She left her NYC teaching job to open a sewing studio. Here's how she did it.

Kate Saffady, 50, runs Brooklyn Stitch Studio full-time as of June 2026. Her revenue year-to-date is around $190,000.

George Etheredge for BI

• Kate Saffady left teaching to manage her Brooklyn sewing studio full-time.
• Brooklyn Stitch Studio offers sewing classes for kids and adults.
• Saffady had to navigate NYC's business costs, balancing expenses and income to make it work.

Tucked in a brick building in Carroll Gardens, Brooklyn, is a studio with four white walls with highlights of blue and purple furniture, where children go to sew.

At the Brooklyn Stitch Studio, kids ages eight and up dedicate 90 minutes after school to working on self-directed projects — coming out with sweatshirts and zip pouches.

The more sew-savvy kids help out those still trying to get over the learning curve — in the meantime, they form tight-knit groups, and although the shop's owner, Kate Saffady, encourages it, it seems to happen organically as they share the space, she said.

This spring, Saffady saw that the studio was bringing in more revenue than her preschool teaching job, and in June, the 50-year-old left the classroom to run the studio full time.

Brooklyn Stitch Studio is located inside Gowanus Creative Studios, a Brooklyn workspace complex.

George Etheredge for BI

In 2025, she earned almost $110,000 with her studio while working as a teacher. Year to date, Saffady has earned around $190,000 in revenue and expects additional income in November, when she begins booking the winter session.

In addition to the after-school courses, Saffady also offers private sewing events, birthdays, and one-off adult workshops. She has done everything herself, from building her website to the business's accounting.

"This business is kind of hyperlocal, very specific to this area, so that's why I wanted Brooklyn in it," she said in reference to the studio's name.

Saffady said she usually spends more on fabric for adult classes, since they have a wider range of aesthetics and tastes, while kids are usually easier to buy fabrics for.

George Etheredge for BI

Saffady is one of the business owners Business Insider has interviewed for our Cost of the City series, where we report on what it takes to make it work in New York City, one of the most expensive cities in the country.

The Albany-born small-business owner moved to NYC in 1994. She has lived in Carroll Gardens, Brooklyn, for 25 years.

Her mom was a quilter, and as an adult, Saffady practiced sewing on and off. Yet, it was only in 2019 that she picked it up again. This led her to open a four-week crafts summer camp in a rented classroom during the summer of 2022. Seeing how kids really took to the sewing section, the camp focused solely on sewing the next year. By January 2025, she opened a physical studio and started hosting classes there.

The cost of growing a small business in NYC

To furnish the space, she bought chairs and tables from Ikea and Walmart and spent thousands on sewing machines and materials, putting the expenses on a credit card that she is still paying off. By spring of 2025, she was breaking even on the studio space.

Since sewing became her job, Saffady has had to find other pastimes, such as beading and embroidery. "Turning my hobby into a business has completely eliminated my personal hobby of it," she said.

George Etheredge for BI

In April 2026, she moved to a larger room in the same building, where rent, maintenance, and utilities total $2,587 a month. The additional space allowed her to host larger events and build more momentum.

"My rent increased a lot, but I'm also able to do so many more things that I couldn't do in my old space," she said.

After-school classes cost $60 to $80, while workshops run $90 to $110. With 12 machines, she typically caps most classes at 12 students, though there are some exceptions for bigger events. Five or six attendees typically cover a class's costs, though she will run smaller classes of four students to build word-of-mouth demand.

She also pays around $55 in monthly liability insurance and over $200 in materials a month. Fabric is the biggest burden, since wholesalers require large upfront bulk orders. For Saffady, that meant spending around $3,500 on initial orders with two different fabric suppliers.

"You have to bite that bullet and make that first large order," she said.

Saffady pays over $2,400 a month out of pocket for health insurance for herself, her husband, and her three children. She also has to pay New York City's unincorporated business tax, a 4% tax on qualifying business income. Yet, fluctuating revenue makes it difficult to estimate in advance how much she will have to pay in taxes, meaning she has to build a savings cushion for those taxes.

"That's just the cost of doing business in New York," she said.

Saffady has made some sacrifices to offset these expenses. She has yet to install internet and has given up street visibility for a studio in a larger complex — she said the lower rent, the building's services, and nearby businesses make the trade-off worthwhile.

