Business & Entrepreneurship

'Selling anger': How cable news profits from outrage

Katy Hill — Wed, 30 Jul 2025 16:38:35 +0000

'Selling anger': How cable news profits from outrage Katy Hill Wed, 07/30/2025 - 10:38

Katy Marquardt Hill

It’s no secret that cable news networks have partisan reputations: Fox News on the right, MSNBC on the left and CNN somewhere in between. But new research shows the divide extends beyond which party a network appears to support. Over the past decade, these networks have increasingly focused on criticizing the opposing political party, a tactic researchers say is less about informing viewers and more about “selling anger.”

“These networks are more interested in talking about the opposing political party rather than their own candidates. This was not the case 15, 20 years ago,” said Diego Garcia, the Burridge Endowed Chair in Finance in the Leeds School of Business and co-author of the working paper.

Diego Garcia

Garcia and his co-authors—Ryan Lewis, associate professor of finance at Leeds, and Maximilian Rohrer, associate professor of finance at the Norwegian School of Economics—analyzed closed-caption data from six major cable news networks between 2012 and 2024, including CNN, Fox News, MSNBC, CNBC, Bloomberg TV, and Fox Business using a form of AI called natural language processing. They tracked which public figures were mentioned, matched those names to Wikipedia data to classify traits like political affiliation, race and gender, and assessed whether the coverage was positive or negative based on the 150 words surrounding each mention.

The findings show that politics dominates cable news, accounting for about 60% of all named individuals mentioned—rising to over 75% during election years. But more revealing is who gets talked about: MSNBC spends more time discussing Republicans than Democrats, while Fox News focuses more heavily on Democrats. In 2024, Fox covered Democrats 60% of the time, with MSNBC showing the reverse.

The trend holds for business channels too. Fox Business mirrors Fox News, with more frequent and more negative coverage of Democrats compared to Republicans, according to the researchers. CNBC and Bloomberg show more balanced and less political coverage overall.

While the study didn’t explore what’s driving the shifts in coverage, Garcia has a theory: “Social media has made it very easy for these media firms to experiment with what sells. And anger is very powerful,” he said. “It seems to work to increase engagement.”

Garcia speculates that cable networks began to test different kinds of content when social media became widespread in the mid-2010s, and discovered that outrage boosts viewership.

“I think Fox was the first one to figure this out, and they started pushing this negative rhetoric in their news,” he said. “They’re actually now the No. 1 cable news channel in the U.S. by far.”

Indeed, Fox News now commands over 60% of the cable news audience—a dramatic jump from a more evenly split landscape a decade ago.

Beyond politics: race, gender, and LGBTQ coverage

The researchers also examined coverage of other identity groups. Women made up just 17% of all people mentioned on cable news—far below their share of the population. Fox News mentioned women more than other networks but focused largely on female politicians (mostly Democrats). CNN gave slightly more attention to women who were not politicians, while MSNBC was more positive in tone toward female political figures.

Black Americans were mentioned in roughly 11% of daily coverage, closely mirroring their share of the U.S. population. But sentiment varied widely: MSNBC was the most positive, especially toward Black people who were not politicians. Fox News, on the other hand, showed significantly more negative sentiment, particularly during moments of racial tension, such as the George Floyd protests.

“LeBron James, Fox News really doesn’t like him at all,” Garcia noted. “If you look at a sentiment score on LeBron, it’s actually very negative on Fox.”

Coverage of LGBTQ individuals was sparse at under 2% overall. CNN and MSNBC offered more frequent and more positive mentions. Fox News provided the least coverage and displayed a consistently negative tone, particularly around issues like Florida’s “Don’t Say Gay” law, which prohibits classroom instruction on sexual orientation or gender identity in public schools.

Supreme Court justices were rarely mentioned—making up just 0.5% of all people named—but their coverage spiked during key rulings. Fox News significantly reduced coverage of the Court after it agreed to hear the case that eventually overturned Roe v. Wade. CNN and MSNBC, in contrast, increased coverage during that period.

