Business

Rethinking affordability: policy has to start with how households experience shocks

Published

7 hours ago

January 11, 2026

Public debate often treats economic disruptions as short-lived problems—sharp swings in prices, employment, or growth that settle once the broader economy finds its footing again. Early November’s election results suggest voters may see things somewhat differently. Candidates who focused squarely on affordability did well because households may be responding, at least in part, to something far more persistent: years of declining economic well-being that do not roll back once the headlines move on.

For decades, policy conversations have too often accepted a simple assumption: that it is only rational to tolerate short-run turmoil in exchange for long-run stability. In this model, policymakers adjust course—sometimes modestly, sometimes not at all—while workers, small-business owners, jobseekers, and caregivers are expected to weather the turbulence. In theory, these shocks are supposed to fade, and the greater good is served by merely bandaging the complaints of lower-income groups until the headline metrics herald an apparent return to normalcy. In practice, however, households experience these shocks—and their aftermath—very differently. And while some economic turbulence is truly inevitable, appreciating the disconnect between the picture painted by the aggregate indicators and the ripple effects households feel is a necessary step towards identifying policies that can improve affordability.

Everyday Americans certainly feel the effects of economic shocks that are captured in the headline statistics, but there are many reasons why an improvement in those headline numbers doesn’t map to an improvement in a household’s financial situation. For example, most people don’t budget for the 80,000 goods and services tracked by the Consumer Price Index (CPI). They manage a much smaller set of expenses, e.g. rent, groceries, childcare, utilities, insurance premiums, and a few others. If the weekly grocery bill jumps by $40, that often becomes the new number they have to live with.

Even when market forces eventually push prices down, the clock is rarely fully wound back and wages often fail to keep pace with the new cost realities. A rent increase does not automatically reverse when inflation cools. Childcare prices do not necessarily fall just because CPI moderates. Shocks to essentials are rarely one-time disturbances that disappear when the crisis fades, even if the price increases only once—more often, they become lasting additions to the cost of living, raising the baseline from which working Americans make every subsequent financial decision.

Recent price surges underscore how rare true reversals are. The CPI for food shows prices decelerating but not reversing from their 2022 spike, a frustration grocery shoppers have experienced firsthand. Milk prices, for example, fell briefly from $4.20 per gallon in January 2023 to $3.86 by May 2024, only to stabilize around $4.00 by August. By November 2025, consumers were paying 25% more for the same purchases than they had in 2019. Egg prices tell a similar story: despite easing from their most serious spikes in January 2023 and March 2025, they remained roughly double their pre-inflation level as of September 2025.

Housing offers little reassurance. The Zillow Observed Rent Index (ZORI) shows rents jumping more than 15% in 2021. The increases slowed down between 2022 and 2025, but rents did not plunge back to their 2019 level; instead, they resumed climbing at roughly their pre-pandemic pace from a much higher baseline. The end of the inflation shock does not mean a return to affordability—it means the return to typical price movement. For many working households, that means a continuation of the faster-than-CPI-U accumulation that characterized the cost of necessities for the previous two decades.

Even if a one-time shock dissipates, the damage households sustained in the interim can slow their progress for years. A temporary hit to purchasing power may force a household to take on additional debt or postpone savings for college or retirement—effects that do not show up clearly in present-day headline indicators. From that perspective, a one-time shock at the macro level can easily become a permanent shift in a household’s financial position.

This distinction explains, in part, why voters responded so strongly to affordability-focused campaigns. They may not be rejecting long-run thinking entirely; rather, they are likely reacting not just to today’s “sticker shock,” but to the reality that the long run they have been living is defined by accumulated, irreversible shocks—none of which appear clearly in top-line indicators.

For policymakers, the implication is straightforward: there is often no such thing as a one-time effect for households. A shock might disappear from the inflation tables or unemployment charts, but everyday Americans continue to feel its consequences long after the data normalizes. Further, even when a shock resolves at the national level, local communities may continue to struggle if critical employers have downsized or if reduced spending within the community has resulted in a more permanent slowdown.

From a macroeconomic perspective, shocks do often look temporary. The unemployment rate eventually fell after the 2008 financial crisis. Gross Domestic Product (GDP) rebounded after the 2020 lockdowns. The CPI surge in 2022 slowed as supply chains recovered. From that vantage point, the economy appears to move past each disruption in turn, reinforcing the idea that these are temporary events.