"Ideally, I would have wanted to be in a retail storefront, in a more visible foot traffic area," she said.

Leaving the classroom

Her experience as a preschool teacher has also helped her transition into her new role.

"My pace is naturally slow, and I'm used to breaking it down. It comes easily to me to soothe someone when they're frustrated or upset," she said. "It's very similar to the scenarios that happen in preschool."

Saffady in her studio, sitting in front of tote bags, purses, wallets, and pouches she and her son have sewn.

George Etheredge for BI

To prepare for the switch, she saved all the money that came in from the studio and, with her husband, decided to be more financially conservative as the business grows. Although she gave up a stable income, she has gained a more balanced life.

"The more events I booked, the more momentum started to build, and I felt like I couldn't turn things away," she said.

For a 90-minute sewing class, it's at least 2 hours of prep time. Now, Saffady spends most of her day preparing for prep work for the kids — something she used to have to do at night after her teaching job.

"I'm just on the cusp of realizing how much more balanced my life can be," she said.

Living in NYC is costly, but it is key to how Saffady runs her client-based business.

"There's such a large pool of potential customers in New York. As difficult as it is with the costs here. It must be so much more difficult to do something like this in a smaller area."

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Flying in Beta Technologies' Alia CX300 showed me why electric planes aren't mainstream yet

tk

• Beta's electric plane can already fly for hours. So why aren't paying passengers riding in one yet?
• The biggest roadblock is hiding under the floor: nearly 3,000 pounds of batteries.
• Beta is racing toward a 2027 certification target, but getting airborne may be the easy part.

US airline fares rose almost 24% over the past year, making the prospect of cheaper short flights especially appealing.

One possible solution: electric planes.

For our video series, "The Limit," I recently took a 25-minute flight on Beta Technologies' Alia CX300. The journey used about $5.25 in electricity. A comparable trip in a conventional jet-fuel-powered plane would have cost an estimated 10 times as much in fuel, about $60

Electric aviation has spent decades promising an electric-car-style revolution. Beyond lower costs, electric planes could make short flights quieter and produce no in-flight emissions.

Now, one Vermont-based company is facing a crucial test.

Beta Technologies is aiming to get its Alia CX300 certified by the Federal Aviation Administration by the end of 2027. The plane has already flown nearly 400 miles on a charge and stayed airborne for over five hours.

The question is whether those advantages can translate into a viable business. Other electric-aircraft startups have run into financial trouble after spending years trying to bring aircraft to market.

I toured Beta's manufacturing facility, watched how it builds its batteries and aircraft, and flew aboard the CX300 myself.

What I saw helps explain why electric planes still aren't regularly carrying passengers, more than 50 years after the first electric aircraft flew — and what Beta has to accomplish over the next year if it wants to change that.

Beta thinks controlling almost everything could give it an edge.

Nicolas Economou/NurPhoto via Getty Images

Other electric-aircraft companies have already gone under after spending years and billions of dollars trying to bring their planes to market.

Beta is taking a vertically integrated approach, building its own batteries, propulsion systems, planes, and charging technology.

The company went public in November 2025, raising more than $1 billion. “It was the largest founder-led industrial IPO in history,” Beta founder and CEO Kyle Clark told me.

The physics are still working against electric planes.

Each of Beta's battery packs weighs about 560 pounds.

Busienss Insider

In order to fly about 300 nautical miles, the Alia CX300 must carry nearly 3,000 pounds of batteries. The jet fuel needed to fly a comparable distance would weigh only about 50 pounds.

The CX300 can carry just five passengers and one pilot, underscoring how battery weight constrains the size and range of electric aircraft.

That's why Beta is initially targeting relatively short routes of about 150 to 200 miles.

So Beta designed an airplane around using as little energy as possible.

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The CX300's 50-foot tapered wingspan, V-shaped tail, and rear-mounted propeller reduce drag and conserve battery power. Its wing shape was inspired by the Arctic tern, a bird known for its long migrations.

During my flight, the pilot shut off the motor, and the aircraft continued gliding without power. With a roughly 17-to-1 lift-to-drag ratio, Beta says the CX300 could glide down to a suitable landing strip after a complete loss of power.

The CX300 is fast and surprisingly maneuverable.

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While I was inside the aircraft, the sheer acceleration took me by surprise.