“Fox News is very quiet about the Supreme Court, even though it was big news,” Garcia said.

Tuning out bias

Garcia, who describes himself as socially left-leaning and economically conservative, said the findings changed how he consumes media.

“I force myself to try to listen to different sources because of these very strong biases,” he said.

He believes political coverage should shift away from stoking outrage and emphasize fair coverage of real issues.

“We should be discussing immigration. We should be discussing climate change,” he said. “Not conspiracy theories and trash talk.”

His advice for viewers: Don’t rely solely on your favorite cable station for your news. “If you just go to the source that caters to your confirmation bias, there’s going to be very negative news about the opposing party,” Garcia said. “That’s the business model right now.”

Major networks increasingly focus on criticizing the opposing party–fueling division to boost ratings, according to a 12-year study of TV news.

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Should you be worried about the national debt?

Katy Hill — Tue, 29 Jul 2025 14:50:12 +0000

Should you be worried about the national debt? Katy Hill Tue, 07/29/2025 - 08:50

Katy Marquardt Hill

The national debt just passed $36 trillion, reigniting debates over spending, growth and taxes. But how serious is it, and how will it affect everyday Americans? �鶹��Ѱ��Boulder Today caught up with Shaun Davies, associate professor of finance at the Leeds School of Business, to break down what you need to know.

Shaun Davies

Let’s start simple. What’s the difference between the deficit and the national debt?

The deficit is what happens when the federal government spends more than it collects in a given year. So if the government takes in $4 trillion in tax revenue but spends $5 trillion, the deficit would be $1 trillion. To cover that gap, the government issues debt—for example, U.S. Treasury bonds. The national debt is the total amount we owe from running deficits over time, minus any surpluses, which we have not had since 2001.

So the U.S. owes over $36 trillion. Should we be concerned?

Yes and no. That level of debt could be sustainable if we keep it in check and the economy continues to grow. But our debt-to-(gross domestic product) ratio is now around 120%, which means we owe more than we produce in a year. That’s a red flag. Unfortunately, under both Republican and Democratic leadership, we’ve seen very little fiscal discipline. The real concern is the growth rate of the debt.

How do we compare to other major economies?

We’re in the middle of the pack. I’d give us a C, maybe a C-minus. We’re in better shape than Japan, which has a massive debt load relative to its GDP. But we lag behind most European countries, which tend to keep their debt under 100% of GDP. So we’re not failing, but we’re definitely not excelling.

What are some of the biggest myths about the national debt?

Interest rates are one of the most misunderstood pieces. The Federal Reserve has some control over interest rates, but much less than the average person realizes. The Fed sets short-term rates, like what banks charge each other for overnight loans. But longer-term interest rates—like those on 10-year Treasury bonds, mortgages and auto loans—are determined by the market. If investors get spooked about the U.S. debt, they’ll demand higher returns for holding that debt, which means higher interest rates for all of us.

President Donald Trump’s tax cut and spending bill is projected to add $3 trillion to the debt over the next decade. What’s driving that?

It’s simple math: less revenue and more spending. Tax cuts reduce what the government brings in. New spending increases what it pays out. On top of that, higher interest rates mean the government has to pay more just to service its existing debt. That cost is growing fast.

Is this projected debt increase unusually large?

These large deficit increases are becoming more common—2017’s tax cuts, the COVID relief bills, the Inflation Reduction Act. But just because it’s common doesn’t mean it’s wise. If something keeps making you sick, you probably shouldn’t keep eating it. The troubling trend is not just the level of debt, but how fast it’s growing.

How does the national debt impact the average American?

In the short term, it’s mostly political noise. If you tune it out, you probably won’t notice much. But long term, if the U.S. needs to issue a ton of new debt and the market loses confidence, interest rates could spike. If we're not careful, we could see mortgage rates exceed 10% and maybe even more. Again, longer term interest rates are set by the market, not the Fed. If the market loses faith, look out.