But this “recovery” story breaks down at the household level much more than policy leaders take into account. In 2021, households reported surviving the initial COVID slowdown by postponing their progress towards financial goals: either by drawing on savings set aside for something else, by taking on additional debt or putting off bills, or making plans to delay retirement. But by 2023, when the slowdown was replaced by inflation, consumers once again leaned on the savings to cover the rising costs of groceries—with nearly one in five relying on funds they had not intended to use for everyday purchases.

Aggregate indicators do not show how much financial well-being households lost during those periods, how long it will take them to rebuild, or whether they ever will. This is a critical blind spot: the metrics policymakers rely on were never designed to measure the compounding, non-reversible nature of household-level shocks.

Research from my colleagues at the Ludwig Institute for Shared Economic Prosperity (LISEP) and others shows just how large this gap has become. When inflation rose in 2021, much of the debate framed price increases as a temporary concern overshadowed by the risk of recession. But for many, the pressure had been building for years. Essential expenses had outpaced median wages over the past two decades. For a family of four, between 2001 and 2023:

Rent: 40th percentile rents rose 125%.
Healthcare: Annual health-insurance premiums borne by middle-income workers more than tripled.
Childcare: The average price of center-based childcare doubled.
Wages: Median wages for typical workers rose by only 92% in nominal terms, resulting in a 4% decline in purchasing power for families whose budgets are dominated by necessities.

These aren’t short-term fluctuations. They are structural and cumulative increases in the cost of essentials, compounded by wage growth that lagged behind. That combination steadily eroded families’ room to maneuver. So, when inflation in groceries and consumer goods spiked in 2021—even for a relatively brief period—low- and middle-income Americans had precious little slack left to absorb it.

This is why focusing on headline inflation misses the larger, persistent threat. Rising unavoidable expenses have been pushing up the household cost structure for decades. CPI understates the rise in many essentials, and labor-market metrics often overstate the prevalence of living-wage jobs. Add in higher barriers to homeownership and education, and the financial path forward becomes even steeper. Consumer behavior reflects this reality. New tariffs introduced in 2025 were described as temporary “trade adjustments,” yet analysis from the Budget Lab at Yale University estimates they will raise consumer prices by roughly 1.7% and cost the average household $2,300 this year alone. Even if those increases eventually unwind, the impact will fall on households that have already been squeezed for decades, and many households are no longer assuming prices will fall back—they’ve been burned too often.

In a recent survey, 44% believe tariffs have already increased the price of goods and services, and a quarter reported switching to generic or private-label goods in response. These are not the behaviors of households expecting a quick return to pre-shock conditions.

Against this backdrop, new shocks—whether from AI-driven disruptions, federal layoffs, or additional trade-policy changes—may well land on households that are already stretched thin. Even well-intentioned policies can have unintended consequences if they are not evaluated through the lens of a household balance sheet. Focusing only on short-term affordability or only on long-term reform which may never come misses the point; both matter, because families must make both short- and long-run decisions at the same time.

After more than two decades of declining well-being for most middle- and low-income households, it is clear that structural reforms are needed to bring costs back in line with wages. Short-term fixes alone are unlikely to address the root causes of affordability and, if misguided, could even prove counterproductive. Effective leaders should recognize that working-class households need both immediate breathing room and policies that make long-term stability possible.

Ultimately, policy must be judged not only by aggregate performance of the economy as a whole or political resonance but by its ability to strengthen household financial resilience of all income groups—helping families make progress in good times and avoid lasting setbacks in bad. Until our measurement tools capture these realities directly, policymakers will continue to rely on short-termism, intuition, and ideological prejudices rather than evidence.

And while intuition and such prejudices may shape elections, and too often do, effective policy and the country’s well-being require something more precise: an economic framework that recognizes that very few shocks are ever truly “one-time” for the households who have to bear them.

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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Buddhist monks are walking barefoot from Texas to DC with their dog, drawing crowds across the South

Published

11 minutes ago

January 11, 2026

Jace Porter

A group of Buddhist monks and their rescue dog are striding single file down country roads and highways across the South, captivating Americans nationwide and inspiring droves of locals to greet them along their route.

In their flowing saffron and ocher robes, the men are walking for peace. It’s a meditative tradition more common in South Asian countries, and it’s resonating now in the U.S., seemingly as a welcome respite from the conflict, trauma and politics dividing the nation.