The CX300 reached roughly 87 knots, about 100 mph, before lifting off, and once we were airborne, the pilot put the plane through a series of sharp rolls and banks.

The flight was smooth overall, though the sharp banking was enough to make me a little queasy. I don't blame the electric propulsion: I think that would have happened to me in any small plane.

Then there's the infrastructure problem.

Inside Beta Technologies headquarters.

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A gas-powered aircraft can land and refuel at airports around the world, while an electric plane needs charging infrastructure to get back into the air.

Beta has installed more than 120 charging stations across the US, and its system can recharge an aircraft in under an hour.

The company is also building the charging technology itself, meaning it can develop the planes, batteries, propulsion systems, and infrastructure as parts of the same ecosystem.

Beta is spending hundreds of millions before its plane reaches commercial service.

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Getting the technology to work is expensive. Beta says it generated a little more than $35 million in revenue last year against about $400 million in operating expenses.

The company is also building a business around replacement batteries, which it expects customers to need repeatedly over an aircraft's lifetime.

2027 could be the real test.

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Beta is targeting FAA-conforming production of the Alia CX300, its conventional-takeoff aircraft, at the end of 2026 or early 2027, with certification expected by the end of 2027.

The company plans to start with medical, cargo, and defense missions before moving into passenger service, while continuing to develop a vertical-takeoff version that wouldn't need a conventional runway.

Certification still won't guarantee cheap electric flights.

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Electricity itself can be cheap: The CX300 demonstration flight I was on cost only a few dollars in electricity, according to Beta.

Commercial operators would still have to pay for pilots, maintenance, insurance, charging infrastructure, and battery replacements.

Beta has already shown that an electric plane can fly hundreds of miles. By the end of 2027, it hopes to prove something much harder: that one can make it through certification and become a commercial aircraft.

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NYC's DoorDash settlement is just one part of Mamdani's big swing against delivery apps

New York City Mayor Zohran Mamdani.

ANGELA WEISS / AFP via Getty Images

• The last two NYC mayors have gone after major delivery companies.
• Mamdani's win against DoorDash this week is part of a bigger campaign over gig worker pay and safety.
• Business leaders fear Mamdani's policies could reduce job investments and impact local employment.

Mayor Zohran Mamdani's win against DoorDash is just one battle in his bigger war on delivery companies.

The $131.5 million settlement accomplished what former mayor Eric Adams' administration had begun. Now, regulating companies like Amazon, DoorDash, and Uber Eats has become a pillar of Mamdani's approach to the business world: His administration confronts blue-chip employers with lawsuits and tighter policies, and supports union efforts to boost worker safety and financial security.

Business Insider spoke with City Hall leaders, union representatives, and companies at the center of Mamdani's delivery work crackdown. Worker advocates are pushing for even tighter protections, while employers worry about what it means for their businesses and operations in the city.

DoorDash said in its Tuesday statement, "We screwed up," but other companies say increased regulation could make it harder for delivery businesses to operate in NYC.

DoorDash isn't the first delivery app to get dinged in NYC

Regulating the delivery economy is thorny, especially when thousands of New Yorkers' incomes are on the line. Business leaders, big and small, say that with more hoops to jump through, they will be less likely to invest in jobs in NYC.

The administration has received this criticism before, with business leaders concerned that Mamdani's policies — ranging from city-run grocery stores to taxes — could undermine job stability for small vendors and local workers.

The Mamdani administration's main focus has been on eliminating delivery app junk fees and enforcing scheduling laws and gig worker protections enacted before the mayor took office.

The city's Department of Consumer and Worker Protection led the effort to secure the DoorDash settlement after a court found that 264,000 Dashers were underpaid or paid late.

The DCWP previously settled multimillion-dollar lawsuits with Uber Eats and Hungry Panda over what courts found to be labor violations, like unnecessary charges and unfair wages. Commissioner Sam Levine called the Tuesday settlement "a real game changer for our enforcement and our policy development."

Few cities have the kind of gig worker protections that NYC is pushing for, and any wins from the Mamdani camp could set the tone for worker protections in other metros. "My message to other cities is copy us, do better than us," Levine told Business Insider.

Beyond legislation, Mamdani's team sponsored a new Deliverista Hub in lower Manhattan with charging stations and resources for workers at app-based delivery companies.