What trade-offs might we face if borrowing continues at this scale?

At some point, we have to get serious about reducing the debt-to-GDP ratio. That likely means higher taxes and lower government spending. It will be unpleasant, but financial stability demands it.

What’s the worst-case scenario if debt keeps growing unchecked?

The U.S. government can’t go bankrupt in the way a company can—it can always print more money. But that would lead to serious inflation. If the world loses faith in the U.S. dollar and our bonds, we could see a spike in interest rates, the dollar could weaken considerably, and economic growth will come to a standstill. It will be a dark day. We need to take our medicine now.

From inflated interest rates to future tax hikes, �鶹��Ѱ��Boulder finance expert Shaun Davies explains what today’s debt levels could mean for tomorrow’s economy—and your wallet.

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New quantum physics and AI-powered microchip design software awarded grants

Amber Elise Carlson — Thu, 24 Jul 2025 04:02:09 +0000

New quantum physics and AI-powered microchip design software awarded grants Amber Elise Carlson Wed, 07/23/2025 - 22:02

Amber Carlson

Semiconductors—substances that can selectively conduct or block electricity—have been dubbed the “brains of modern electronics.” They form the building blocks of the chips that power electronic devices from laptops to smartphones and tablets to sports watches.

But semiconductors generate heat when they’re working, and they can easily get too hot, which hurts their performance and can damage them. While smaller chips are denser and more efficient at processing, they are harder to keep cool because of their size.

Sanghamitra Neogi, an associate professor in the Ann and H.J. Smead Aerospace Engineering Sciences department, is exploring ways to protect semiconductors and microchips from heat damage. She specializes in nanoscale semiconductors, which are so tiny their parts are measured in nanometers (billionths of a meter).

Sanghamitra Neogi speaks about her startup, AtomTCAD Inc., at �鶹��Ѱ��Boulder's Ascent Deep Tech Community Showcase on June 25, 2025. (Credit: Casey Cass/�鶹��Ѱ��Boulder)

Neogi and her research group, CUANTAM Laboratory, have developed a sophisticated software called AtomThermCAD that can predict how the materials in a microchip respond to heat, which determines whether the chip will ultimately fail from overheating. AtomThermCAD is short for Atom-to-Device Thermal Computer Aided Design software for nanometer-scale semiconductor devices. The research behind this software was primarily supported by a $1 million DARPA MTO Thermonat grant awarded between 2023 and 2025.

Earlier this year, Neogi launched a startup to bring the software to market for semiconductor manufacturers and other customers. To kickstart her new company, AtomTCAD Inc., Neogi received $150,000 in recent grant funding from the state’s Office of Economic Development and International Trade, or OEDIT, matched by another $50,000 from Venture Partners at �鶹��Ѱ��Boulder, which helps �鶹��Ѱ��faculty and researchers turn their discoveries into startups and partnerships through funding and entrepreneurial support.

The grant from OEDIT was an advanced industries proof-of-concept grant for researchers in advanced industries. Managed by OEDIT’s Global Business Development division, this funding is intended to accelerate innovation, promote public-private partnerships and encourage commercialization of products and services to strengthen Colorado’s economy.

OEDIT Executive Director Eve Lieberman said that Neogi’s work will benefit the entire semiconductor industry, a rapidly growing segment of Colorado’s economy.

“Dr. Neogi’s research addresses one of the industry’s toughest challenges by improving heat management at the nanoscale, which boosts chip performance and supports the growth of Colorado’s advanced technology sector,” Lieberman said.

Chip designers use software like Neogi’s to test their designs without needing to actually build the chips. But unlike most chip design software, AtomThermCAD uses AI-accelerated quantum physics calculations to model the semiconductors and their components at an atomic level so it can accurately predict whether semiconductors or transistors too small to be seen by the naked eye will overheat.

The software could accelerate technological advancement by saving chip designers months, if not years, of time they previously had to spend developing and testing their designs.