Their journey began Oct. 26, 2025, at a Vietnamese Buddhist temple in Texas, and is scheduled to end in mid-February in Washington, D.C., where they will ask Congress to recognize Buddha’s day of birth and enlightenment as a federal holiday. Beyond promoting peace, their highest priority is connecting with people along the way.

“My hope is, when this walk ends, the people we met will continue practicing mindfulness and find peace,” said the Venerable Bhikkhu Pannakara, the group’s soft-spoken leader who is making the trek barefoot. He teaches about mindfulness, forgiveness and healing at every stop.

Preferring to sleep each night in tents pitched outdoors, the monks have been surprised to see their message transcend ideologies, drawing huge crowds into churchyards, city halls and town squares across six states. Documenting their journey on social media, they — and their dog, Aloka — have racked up millions of followers online. On Saturday, thousands thronged in Columbia, South Carolina, where the monks chanted on the steps of the State House and received a proclamation from the city’s mayor, Daniel Rickenmann.

The physical toll of the monks long walk

At their stop Thursday in Saluda, South Carolina, Audrie Pearce joined the crowd lining Main Street. She had driven four hours from her village of Little River, and teared up as Pannakara handed her a flower.

“There’s something traumatic and heart-wrenching happening in our country every day,” said Pearce, who describes herself as spiritual, but not religious. “I looked into their eyes and I saw peace. They’re putting their bodies through such physical torture and yet they radiate peace.”

Hailing from Theravada Buddhist monasteries across the globe, the 19 monks began their 2,300 mile (3,700 kilometer) trek at the Huong Dao Vipassana Bhavana Center in Fort Worth.

Their journey has not been without peril. On Nov. 19, as the monks were walking along U.S. Highway 90 near Dayton, Texas, their escort vehicle was hit by a distracted truck driver, injuring two monks. One of them lost his leg, reducing the group to 18.

This is Pannakara’s first trek in the U.S., but he’s walked across several South Asian countries, including a 112-day journey across India in 2022 where he first encountered Aloka, an Indian Pariah dog whose name means divine light in Sanskrit.

Then a stray, the dog followed him and other monks from Kolkata in eastern India all the way to the Nepal border. At one point, he fell critically ill and Pannakara scooped him up in his arms and cared for him until he recovered. Now, Aloka inspires him to keep going when he feels like giving up.

“I named him light because I want him to find the light of wisdom,” Pannakara said.

The monk’s feet are now heavily bandaged because he’s stepped on rocks, nails and glass along the way. His practice of mindfulness keeps him joyful despite the pain from these injuries, he said.

Still, traversing the southeast United States has presented unique challenges, and pounding pavement day after day has been brutal.

“In India, we can do shortcuts through paddy fields and farms, but we can’t do that here because there are a lot of private properties,” Pannakara said. “But what’s made it beautiful is how people have welcomed and hosted us in spite of not knowing who we are and what we believe.”

Churches, families and towns host the monks along their path

In Opelika, Alabama, the Rev. Patrick Hitchman-Craig hosted the monks on Christmas night at his United Methodist congregation.

He expected to see a small crowd, but about 1,000 people showed up, creating the feel of a block party. The monks seemed like the Magi, he said, appearing on Christ’s birthday.

“Anyone who is working for peace in the world in a way that is public and sacrificial is standing close to the heart of Jesus, whether or not they share our tradition,” said Hitchman-Craig. “I was blown away by the number of people and the diversity of who showed up.”

After their night on the church lawn, the monks arrived the next afternoon at the Collins Farm in Cusseta, Alabama. Judy Collins Allen, whose father and brother run the farm, said about 200 people came to meet the monks — the biggest gathering she’s ever witnessed there.

“There was a calm, warmth and sense of community among people who had not met each other before and that was so special,” she said.

Monks say peace walks are not a conversion tool

Long Si Dong, a spokesperson for the Fort Worth temple, said the monks, when they arrive in Washington, plan to seek recognition of Vesak, the day which marks the birth and enlightenment of the Buddha, as a national holiday.

“Doing so would acknowledge Vesak as a day of reflection, compassion and unity for all people regardless of faith,” he said.

But Pannakara emphasized that their main goal is to help people achieve peace in their lives. The trek is also a separate endeavor from a $200 million campaign to build towering monuments on the temple’s 14-acre property to house the Buddha’s teachings engraved in stone, according to Dong.