Ligia Guallpa, executive director of the Workers' Justice Project — a union representing delivery workers, cleaners, and construction workers — told Business Insider over the summer that her organization has seen the mayor, "delivering settlements, making concrete changes in the industry, forcing app delivery companies into compliance, and ensuring they treat workers more fairly and with dignity."

Up Next: Amazon

In August, Mamdani announced his support for the Delivery Worker Protection Act, a City Council bill that would increase licensing requirements for companies operating delivery-focused warehouse facilities, opening the door to expanded safety, training, and resources for workers. It would also make it more difficult for online sellers like Amazon to hire subcontractors without the same benefits and safety protections as full-time employees.

Amazon delivery workers don't operate under the same schedule and pay structure as traditional gig workers — they are direct W-2 employees of the companies that contract with Amazon to drop off packages rather than operating independently — but City Hall is taking steps to improve their working conditions, too.

The retail goliath contracts with last-mile warehouses in New York, where subcontractors handle the final step of the delivery process. Eighteen of those facilities opened in the five boroughs between 2017 and 2025, per the Comptroller's Office.

Despite being a full-time delivery contractor, NYC delivery driver and union leader Luc Rene said that his shifts and weekly income are unpredictable, and he often has to buy his own work equipment.

"It's always a fight to get a job," he said, adding that he and his colleagues aren't always guaranteed 40-hour weeks.

A spokesperson for Amazon referred reporters to the company's testimony sent to City Hall over the latest delivery worker protection proposal, which says the law would threaten "the small businesses that deliver to customers, putting the jobs of more than 5,000 of their employees at risk, and forcing us to consider relocating delivery operations outside of the city."

The New York Delivers Coalition, a group of 50 small businesses, also sent a letter to lawmakers in August, asking them to "consider the real world ramifications this legislation will have on the small, family-owned business community."

As the mayor's worker protection czar, Levine said his next policy goals include cracking down on dynamic pricing and algorithm-created wages for New Yorkers, which Business Insider found already impacts the delivery economy.

"We're in a complex economy — there's going to be complexity — it's who gets to make the rules," Levine said. "Do we leave that entirely to corporate America, or do we say that the people of the city of New York should have some say in how much workers are getting paid, what relief they're entitled to when they're underpaid?"

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Trump wants potash from Belarus. A Canadian premier warns it would have to go through Russia.

Canada supplies the vast majority of US potash imports, a key fertilizer ingredient.

Heywood Yu/Bloomberg/Getty Images

• President Donald Trump is seeking cheaper potash from Belarus as his trade fight with Canada continues.
• A Canadian premier warns that the fertilizer would have to be shipped through Russia.
• Belarus says it has little additional supply because this year's output is already contracted.

President Donald Trump's plan to buy potash from Belarus has drawn a warning from the leader of Canada's biggest potash-producing province, who says the fertilizer would have to be shipped through Russia.

His comments came after Trump said Monday that the US is negotiating a "massive Deal" to buy potash from Belarus.

"The pricing would be for substantially less than we are currently paying to Canada, very good news for our Farmers and Ranchers.," Trump wrote on Truth Social.

Potash is a key fertilizer ingredient used to boost crop yields, and Canada supplies the vast majority of US imports.

The proposal is the latest front in Trump's trade fight with Canada.

His administration has repeatedly targeted Canadian exports, although potash has largely been exempted from tariffs given its importance to US agriculture.

Scott Moe, the premier of Saskatchewan, argued that Belarusian potash would have to travel through Russia before reaching US farmers, raising questions about Trump's claim that it would be cheaper.

"Does anyone believe Belarusian blood potash shipped through Russia is going to be more affordable, more sustainable or more ethical than potash shipped from Saskatchewan - right here in North America?" Moe wrote in a post on X.

Belarus is landlocked, and sanctions imposed over its support for Russia's invasion of Ukraine, along with the loss of its main export route through Lithuania, have made its potash more expensive to ship to the US through Russia.

Moe has previously warned against using potash as a trade weapon.

As Canada weighed retaliatory trade measures last month, he urged Ottawa not to target potash exports, arguing that the move would hurt Canadian producers and encourage US buyers to look elsewhere.

Whether Belarus can significantly increase shipments to the US is also unclear.

Belarusian leader Alexander Lukashenko said earlier this month that Belarus had resumed selling potash to the US after Washington lifted sanctions on Belarusian potash producers.

