scrutiny and U.S. political pressure.

TSMC shares advanced 1% Wednesday, while Nvidia climbed close to 2%, and Apple slipped about 1%.

With today's gains, shares of Intel have added nearly a third of their value in 2026 so far.

Carvana stock tumbled Wednesday following a short-seller's report.

Kevin Carter / Getty Images

Key Takeaways

• Shares of Carvana tumbled 20% on Wednesday after short-seller Gotham City Research accused the company's largest shareholder of using his other companies to inflate the used-car seller's profits and enrich himself.
• Gotham City's report echoes accusations made by Hindenburg Research and Jim Chanos last year.
• Carvana stock rose 10,000% in the past three years thanks to the turnaround effort that short sellers say is a sham.

A lengthy runup in the price of a used-car stock got stuck at a red light today.

Shares of Carvana (CVNA) plummeted on Wednesday, recently falling 15%—they were earlier down even more—after short-seller Gotham City Research accused it of artificially inflating its profits to create the illusion of a successful turnaround and enrich its largest shareholder.

The drop erased the shares' year-to-date gains and put them on track to close at their lowest price since early December.  

Why This Matters for Carvana Investors

Carvana stock has been on a rollercoaster ride for years, losing nearly all of its value between 2021 and late 2022 before jumping more than 10,000%. In the past year, the stock has shaken off short-seller allegations and charged higher.

Gotham City Research accused Carvana of overstating its profits between 2023 and 2024 by $1 billion. Carvana reported total net income of about $550 million across those two years.

Carvana did not respond to Investopedia's request for comment in time for publication.

Gotham City alleges that Carvana has inflated its profits and margins in recent years through shadowy business dealings with companies like used-car dealer DriveTime and loan servicer Bridgecrest, both of which are owned by Ernest Garcia II, Carvana's largest individual shareholder and the father of its CEO, Ernest Garcia III. 

Other short-sellers have accused Carvana and the Garcias of creative accounting. Hindenburg Research made similar accusations in January 2025. Legendary short-seller Jim Chanos has also accused the company of employing aggressive accounting to juice its results. 

Despite Wednesday's slump, Carvana shares are up about 10,000% since hitting an all-time low in December 2022, when the company appeared destined for bankruptcy. In 2023, Carvana implemented cost cuts and struck a deal with creditors to ease its debt burden, beginning a turnaround that culminated last month with Carvana's addition to the S&P 500.

Mandel Ngan / AFP via Getty Images

Key Takeaways

• The Federal Reserve held borrowing costs steady after three consecutive quarter-point cuts to its key interest rate.
• Simmering inflation and a cooling job market are pulling the Fed's policy in opposite directions.
  
• The Fed is resisting political pressure from the Trump administration to sharply reduce rates.
  

Borrowing costs are set to hold steady for the time being, as the Federal Reserve has returned to a wait-and-see mode to determine whether inflation or unemployment poses the greater threat to the economy.

The Fed's policy committee voted to keep its key interest rate flat Wednesday at a range of 3.5% to 3.75%, keeping borrowing costs stable. The committee cut the rate by a quarter-point at each of its last three meetings. The Federal Open Market Committee voted 10-2 to stand pat, with Fed Governors Stephen Miran and Christopher Waller dissenting in favor of another rate cut.

Fed officials have debated cutting rates to boost the job market after a sharp slowdown in hiring in recent months, and the need to keep rates higher for longer to push down inflation that's run above the Fed's 2% annual target for more than four years.

"In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks," the committee said, repeating language from its most recent statement in December.

The Fed funds rate influences borrowing costs across all kinds of loans and is the Fed's main tool for fulfilling its dual mandate to keep inflation in check and maximize employment.

What This Means For The Economy

The end of the Fed's most recent cutting campaign signals a period of stability for borrowing costs that could last for months, until shaken loose by new leadership or a change in economic conditions.

The committee largely repeated the language of its last statement in December, but added that "job gains have remained low, and the unemployment rate has shown some signs of stabilization," and that "inflation remains somewhat elevated."