The monks practice and teach Vipassana meditation, an ancient Indian technique taught by the Buddha himself as core for attaining enlightenment. It focuses on the mind-body connection — observing breath and physical sensations to understand reality, impermanence and suffering. Some of the monks, including Pannakara, walk barefoot to feel the ground directly and be present in the moment.

Pannakara has told the gathered crowds that they don’t aim to convert people to Buddhism.

Brooke Schedneck, professor of religion at Rhodes College in Memphis, Tennessee, said the tradition of a peace walk in Theravada Buddhism began in the 1990s when the Venerable Maha Ghosananda, a Cambodian monk, led marches across war-torn areas riddled with landmines to foster national healing after civil war and genocide in his country.

“These walks really inspire people and inspire faith,” Schedneck said. “The core intention is to have others watch and be inspired, not so much through words, but through how they are willing to make this sacrifice by walking and being visible.”

On Thursday, Becki Gable drove nearly 400 miles (about 640 kilometers) from Cullman, Alabama, to catch up with them in Saluda. Raised Methodist, Gable said she wanted some release from the pain of losing her daughter and parents.

“I just felt in my heart that this would help me have peace,” she said. “Maybe I could move a little bit forward in my life.”

Gable says she has already taken one of Pannakara’s teachings to heart. She’s promised herself that each morning, as soon as she awakes, she’d take a piece of paper and write five words on it, just as the monk prescribed.

“Today is my peaceful day.”

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Business

What global executives need to ask about China in 2026

Published

42 minutes ago

January 11, 2026

Jace Porter

2025 was a turbulent year for China. The country began the year battling geopolitical headwinds and weak domestic demand. By April, new tariffs and trade frictions triggered some of the most significant trade actions in decades.

Yet by November, the story had changed. China’s annual trade surplus passed $1 trillion, a record high. GDP growth remained steady at around 5%. The country seems to have shrugged off concerns of “deglobalization.”

What does 2026, the Year of the Horse, pose for China? The headlines may focus on Trump tariffs or real estate woes, but there are more subtle trends happening that will define China’s economic trajectory. China presents new challenges for international business, particularly from confident local competitors, but there are still opportunities for disciplined global executives. Five key questions will matter as the world’s second-largest economy navigates a fast-changing global economy.

How will tariff uncertainty shape your China strategy?

China has long dominated global manufacturing, thanks to its cost competitiveness and integrated supply chains. That strength remains intact despite higher U.S. tariffs in 2025, which have now stabilized at around 50%. The tariffs barely dented China’s trade: The country’s share of global goods exports held steady at around 14%, four times greater than India and Vietnam combined.

The reason is that China has already broadened its trade partners. Goods exports to the U.S. represent just 2-3% of China’s GDP, and over half of China’s goods exports now go to Global South economies including ASEAN, Latin America, the Middle East, and Africa.

China also exports more knowledge-intensive goods, such as electronics and automobiles, and fewer labor-intensive goods, like furniture and toys.

Beijing’s bought itself some time, but 2026 will be the test of how resilient China’s export economy truly is. Trade patterns will continue to shift, with one analysis by the McKinsey Global Institute suggesting that as much as 30% of global trade could be shift corridors by 2035. The trade map is being redrawn in real time.

Multinational companies with a presence in China need supply chain flexibility, so that can rewire their operations as quickly as China’s companies can.

Where are Chinese consumers spending, and what does that mean for global brands?

Before the pandemic, Chinese consumers drove near-double-digit retail growth each year. Yet in 2025, consumer confidence hit historic lows, youth unemployment hovered around 15%, and real estate remained stagnant. Yet retail spending grew around 4-5% in the first three quarters of 2025 year-on-year.

Chinese consumers continue to spend—just on different things. Tourism spending rose 12% in the first three quarters of 2025, while box office revenue jumped 22%. Government subsidies supported double-digit growth in spending on electric vehicles and home appliances. Discretionary spending, however, struggled.

The opportunity for executives lies in tapping China’s sizable household savings. Consumers are waiting for something worth buying, and so the challenge will be to offer products and services that Chinese shoppers think are genuinely worth pursuing. Competing on price alone won’t work; only a compelling value proposition will unlock these locked savings.

Can your business survive and thrive in China’s hyper-competitive market?