He also called on Washington to release more than $40 million in Belarusian funds frozen in the US banking system.

On Monday, Lukashenko suggested Belarus may have little additional potash available for new Western buyers.

"We simply do not have those volumes - everything is contracted," he said, according to a post from his office.

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A $750 million hedge fund manager shares the 4 things he’s watching as energy markets teeter

Jeffrey Baird, Managing Partner of Merritt Point Partners

Merritt Point Partners

• Oil markets have avoided catastrophe after six months of war, but the situation is becoming grim.
• An expert commodities trader explained the four things he's watching, and what's kept prices down.
• The situation going forward is even more uncertain, said Baird.

Shortly after the US military's late February strike on Iran and the following Strait of Hormuz blockade, oil seemed poised to reach record heights if the war continued.

Instead, the oil markets have settled at an expensive —but not catastrophic — $100-ish a barrel, much lower than what hedge fund manager Jeff Baird would have expected after six months of war.

Baird has spent 25 years trading commodities and runs Merritt Point Partners, a $750 million hedge fund specializing in the asset class. Their general commodity strategy, which uses a range of long and short options across a variety of commodities, has returned over 16% in the last twelve months, according to a person familiar with the matter.

That experience has taught Baird to "adopt an attitude of humility when confronted with things that have never happened before," he said. Doubly so when the industry is facing huge amounts of uncertainty after becoming accustomed to real-time inventory data and satellite tracking of cargo in recent years.

JPMorgan oil market analysts laid it plainly in a report this week, saying that for the first time since the conflict began, they "don't have a baseline view."

"We simply don't know how to model the endgame," the Thursday report said.

Baird agreed that "we don't know what's going to happen," Baird said. But that doesn't mean there aren't signals to watch.

He identified three main price-moderating forces: heavy reliance on strategic petroleum reserves, a decrease in oil demand for some countries, and China stepping back from oil market purchases.

Now, those same three factors will be important signals as to just how much longer oil can stay away from record prices. And while we may not know what China will do or whether oil demand will spike back up, we do know that time is running out for the US Strategic Petroleum Reserve.

"Can we continue to draw and rely on them for a couple of months? Probably," Baird said. "But six more months? We're going to have to do something else," Baird said. "We can't just rely on inventories at that point."

Here are 4 things to watch:

Strategic petroleum reserves

Over the last five months, the US Strategic Petroleum Reserve has pumped out an average of nearly 25 million barrels a month. It's now at 285 million barrels, just a little over 30 million barrels, or a little over a month at that outflow rate, above its congressionally mandated limit.

More concerning are the "operational challenges" in the storage facilities where the oil is kept. Some of the oil may be too "briney and heavy" to use or hard to pump out.

"Those storage caverns have been in use for 50-plus years, and are now at levels that we haven't seen before," Baird said, adding that he's already heard of problems extracting oil from some caverns.

Those constraints may help explain why reserve outflows slowed to a "trickle" of 400,000 barrels last week, Baird said. If that pace continues for the rest of September, monthly outflows would fall below 2 million barrels — roughly one-ninth of August's level — which could cause prices to rise.

With just months left in the US strategic reserve, the question is now: what will happen if reserves can't meet demand?

It won't "reveal itself" as some grand calamity, but instead will create a ripple effect across the buffer inventories held by refiners, Baird said. They will run out of their own spare inventory that they keep in case operational hiccups delay their deliveries.

Demand destruction

Demand destruction, or reducing usage, across emerging markets and China has also played a large role, said Baird. He estimates that consumption has dropped by roughly 4 to 6 million barrels a day.

China's rapid electrification project and export of electric vehicles played a major role, but much of this could also have to do with people and companies in emerging markets not being able to afford things they once did.

Demand destruction can be hard to understand because it's both diffuse and from some of the hardest places in the world to get data about, but he said you can tell they're using less by "inferring from inventory levels and production and shipping," he said.

It could manifest itself in a person choosing to take a train instead of a plane, Baird said, or for a company to hold off on shipping a product for months to avoid paying three times higher diesel prices.

But whether it's because the holidays are coming or that shipment is now needed for some industrial process, shippers may soon need to send their products out regardless of the price.

"There's a risk that some of that demand response we've seen is temporary," Baird said. "People made choices because they believed this conflict was going to be temporary, and not last for six months."

