Economy articles
Are wages keeping up with inflation?
Yes. From February 2025 to February 2026, wages grew 1.7 percentage points faster than inflation. Nominal wages — the literal dollars earned regardless of cost of living — increased by 4.1% while inflation stood at 2.4%. When wage growth outpaces inflation, it indicates that workers are experiencing an increase in purchasing power from the previous year.
How has inflation affected your dollar?
Inflation, simply put, is the rise in prices over time. As a result, each dollar buys less than it did before. Use this inflation calculator below to track the value of the dollar. See how a dollar has changed in worth during your lifetime, or even as far back as 1913, when the data begins. Or reverse the numbers and track what the cost of an item today was worth in the past.
What is the current inflation rate in the US?
About 2.4%, as of February 2026. Inflation refers to the rise in prices of goods and services over time, which reduces the purchasing power of the dollar. The inflation rate is the percentage that describes how quickly these prices are rising. While several government datasets track price changes, the Consumer Price Index (CPI) represents about 90% of the US population. The CPI measures inflation by tracking the price fluctuations of a “basket of goods and services” over time, providing a clear picture of how inflation affects everyday living expenses.
What are the biggest drivers of inflation in the past year?
From February 2025 to February 2026, mostly housing. During that time frame, housing price increases accounted for three-fifths of the overall inflation rate. The inflation rate is calculated using the Consumer Price Index (CPI), which tracks the price changes of a consistent basket of goods and services over time. As of February 2026, overall prices increased 2.4% over the previous year. Each item in this basket is given a weight that reflects how much the average urban household spends on it. Items with higher weights, like shelter, tend to have a larger impact on the overall inflation rate than categories with lower weights. By examining the price changes across different categories, we can better understand the factors contributing to the current inflation rate.
How much is spent on personal healthcare in the US?
Between the money spent by private insurance, Medicare and Medicaid, and people making out-of-pocket payments, America spent a total of $4.5 trillion on personal healthcare in 2024, according to the Centers for Medicare and Medicaid Services (CMS).
Why might prices feel high if inflation is slowing?
Inflation has eased since a 2022 peak, but an estimated three-quarters of American adults are still concerned about coming price increases. While the inflation rate has dropped to 2.9% as of December 2024, Americans are feeling the lasting impact of a historic spike. How is inflation trending? After rising to a 40-year high of 9.1% in June 2022, the inflation rate trended down for much of 2023 and 2024, falling to a low of 2.4% in September 2024 before ticking up over the next few months. The declining inflation rate means prices have been rising at a more gradual pace, and this can in turn mean less stress on consumers.
How will the Inflation Reduction Act change the IRS?
The Inflation Reduction Act, which recently passed the House and the Senate, puts $80 billion toward expanding the Internal Revenue Service (IRS). More than half of the funds will go toward expanding the enforcement division that conducts audits on individual and corporate tax returns. Currently, corporations making over $20 billion are audited the least of any size company but make up the largest share of additional tax revenue from audits.The IRS's budgey has remained about the same since the 1990s, despite processing more returns every year. The $80 billion expansion is nearly six times the size of the IRS’s current annual operating budget and expires in 2031.
What is inflation and how is it measured?
In economic discourse, economists, government, and media often refer to the concept of inflation — general price increases in an economy.Inflation measures a nation’s economic wellbeing, in part because it reflects consumer experience — rising inflation means an increase in cost of living.What causes inflation?Inflation is a byproduct of supply-and-demand economics. Prices rise when the demand for goods and services outpaces the production of those goods and services, or when raw materials used in production and other “input goods” are in limited supply.As a result, the amount a dollar can buy is reduced over time. For example, imagine an item that cost $1.50 in 1920. After accounting for inflation, that same item would cost $9.80 in 1990 and $22.85 in 2023.How is inflation measured?There are many ways of measuring inflation, but one of the most common measures is the Consumer Price Index for Urban Consumers (CPI-U), which is produced by the Bureau of Labor Statistics. The CPI-U shows changes in the prices paid by urban consumers for a “representative basket of goods and services,” or the most common goods and services purchased on an average month based on detailed surveys of what Americans spend their money on. The urban consumer group represents about 93% of the US population.There are eight major purchase categories covered in the CPI-U:Food and beveragesHousingApparelTransportationMedical careRecreationEducation and communicationOtherNot all categories are considered equally when generating the overall measure of inflation — each category is assigned a “relative importance” based on its proportion of all expenditures. In the most recent CPI calculations, housing was weighted the most heavily.The overall CPI, also known as “headline” CPI, includes all items in more than 200 categories. Since food and energy categories are typically much more volatile than the other parts of the CPI, some choose to focus on a metric called the “core” CPI which excludes these two categories.
What is the money supply, and how does it relate to inflation?
Inflation rose 9.1% from June 2021 to June 2022, the biggest increase in 40 years. To combat inflation’s rise, the Federal Reserve (also known as "The Fed") raised interest rates three times this year. Raising interest rates combats inflation in a few ways. One way is by reducing the money supply in the economy.But what is money supply? And how can it potentially lower inflation?What is the money supply?Broadly, the money supply is the total amount of money circulating through the economy. For example, cash, coins, and bank accounts are all part of the country’s money supply.The Federal Reserve defines it more specifically as a group of safe assets that households and businesses can use to make payments or to hold as short-term investments.Economists commonly use two measures for the money supply, known as M1 and M2. M1 includes very liquid assets, such as cash and checking deposits. M2 is more broad. It also includes savings deposits, money market securities, and other assets. The main distinction between M1 and M2 is how easy it is to access and use these assets. While M2 assets can easily be converted into cash, it takes a bit more effort than items included in M1.