Fed's Independence Is Tested

The Fed's decision to hold rates diverged from President Donald Trump's repeated calls for sharp rate cuts. The administration has publicly criticized the central bank, and in recent months, has pursued legal actions against Fed officials, including threats of criminal prosecution against Fed chair Jerome Powell and an attempt to fire Fed governor Lisa Cook, an issue now pending a Supreme Court ruling.

Trump has said lower borrowing costs would help the economy and household finances by reducing the cost of loans like mortgages, and has denied knowing in advance that the Justice Department was taking action against Powell. Fed officials, including Powell, have accused the administration of intimidation and of attempting to undermine the Fed's independence, which was established by Congress to be outside the White House's control.

Economists say the Fed's traditional distance from politics has made it more effective in managing monetary policy. In countries with less independent central banks, heads of state tend to force interest rates down, which can boost the economy in the short run but often leads to runaway inflation.

Economy Isn't Making Decisions Easy

The Fed faces a dilemma with economic data pulling it in opposite directions. Inflation had been cooling down since spiking immediately after the pandemic, but stopped making downward progress in 2025 as tariffs pushed up prices for many consumer goods. That would normally lead the Fed to keep rates higher to push it down.

However, job creation has ground nearly to a halt and the unemployment rate has edged up in recent months as Trump's unpredictable trade policies have stoked uncertainty among business leaders, leading many to put hiring and expansion plans on hold. The Fed could address that problem with easier money policies by lowering rates.

Further complicating matters, the government shutdown in October and November delayed and distorted key data bout employment and inflation, and another shutdown is on the horizon as lawmakers debate immigration enforcement funding.

Financial markets expect the Fed to stay on hold at least until June, which will be the first meeting after Powell's term ends in May.

Gold has been a hot asset lately, while the U.S. dollar has faltered.

Kristiano Purnomo / AFP via Getty Images

Key Takeaways

• Dollar weakness is a "tailwind" for gold prices, Morgan Stanley's metals and mining strategist says.
• Precious metals experts see gold's rally continuing, but they see a chance of near-term volatility as investors take profits.

One asset's weakness can be another's strength. That concept has added fresh complexity to rising investor demand for gold.

Case in point: Spot gold prices continue to rally, breaking past $5,300 on Wednesday following a drop in the greenback yesterday. While it has regained some ground today, the Dollar Index—which tracks the currency against a basket of foreign counterparts—recently dropped to its lowest level in four years after seemingly sanguine comments from President Donald Trump about a weaker buck.

Those comments may be helping gold's recent rise, already aided by the perception of increased geopolitical risk, inflation, government debt levels and the expectation of lower interest rates. Traders now appear to be working in the possibility that the slide in the greenback was the Trump administration's goal, not just a consequence of increased uncertainty about U.S. policy.

WHY THIS MATTERS TO YOU

While some investors may be cheering on the prospect of a continued rally in gold, its gains at the expense of a weaker dollar wouldn't be helpful to the average person in the U.S. A lower dollar means less purchasing power.

Trump, during a visit to Iowa yesterday, was asked whether he was comfortable with the dollar's decline. "I think it's great, the value of the dollar," he said. "If you look at China and Japan, I used to fight like hell with them, because they always wanted to devalue."

Those words will stoke "genuine lines of thought among market participants that this may merely be the opening act of a more coordinated policy effort from the Trump administration to actively pursue a weaker dollar," Matthew Ryan, head of market strategy at financial services firm Ebury, said in emailed comments.

A weaker dollar could make exports relatively less expensive for foreign buyers, reduce the trade deficit, and raise the value of multinational corporations' profits outside the U.S.

"The dollar's supremacy is cracking," Nigel Green, founder of financial advisory firm deVere Group, wrote Wednesday morning. "When leaders and policymakers appear unconcerned about sharp declines, traders assume volatility will persist."

Some dollar watchers are now looking toward what Fed Chair Jerome Powell might say about the dollar later today after the central bank's latest interest-rate decision. Over the longer term, many strategists expect gold prices to continue climbing, and weakness in the dollar—another haven asset—could propel the metal even higher.

A confluence of other factors are working in the metal's favor, according to Amy Gower, Morgan Stanley's metals and mining strategist. "We are seeing generally good investor appetite for real assets," she said in a Wednesday interview with Squawk Box Europe, adding that central banks' cutting rates tends to be good for nonyielding assets like commodities. "Further dollar weakness would be an additional tailwind."