China

China, the world's largest importer, has played a massive role in keeping prices down by substantially stepping back from the Middle Eastern market.

Shortly after the COVID shock, China began aggressively buying oil to build its own reserves up to 2 billion barrels, said Baird, but once this conflict began, its purchases from the Middle East were cut in half from roughly 14 million barrels before the conflict to seven million barrels by July.

According to Baird's estimates, it stopped stockpiling roughly 2-4 million barrels a day, alongside domestic demand destruction of three to five million barrels a day.

This decision, which has opened up another four to seven million daily barrels of oil, seems like a shrewd move to get into good graces with their Asian neighbors, Baird said, by posing themselves as "reliable partners," in contrast to America.

Once the US and Iran agreed to halt hostilities in July and crude began to flow, China's purchases recovered roughly half of the seven million daily pullback.

As for the future, Baird cautioned against trying to read Xi Jinping's mind, but said he'll be closely watching their import numbers since Saudi Arabia's East-West pipeline was attacked and taken offline, drastically reducing the country's ability to export.

The firm's "loosely-held" view is that China will take what is available from the Middle East, but will not go out and bid in other markets, Baird said.

"That might change if it becomes clear that this situation is going to persist indefinitely, and that the risks are tilted to the loss of more supply rather than the resumption of full flows," Baird said.

As such, his "hunch" is that for now, China could slow down its purchases again.

The market

As potential oil blockades pile up, Baird still cautions against doom, drawing on his personal experience, such as the aftermath of the Russia-Ukraine war.

"If there's a lot of money on the line, people will figure out a way to make something happen," he said.

Some solutions are at the state level, like the US government convoying oil out of the Strait and Iran sending oil by rail as ways to get oil out, even if they're expensive, he said. The thing with markets is, if something pencils out, a market actor should decide to step in.

Take the highly refined and extra-expensive diesel market, battered by the Strait blockages and Ukrainian attacks on Russian refiners.

Cracks, or the cost to refine raw oil into diesel, are almost at $100 a barrel, up from somewhere between $10-20 a barrel. This is pushing diesel to prices that could bring more refiners online, or push them to run 24/7 to maximize their output.

"Every refiner on Earth, that is operational and not under direct military attack, should be motivated to do everything in their power to maximize output," he said. "If you're a refiner right now, you're possibly making decades worth of revenue in months."

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The double-whammy that's about to hit the US economy

iStock; Tyler Le/BI

If you ask most economists, market experts, and even the Federal Reserve, the story of the US economy for the rest of 2026 will be one of strong and steady growth. But there are serious reasons to doubt this forecast of calm waters.

There's no better example of the sanguine consensus view than the Fed's latest Summary of Economic Projections, released as part of the central bank's meeting on Wednesday. According to the FOMC's rundown, no participants saw the risks to GDP growth as tilted to the downside. Meanwhile, after this week's interest rate hike — the first in three years — investors and analysts don't really see the Fed taking much more action. In the face of buoyant growth predictions and strong financial conditions, the market is priced for another two rate hikes between now and March, not much else. Again, this feels optimistic given the near-term risks that inflation could reheat in the coming months.

Despite the rhetoric, the US economy is facing a squeeze from two ends. The first is a slowdown in consumer spending, as Americans pull back amid higher inflation, sluggish income growth, and geopolitical uncertainty. The second is the Federal Reserve's renewed interest rate hikes, which will ultimately need to slow the economy down to tame price hikes. Hoping for inflation to cool on its own seems more difficult to justify every month that inflation remains above the Fed's target.

There are reasons to expect consumer spending to slow and reasons to expect the Fed not to act as a shock absorber. The net effect of this is clear: somewhat higher unemployment and somewhat tighter financial market conditions (aka lower stock prices), in order to ultimately achieve slower inflation.

Consumer likely cools

In recent years, American consumers have been the crucial drivers of the economy. While AI has attracted considerable attention, consumer resilience has been an important driver of US GDP. In the first half of 2026, Americans did their part and used their wallets to fuel the economy. Indeed, in the second quarter of the year, real consumption added nearly 2.5 percentage points to growth. Growth in the current quarter continues to run at a breakneck pace, but looking at the rest of the year, there are several reasons to worry that spending may not hold up.