How did the Inflation Reduction Act of 2022 change corporate taxes?
The Inflation Reduction Act, signed by President Joe Biden on Aug. 16, 2022, changed the way large corporations are taxed. The law imposed a minimum 15% tax on corporations that made $1 billion in average annual earnings over the past three years.Corporations report income in two different ways: book income and taxable income. The 15% minimum tax applies to book income with some adjustments.The minimum book tax's objective is to ensure that businesses pay taxes when making a profit. The tax took effect in 2023. The Joint Committee on Taxation estimated that about 150 corporations would be subject to the minimum tax each year, and that it will result in a gain of $222 billion over 10 years.A Congressional Research Service report estimated that about half the tax revenue would be collected from manufacturing companies (with about 16% from chemical manufacturing) and about 11% each from information and holding companies.
What is the Federal Reserve?
The Federal Reserve, also known as "the Fed," is the central bank of the United States. It was established in 1913 to manage the nation’s monetary policy and respond to stresses in the banking system. What does the Federal Reserve do?The Federal Reserve uses its monetary policy tools to influence the national economy. In practice, this means the Fed manages federal fund rates and the money supply to support job growth and keep prices steady. Supporting maximum employment and stable prices is known as the Fed’s “dual mandate.”The Fed makes short-term changes in federal fund rates to influence long-term economic growth and stability. The Fed aims to maintain a 2% inflation rate (although it’s been known to set a higher short-term inflation target to manage economic stability). The Fed closely monitors the core Personal Consumption Expenditures index, or core PCE, when making decisions about interest rates and mediating inflation.
Are groceries more expensive than last year?
Grocery store food prices increased 2.1% from January 2025 to January 2026, according to the Bureau of Labor Statistics (BLS). That’s less than the increases for utility gas (9.8%), electricity (6.3%), medical services (3.9%), and shelter (3.0%), but more than new vehicles (0.4%), transportation services (1.3%), apparel (1.7%), and gasoline (-7.5%). A 2.1% increase is 0.1 percentage points above the 2% of the Federal Reserve’s inflation target, which aims to foster stable economic development.
Just the Facts about the US economy
How does the government measure the economy? By tracking GDP, unemployment numbers, and the prices people pay for goods and services.
What is the gross domestic product (GDP) in the US?
About $24.1T in Q4 2025. Gross domestic product (GDP) measures the value of goods and services a country or state produces — it’s the sum of consumer spending, business investment, government spending, and net exports. It is often used to quantify the size of its economy. The $24.1T is the “real GDP,” which is adjusted to account for inflation to make it easier to compare the size of an economy over time.
What is the federal poverty level?
The federal poverty guidelines — also known as the federal poverty level (FPL) — are used by federal agencies to determine eligibility for programs like Medicaid and the Children’s Health Insurance Program (CHIP). These guidelines are issued annually by the Department of Health and Human Services (HHS) and are based on the official poverty thresholds calculated by the Census Bureau. They set the income limits for many need-based programs, helping determine who qualifies for assistance. While the thresholds are more detailed and used for statistical measurement of poverty, the FPL is a simplified version designed for administrative purposes. The guidelines are adjusted for inflation each year and vary by household size.
What is the income of a US household?
About $81,600 in median income in 2024. Household income is the total money received in a year — wages, pensions, investments, public assistance, and more — by everyone in a household over 15.
What does it cost the IRS to collect taxes?
The IRS spent $18.2 billion to collect $5.1 trillion in taxes in 2024. In other words, it cost the agency 36 cents for every $100 it collected. Collecting trillions of dollars from a population of 341 million people and approximately 35 million businesses is no small project. The IRS’s staff of 90,516 people collects and evaluates returns, issues refunds, offers taxpayer assistance, oversees tax-exempt organizations, and enforces tax law. How much money does the IRS collect? The IRS is responsible for collecting internal revenue — mostly in the form of taxes — from individuals and businesses across the US. In fiscal year 2024, the agency collected nearly $5.1 trillion, up 26.1% over the previous 10 years. That total included: $4.4 trillion from individual income taxes and other individual payroll contributions $565 billion from corporate income taxes $78 billion from excise taxes $48 billion from all othersThis revenue funds most of the federal government’s programs, from Social Security and Medicare to defense and support for veterans.
How much revenue does the federal government collect from tariffs?
$194.9 billion in FY 2025. This figure reflects revenue from tariffs and other import-related fees, also known as customs duties. Customs duties are taxes and fees paid by US importers and collected by US Customs and Border Protection on goods imported into the country, which generate revenue for the federal government.
What is the average wage in the US?
The average wage was $1,280 per week in February 2026, 1.7% higher than a year before. The average weekly wage, the typical earnings that employees bring home for one week of work, is a valuable indicator to assess economic conditions, labor market health, and wage trends.
What is the Consumer Price Index, and what does it mean for the economy?
Rising inflation can have a direct impact on the lives of Americans. It means increases in prices at grocery stores, gas stations, and retail shops, making it harder to afford their daily necessities, particularly if wage increases don’t keep up.Inflation is a phenomenon that can be reported using various measures, the most common of which is the rate of change in a measure called the Consumer Price Index (CPI).What does the CPI measure?The CPI, produced by the Bureau of Labor Statistics (BLS), measures changes in the prices paid by urban consumers (who are over 90% of the population) for a particular group of goods and services. The CPI looks specifically at the prices of apparel, education and communications, food and beverages, housing, medical care, recreation, transportation and other items in over 200 categories.What is the difference between CPI and inflation?The CPI is reported monthly alongside the “inflation rate,” which, though reported monthly, is a measure of percentage change in the CPI in the last year.