China is struggling with deflationary pressure, even as the West fights inflation. 2025 accelerated what the Chinese call “involution”, an intense competition that erodes margins across the industry. Roughly 30% of large industrial firms reported losses, up from 20% before the pandemic.

But the period of “overcapacity” may be easing. Fixed asset investment slowed, and then shrank, reflecting weaker spending in some sectors. Rather than being a concern, lower investment may signal that companies are pulling back from excessive expansion, correcting years of overinvestment that flooded markets and destroyed pricing power. That adjustment, if reinforced by appropriate reforms, could eventually stabilize margins.

Companies must now differentiate through technology, branding and services, and not just price. Importantly, success in China will lead to a competitive advantage anywhere else in the world. Otherwise, competition with Chinese players can be brutally unforgiving—not just on their home turf, but increasingly overseas as well.

Are you ready to face Chinese competitors abroad?

China has attracted foreign capital for decades. But last year, China turned into growing source of investment. Foreign direct investment announcements into China between 2022 and 2025 fell by roughly two thirds, compared to between 2015 and 2019 on an annualized basis. Outbound Chinese FDI announcements held steady at around $100 billion annually, but it’s broadened beyond the traditional destination of emerging Asia to newer markets like Latin America, the Middle East and Europe.

Chinese companies are also becoming global cultural exporters. Pop Mart’s Labubu figurines, the blockbuster Black Myth: Wukong, and Chinese EV brands have all captured global audiences. This reflects a growing form of commercial “soft power,” as Chinese culture, lifestyle trends and consumer brands penetrate markets.

In 2026, expect to face Chinese competitors on your home turf. Global South markets, and their younger and increasingly affluent populations, are becoming more important to Chinese companies, but Western economies still present an opportunity for Chinese brands that are competitively priced and culturally relevant. It’s not a question of whether Chinese companies are coming; it’s whether you’re ready to match their speed, cost, and efficiency.

Will Chinese AI reshape productivity, in China and beyond?

Before 2025, Silicon Valley looked like it had an insurmountable lead over China in AI. Then came perhaps the biggest China story of the year: DeepSeek’s open-source AI model that rocked markets and intensified AI competition in China, the U.S., and around the world.

China is now an AI leader, even amid tough U.S. export controls and a moribund venture capital sector. Major tech firms like Alibaba rolled out models competing with the best from the U.S., while a swarm of “little dragons”—smaller, agile AI startups—released their own innovative models. Chinese AI now perform strongly on LLM leaderboards

China’s innovation engine—rapid iteration, cost-efficient scaling, substantial engineering talent, and collaborative open-source development—explains how the country was able to take the lead on AI.

But business impact is more important than technical performance. Will this AI capability translate into meaningful productivity gains?

McKinsey Global Institute analysis finds Chinese companies rank in the top ten in 16 of 18 sectors that can drive up to one-third of GDP growth by 2040, with AI playing an important enabling role across many of them.

More meaningful signals may emerge next year, as China continues to invest in AI use-cases across its manufacturing sector. A new “DeepSeek moment,” perhaps in industry, might be a sure bet for 2026.

Looking ahead

2026 begins with sharper risks for China: Geopolitical uncertainty, a struggling real estate sector, strained public finances, and elevated youth unemployment. Yet what draws companies to China—scale, innovation, and global influence— remain as compelling as ever.

The companies that will win in China next year won’t be those with the best macroeconomic forecasts, but rather those that can win on the ground: building resilient supply chains, differentiating themselves from the competition, and harnessing the country’s innovation.

For global businesses prepared to operate with this level of discipline, China can still be a lucrative market in the Year of the Horse.

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Business

Allegiant to acquire Sun Country in deal valued at $1.5 billion

Published

1 hour ago

January 11, 2026

Jace Porter

Allegiant Travel Co. will acquire Sun Country Airlines Holdings Inc. in a cash-and-stock deal valued at $1.5 billion including Sun Country’s debt, the two carriers said in a joint statement on Sunday.

Sun Country’s shareholders will receive 0.1557 shares of Allegiant common stock and $4.10 in cash per Sun Country share, the companies said. The offer represents a premium of 19.8% over Sun Country’s closing share price on Friday, according to the statement.

The combined entity will provide more than 650 routes, including 18 international destinations in Mexico, Canada, the Caribbean and Central America, the companies said.

“Together, our complementary networks will expand our reach to more vacation destinations including international locations,” said Allegiant Chief Executive Officer Gregory C. Anderson in a statement.

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