The most obvious reason for the slowdown is that the boost from larger tax refunds is fading away. In the first half of the year, Americans saw about an 11% increase in their average refund compared with last year, thanks to changes made by last year's Big Beautiful Bill tax reform law. The boost in income from lower taxes has contributed 0.4 percentage points to US GDP so far in 2026, according to Brookings' Fiscal Impact Measure. Despite this tailwind, inflation-adjusted consumer spending grew at only a 2.0% annual pace over the first half of the year, similar to its 2025 rate. In the second half of this year, the contribution of taxes and benefits to US GDP is projected to slow to zero, then become a drag on the economy in 2027 — in other words, fiscal policy is transitioning from tailwind to headwind.

In addition to losing the tax-refund boost, American households will soon be forced to deal with a larger geopolitical uncertainty tax in the form of higher gas and food prices. As the war in Iran drags on, higher commodity prices will bleed into the prices you pay at the pump and at the grocery store. One way to gauge the shock is to compare movements in headline and core inflation — the former includes all goods, while the latter strips out food and energy prices. In the last three months, the gap between the two measures has narrowed, suggesting that the price pressure from gas, eggs, and their ilk is declining.

However, signs suggest that the rest of the year will be a bit more challenging. On energy, prices for refined energy products have been rising. Nationwide retail gasoline prices are up $1.25 per gallon on average compared to the same time of year. This is particularly alarming since energy prices typically fall at this point of the season, thanks to the end of the summer driving surge.

Next, the rise in diesel prices and agricultural commodity prices, two important cost drivers for farmers and other parts of the agricultural supply chain, means grocery store prices will almost certainly accelerate into year-end. In short, the "shock tax" that Americans feel at the pump and the grocery aisle will only increase over the rest of the year.

The final headwind to consumer spending is set to come from the housing market, as mortgage rates climb and the number of Americans moving stalls. Home sales were already slowing before the latest run-up in mortgage rates, which have recently topped 7% for the first time in over a year. And as home sales slow, so too do purchases of major household goods like furniture, appliances, and carpeting. It usually takes six months for the slowdown in home sales to filter down into decreased spending on big-ticket items, which is important, since the contribution from furnishings and durable household equipment punched above its weight in the second quarter. The slowing in home sales over the past few months implies this good news will turn sour by year-end.

Fading fiscal relief, a rising geopolitical tax, and a decline in people moving homes, all in the context of relatively sluggish growth in wages and salaries, imply that household consumption growth will probably moderate into next year. Consumption is an important part of US growth, and, importantly, many more jobs are tied to consumer spending than to business investment. If people don't buy as much stuff, firms don't need to produce as much stuff either.

The Fed keeps squeezing

At the same time that American consumers are tightening their purse strings, the Fed is tightening as well. The central bank raised interest rates on Wednesday, and despite the ho-hum market expectations, additional hikes are likely on the horizon. Continued hikes are likely to slow the economy. That is ultimately the point of tightening monetary policy — to slow demand and bring consumer prices to the inflation target.

The main reason for the anticipated hikes to come is that inflation progress has stalled. Core inflation remains above 3% and is only projected to approach that target years down the road. And while current inflation numbers aren't great, I think the bigger story is the balance of risks in the inflation outlook. It's difficult to find a reason inflation will meaningfully cool off anytime soon, which increases the risk of it becoming entrenched. When people start to believe more price hikes are on the horizon, they are more likely to swallow that inflation, and it becomes harder to squash. So the recent rise in short-run inflation expectations, which are climbing alongside energy costs, presents a challenge for the Fed. Beyond expectations and the rise in staple prices, other important drivers of the recent increase in inflation also look set to heat up. For instance, the price of semiconductor chips — the critical tech fueling the AI boom — has boosted core PCE inflation by 0.6 percentage points over the past six months, and there is no sign of the bottleneck improving anytime soon.

In the face of consensus about the economy, it's always important to be cognizant of what could upend the apple cart. Based on my reading of the consumer winds and the Fed's renewed dedication to tackling inflation, it's clear that there are two serious reasons to think the US is on shakier ground than it appears.

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Neil Dutta is head of economics at Renaissance Macro Research.

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I drove Cadillac's entry-level EV. It hits Caddy's affordability sweet spot.

The Cadillac Optiq is a convincing entry point into Cadillac's EV lineup because it delivers the brand theater.