Neogi drew on her expertise in physics and quantum technology to develop the software. She said as microchip components get smaller and smaller, approaching the level of individual atoms, researchers need to look to quantum physics to understand how the components behave.

Neogi also feels her approach could have applications beyond microchip development.

“What we developed is a method where you can model the thermal phenomena of any kind of nanoscale tech device,” she said. “Beyond microchips, it could be nanoscale medical devices and implants inside your body, or even drug delivery systems.”

Beyond the story

Our quantum impact by the numbers:

60-plus years as the regional epicenter for quantum research
4 Nobel prizes in physics awarded to university researchers
No. 11 quantum physics program in the nation and co-leader on the new Quantum Incubator facility

Follow �鶹��Ѱ��Boulder on LinkedIn

Sanghamitra Neogi in �鶹��Ѱ��Boulder’s aerospace engineering department will use $200,000 in grant funding to launch a startup in which she will offer software that uses quantum physics to model microchip designs.

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Podcast episode gives mid-year economic check-in

Megan Maneval — Tue, 01 Jul 2025 15:50:00 +0000

Podcast episode gives mid-year economic check-in Megan Maneval Tue, 07/01/2025 - 09:50

Brian Lewandowski and Richard Wobbekind of Leeds' Business Research Division discuss 2025's economic twists and turns and what may be on the horizon.

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Market mood swings: How fear spreads online—and what it means for investors

Katy Hill — Wed, 18 Jun 2025 16:28:31 +0000

Market mood swings: How fear spreads online—and what it means for investors Katy Hill Wed, 06/18/2025 - 10:28

Katy Marquardt Hill

When the stock market slumps, social media can amplify the anxiety.

New research finds that after major market drops, investor sentiment on platforms like Twitter and StockTwits turns sharply negative and attention to market news surges. But these emotional reactions tend to fade within a few weeks. What may last longer are the effects: That short-lived wave of fear and focus can ripple through the market, influencing trading activity and stock performance even after the initial panic dies down.

To understand these dynamics, a team of �鶹��Ѱ�� researchers analyzed millions of posts from 2013 to 2021 on three major investor platforms: StockTwits, Seeking Alpha, and Twitter (now called X). They built two daily indexes: one to track sentiment—how much optimism people feel about the market—and another to measure attention, or how much people are talking about stocks.

Tony Cookson

“Social media is increasingly becoming a forum where investors display their sentiments in public view—it’s a natural setting to take the market’s pulse,” said Tony Cookson, professor of finance at the Leeds School of Business who co-authored the working paper.

“Sentiment captures people’s emotions,” Cookson explained. “In contrast, attention reflects investors’ focus on markets, which can be high when investors are fearful or when they are enthusiastic.”

The researchers used sentiment and attention data on Stocktwits, Seeking Alpha and Twitter posts that were scored as bullish or bearish. After aggregating these firm-level measures to the overall market level, they found that stock prices tend to rise just before high sentiment days, then typically fall over the following few weeks. In contrast, stock prices decline prior to high attention days, followed by a continuation of negative returns.

Their results have implications for investors. “When market attention is high, future returns are lower. On the flip side, after drops in sentiment, returns tend to recover,” Cookson said.

Different forces, different paths

By separating sentiment and attention—two ideas often lumped together in past research—the team was able to trace how each relates to the market. Sentiment, they found, tends to overreact to bad news, reflecting emotional responses that quickly reverse. Attention, on the other hand, grows.

“There’s a clear pattern,” Cookson said. “When markets are going down, we see that sentiment stays down for a while, but then eventually recovers. Whereas attention doesn't exhibit that pattern at all. It tends to reflect yesterday's returns, but then it continues and builds.”

Both forces are closely tied to market activity. When sentiment falls or attention spikes, trading volumes tend to rise. In other words, emotional reactions and market-wide attention—both amplified during times of stress—often drive trading activity together.