Morgan Stanley last week wrote that the dollar's "biggest challenger" remains gold, with the precious metal's share of central bank reserves, as of the end of September, eclipsing U.S. Treasurys for the first time since 1996.

The risk of a gold pullback, however, is becoming more likely, according to HSBC's chief precious metals analyst James Steel. "This near parabolic move in gold does invite volatility and does invite profit-taking on any positive news that might come out," he said in an interview with Bloomberg Wednesday.

Lower taxes in the near term could prove costly in the future.

Investopedia / Photo Illustration by Alice Morgan / Getty Images

KEY TAKEAWAYS

• The 'One Big Beautiful Bill' is expected to create serious tax savings and increase refunds when taxpayers file their 2025 taxes this year.
• These changes, however, cut into Social Security funding.
• With fewer taxes coming in to pay for Social Security benefits, the timeline for benefit cuts has accelerated.

When taxpayers file with the IRS this year, most will see either a lower tax bill or a higher refund. While the increased tax savings will feel good for now, the consequences will affect future Social Security benefits.

Lower tax brackets originally established under the 2017 Tax Cuts and Jobs Act would have expired in 2025. However, the 'One Big Beautiful Bill' made these lower tax brackets permanent and created new tax breaks or boosted already existing ones. It also increased the standard deduction and added an additional deduction for seniors.

These changes are expected to lower most taxpayers' bills and increase 2025 tax refunds by about 15% to 20% on average, according to Morgan Stanley economic analysts. In the short term, this will provide tax savings and additional income through refundable tax credits. But in the long term, it could divert funds from the Social Security program.

The Social Security Administration said the changes from the 'One Big Beautiful Bill' will accelerate the depletion of two main trust funds that pay for benefits from the third quarter of 2034 to the first quarter of 2034. After this date, benefits will be cut by about 20%.

Why This Matters

The reserves funding Social Security benefits continue to dwindle, and lawmakers are taking little action to resolve the issues. This could result in fewer benefits for retirees and those with disabilities. If benefits are cut, the majority of the almost 75 million beneficiaries say they won't be able to survive financially.

Social Security benefits are funded through two main trust funds: Old-Age and Survivors Insurance and Disability Insurance, often referred to together as OASDI. The funds are made up of a combination of payroll tax contributions, reserves, and taxes on Social Security benefits, which, as of the fourth quarter of 2025, totaled $2.561 trillion.

However, since 2021, the OASDI trust funds have consistently been in deficit, meaning there are not enough payroll taxes coming in to cover the amount Social Security spends on benefits. And with lower tax collections from the 'One Big Beautiful Bill,' the trust funds will shrink even quicker.

Tax changes in the legislative bill mean that seniors who are taxed on their Social Security benefits will pay less into the program. 

"Because the revenue from income taxation of Social Security benefits is directed to the Social Security and Medicare trust funds, implementation of the OBBBA will have material effects on the financial status of the Social Security trust funds," the administration wrote in a report delivered to the Senate in August.

The Social Security Administration's analysis does not account for the effects of the 'One Big Beautiful Bill' on all taxpayers' contributions to Social Security, which could further worsen the deficit.

The tax changes degraded the 75-year OASDI actuarial balance, which measures how much payroll taxes need to increase over the next 75 years for the program to both pay out full scheduled benefits and maintain trust fund reserves. As of 2025, the estimated required payroll tax increase was 3.82%. But after changes from the 'One Big Beautiful Bill,' payroll taxes will need to increase by 3.98%.

Lawmakers and analysts have suggested several solutions to remedy Social Security's funding gap, such as raising the full retirement age, reducing the number of Americans eligible for programs like Supplemental Security Income or Social Security Disability Insurance, and capping annual cost-of-living adjustments.

None of these solutions have been adopted yet, leaving future generations wondering if Social Security benefits will still be there when they retire.

Anthropic CEO Dario Amodei wrote that AI that's "better than humans at essentially everything" could arrive in as little as one to two years.