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• I tested the Cadillac Optiq, the cheapest EV in GM's luxury lineup.
• Its elegant design and supple ride make it properly Caddy-ish.
• The Optiq isn't the fastest EV, but that's OK. The interior materials, though? Some aren't great.

Cadillac's entry-level EV doesn't feel particularly entry-level.

The Optiq is the cheapest way to get into an EV with GM's luxury badge. It's a crossover-like SUV with a base trim that starts just under $50,000 — or, less money than the average American car.

I spent a week and about 400 miles in a 2026 Cadillac Optiq Premium Sport, driving from New York City to upstate New York and back with up to three passengers and several large suitcases in tow. My rear-wheel-drive tester stickered at $58,976 with options, including 21-inch wheels, two-tone exterior paint, and Cadillac's warm brown Autumn Canyon leather interior.

That package is hardly pocket change — but after a week behind the wheel, I wondered why buyers would spend more for some other Caddys.

Easy on the eyes and on the throttle

The Optiq has stage presence.

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The Optiq nails the first impression.

Stacked LEDs in the front and back give the crossover a recognizable signature at night. They also put on a dazzling welcome light show as you approach. Inside, a curved 33-inch display stretches across the dashboard, caramel-colored seats look properly expensive, and — praise be — Cadillac kept physical climate-control buttons underneath the screen.

It looks like a Cadillac. More importantly, it drives like one, too.

The interior and exterior both carry Caddy's star quality.

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The steering was accurate, the suspension softened rough pavement despite those huge wheels, and road noise was virtually nonexistent.

Optiq also benefits from GM's SuperCruise assisted highway driving. It was impressive on my highway-dominant drive upstate, automatically pulling into an open passing lane when I caught slower traffic. It, however, occasionally moved over when faster traffic was approaching from behind, a trait that I'm sure drew the ire of other New York drivers.

Off the line, this Optiq takes a rather leisurely approach to acceleration.

That's not a bad thing, especially compared to other EVs I've recently driven that are faster than they need to be. The RWD Optiq still had enough verve to merge comfortably onto the highway. And, if you absolutely need bone-chilling speed, Cadillac now sells the sport-oriented Optiq-V, which launches to 60 mph in 3.5 seconds — nearly half the time my tester took to get there.

The Optiq handled the less glamorous parts of EV ownership well, too. At a Level 3 charger, I added 41.47 kilowatt-hours in 20 minutes, taking the battery from 32% to 72% — roughly enough time for any trip's necessary restroom-and-snacks stop.

Some of the luxury is better from a distance

There's a lot more hard plastic in this picture than you'd think.

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Live with the Optiq long enough, though, and some of the luxury sheen fades.

There's a lot of hard plastic inside. The floating center console, for example, has a black appliqué that looks like wood. It isn't. The silver rings around the cupholders look like hammered metal, but those are plastic, too. Similar trim details appear throughout the dash and doors.

Then there's the infotainment screen…

…Have an iPhone? I have bad news…

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… where there's no Apple CarPlay.

Cadillac's Google-based system is perfectly usable, and the enormous display is well organized, but for plenty of drivers I talk to, losing CarPlay is a dealbreaker.

There are also moments where GM's Silicon Valley-ish ambitions become a little too obvious. The best example is the glovebox: There's no normal latch. Instead, you open it via the infotainment screen, so it only works when the car is on or in accessory mode.

Verdict: Luxe appeal and a price that's less than your mortgage

The Optiq is one of Cadillac's best efforts.

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Cadillac has a surprisingly crowded EV showroom. The Optiq is joined by the slightly larger Lyriq, the three-row Vistiq, the hulking Escalade IQ, the even bigger Escalade IQL, and the built-to-order Celestiq.

The Optiq isn't as extravagant as an Escalade IQ or as dramatic as a Lyriq. That's kind of the point. It's the entry point — although, at just a few inches shorter than the Lyriq, it doesn't feel meaningfully smaller from behind the wheel. (Although the Lyriq is the only GM EV with Apple CarPlay…)

Long drives, though, have a way of cutting through luxury-car theater.

On the trip upstate, I pulled into a rest area starved. My best option was an Impossible Whopper from Burger King, which I ate in the driver's seat. There I was, surrounded by caramel-colored seats and Cadillac's enormous curved display, with tomato juice running down my arm.

The Optiq projects opulence. I was its foil, and I'm okay with that — the burger was worth it.

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