“These are happening simultaneously,” Cookson said. “There’s a lot of trading when there’s a lot of negative sentiment. Those two go hand in hand—they’re capturing and reflecting bad times in the market.”

Volatility and asymmetry

While the study doesn’t analyze recent markets specifically, it offers a blueprint for understanding how volatility ripples through investor psychology. In tests using daily spikes in the VIX index—a popular measure of expected market volatility—the researchers found a consistent pattern: When volatility jumps, sentiment drops sharply and attention surges.

That response isn’t symmetric. “We see this for sharp drops in the market—negative news—but we don’t see it for similarly sharp spikes in markets,” Cookson said. “The negative days seem to leave more of a mark in the sentiment index and the attention index.”

The asymmetry is critical. Fear reflects deeper and longer-lasting shifts in online investor mood than enthusiasm. When markets fall, social media sentiment turns negative—and stays that way for several days. Attention, meanwhile, spikes and remains elevated, showing that fear drives sustained investor focus.

But after a market rally? Sentiment and attention barely budge.

Why does fear hit harder? “Fear spreads faster,” Cookson said. “Enthusiasm is kind of a more gradual building process. You don’t see it in the daily patterns. You see fear on display in this daily index.”

How panic travels

The effects don’t stay confined to a single stock. Instead, the researchers found that fear travels across firms.

“It’s not just sentiment about Apple and Tesla and Microsoft added up,” Cookson said. “It’s Apple affecting how you feel about Tesla or Microsoft.”

That emotional spillover means sentiment that spreads across the whole market is less likely to be about information and more likely to reflect emotion. “When sentiment is focused on one thing, it’s more likely to be information,” Cookson said. “When it’s spread across many things, that can’t be information—it has to be emotion.”

What investors can learn

So what does all this mean for investors?

“In fearful times, sentiment tends to overreact—that’s something to keep in mind,” Cookson said. Meanwhile, increased investor chatter online, especially during anxious periods, often signals weaker stock returns ahead.

The old Warren Buffett dictum—“Be fearful when others are greedy, and greedy when others are fearful”—still applies, Cookson said: “Our results show how natural emotion is part of markets—it matters.”

That emotional swing can be costly. “You might be prone to getting out of the market in a way where you end up buying high and selling low,” Cookson said.

The practical takeaway? Stick to the basics.

“Diversification is usually a good idea. Timing markets is usually a folly,” he said. And be wary of the distorted lens social media can create. “Especially if you’re using social platforms like Twitter or even Seeking Alpha, you’re operating in a polarized information environment. Everything seems either good or bad—maybe it's good to fight the natural urge to act on sentiment.”

New research shows how online sentiment and attention predict trading patterns and returns during volatile markets.

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After the layoffs, what does trust mean at work?

Katy Hill — Wed, 11 Jun 2025 20:57:13 +0000

After the layoffs, what does trust mean at work? Katy Hill Wed, 06/11/2025 - 14:57

Katy Marquardt Hill

In the aftermath of widespread layoffs across industries, the concept of trust at work is under new pressure. As companies operate with leaner teams and ask more of the employees who remain, being “trusted” with greater responsibility can carry mixed emotions. While trust is often intended as a vote of confidence, some employees may experience it as added pressure—especially when job security feels uncertain.

Supervisors often view trust as a show of confidence or a way to motivate employees. But in workplaces still adjusting to job cuts and uncertainty, that trust can land differently, especially for those with shaky confidence or low self-esteem. Instead of feeling empowered, employees may experience it as a high-stakes responsibility that brings more stress than stability.

A growing body of research shows that when trust isn’t grounded in a sense of self-esteem at work, it can backfire—leading to stress, disengagement and even conflict at home.

Tony Kong

Recent research published in the Journal of Management Studies offers new insight into this dynamic. Led by Tony Kong, an associate professor in organizational leadership and information analytics at the Leeds School of Business, the study found that employees’ self-esteem at work plays a crucial role in how they interpret and respond to trust from their supervisor.