Krisztian Bocsi / Bloomberg / Getty Images

Key Takeaways

• Anthropic CEO Dario Amodei published an essay warning that AI could displace half of entry-level white-collar jobs within five years.
• He also argued that AI could create a permanent underclass of unemployed or low-wage workers.

The CEO of Anthropic—the AI company valued at about $350 billion—warns that AI could create a permanent underclass of workers.

Dario Amodei wrote in a 20,000-word essay out Monday that the AI systems his company is helping to build could leave less-skilled workers with nowhere to go—"an unemployed or very-low-wage 'underclass.'"

AI's takeover of jobs will advance, he wrote, "from the bottom of the ability ladder to the top," making scores of jobs obsolete. The changes will thus leave these workers nowhere else to go, he argued.

Why This Matters To You

When globalization gutted manufacturing in the 1990s, displaced workers were told to retrain for office jobs. Amodei is warning that AI will close off that escape route, leaving millions with few options and low wages for those who can still find work.

A 'General Labor Substitute for Humans'

"If AI does to white-collar work what globalization did to blue-collar, we need to confront that directly," BlackRock CEO Larry Fink warned as he opened the World Economic Forum at Davos last week.

Fink told leaders at Davos to stop with the pablum about "the jobs of tomorrow" and start making concrete plans for sharing AI's gains. Amodei's essay warns that such efforts won't be enough.

When mechanized farming displaced agricultural workers over generations, those workers moved into factories. When globalization gutted manufacturing starting in the 1990s, some workers moved into service and knowledge work. But Amodei argues that AI increasingly matches the full range of human cognitive abilities, so it will take away jobs drafting memos, reviewing contracts, and analyzing data that might otherwise emerge. A customer service rep who retrains as a paralegal would find AI waiting there, too.

"AI isn't a substitute for specific human jobs but rather a general labor substitute for humans," he wrote.

Important

Amodei's jobs forecast is just one concern among many in a sweeping new essay. He also warns AI could enable mass bioterrorism, entrench authoritarian surveillance states, and concentrate wealth at levels that "will break society."

Early Warning Signs

Amodei's timeline—losses of up to half of entry-level white-collar jobs within five years—sounds dire even as CEOs compete to make the most apocalyptic predictions about the future of work.  "Probably none of us will have a job," Elon Musk told a Paris tech conference in 2024, describing a future where work becomes "optional." Asked in August 2025 how workers would survive, OpenAI's CEO, Sam Altman, said, "I don't know [and] neither does anyone else," before gesturing at the need "to have some new economic model."

But those looking at the data aren't panicking yet.

Employment among workers aged 20 to 24 in the most AI-exposed occupations has declined since ChatGPT's release in November 2022, according to an analysis released earlier this month by the Federal Reserve Bank of Dallas. The researchers noted that no technology has ever massively disrupted the workforce within just a few years of its release. So far, they found, AI's overall impact has been "small and subtle," adding only about 0.1 percentage point to the unemployment rate.

An ongoing study by the Yale Budget Lab on AI's effects on jobs has reached similar conclusions. The share of workers in the most AI-exposed occupations has remained stable since ChatGPT launched, and jobs are shifting only slightly faster than with the rise of the internet in the late 1990s.

"It would be unprecedented if a new technology had massively disrupted the workforce in three years," Martha Gimbel, executive director of the Yale Budget Lab, told Investopedia in December. "These kinds of things take time."

Lessons From Past Technological Disruptions

That doesn't mean workers should be complacent, Gimbel said. The Yale Budget Lab's research shows that when technological disruptions arrive, the workers they displace rarely recover.

"Workers who get displaced do not get the benefits of the technology in the same way," she said. "We do not have a good track record of figuring out how to help those workers."

Telephone operators displaced by automation were more likely to be underemployed—or to leave the workforce entirely. And while data from the Industrial Revolution is sparse, Gimbel noted "that it was devastating for the weavers, and they never really recovered."

Amodei argues that AI's disruptions will unfold far faster than past tech shifts, when telephone operators, weavers and factory workers across the Rust Belt never recovered. Neither might today's paralegals and customer service reps, and the window to prepare is closing.

"It cannot possibly be more than a few years before AI is better than humans at essentially everything," Amodei wrote. "I can feel the pace of progress, and the clock ticking down."