It might seem intuitive to think that feeling trusted by a supervisor will boost an employee’s engagement and performance, but the reality is more nuanced, Kong said.

"If employees feel valued and important in their workplace, then feeling trusted is a positive experience,” he said. “They feel ready to invest themselves in their work, which enhances their job performance and reduces their work-home conflict.”

However, not every employee feels valued at work. According to Kong, employees who feel unappreciated or devalued in their roles may experience trust from their supervisor in a negative way. For them, being trusted by a supervisor can feel like a heavy burden instead of a morale boost. When they are given extra responsibilities—such as a big project or a leadership role—it may cause imposter feelings, self-doubt and anxiety, Kong said.

"Trust can be heavy,” he said. “When someone trusts us on really critical things and we don’t have confidence in our ability or worth to live up to that trust, it becomes a stressor.”

The impact of trust on work-life balance

The stress from feeling overly trusted can extend into an employee's home life, according to the study, which was conducted in two phases in the United States and China.

The researchers, who also included Cecily Cooper of the University of Miami; Jian Peng of Southeast University in China; Craig Crossley of the University of Central Florida; and Reka Anna Lassu of Pepperdine University, conducted two survey studies in the two countries and found the relationship between felt trust and work engagement was positive when employees’ self-esteem at work was higher. It found the opposite when self-esteem was lower. Similarly, employees with higher self-esteem at work were better at managing work and home demands, while those with lower self-esteem saw more negative effects at home.

"These negative experiences can easily spill over into home life, leading to conflicts with family members," Kong said.

On the other hand, when employees with higher self-esteem at work are given trust, they feel capable of meeting those expectations—and it enhances their performance both at work and in their home lives, the study found.

Balancing trust and avoiding disengagement

As an employee, how can you manage the weight of trust at work? It starts with recognizing where you stand within your workplace’s culture of trust. Are you feeling truly valued by your supervisor and colleagues? If not, it may be worth addressing that gap before stepping into roles that require additional responsibility, Kong said.

This could mean discussing your workload with your supervisor or seeking feedback on your contributions to help ensure you're recognized for your strengths.

Employees who feel trusted should also reflect on their own self-esteem in the workplace and communicate their needs to their supervisor. If you feel overwhelmed or unsure about your abilities or status at work, speak up before taking on more responsibility.

"Your supervisor can only help if your high or low need for trust is known," Kong suggests. "If you feel like you're struggling with low self-esteem at work, you should communicate the issue and address it with your supervisor, so your supervisor can better manage trust and give you appropriate responsibilities."

How managers and HR can help

Managers and human resources departments play a critical role in managing employee trust at work, according to another research paper authored by Kong and published in the Journal of Management. Kong said the first step for managers is to ensure their employees feel valued before extending trust.

"Trust cannot be given blindly or recklessly," Kong explains. "First, make sure employees feel that they matter in the workplace. Appreciation and recognition go a long way toward building that foundation."

Before trusting an employee with high-level responsibilities, it’s crucial for managers to ensure that employees feel valued and esteemed.

"If you’re going to give someone a stretch assignment or involve them in a critical decision, make sure they feel important first," Kong said. "The key is making employees feel that their contributions are unique and significant. When they feel like their voice or support matters, they will feel more confident living up to your trust."

This can be achieved through simple actions like providing constructive and honest feedback regularly, offering recognition for good work and showing appreciation for employees’ unique strengths and the small things they do to make the workplace better.

Ultimately, trust can be a strong force for good in the workplace—but it has to be managed thoughtfully, Kong said.

“When trust is given in alignment with the levels of employees’ self-esteem at work, we are more likely to build a high-engagement, high-performance and low-stress workplace that benefits everyone and makes everyone flourish,” he said.

Supervisors often see trust as a motivator—but in a workplace shaken by layoffs, it can create stress instead of stability.

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Sustainable spinouts: Innovation in action

Megan Maneval — Mon, 09 Jun 2025 15:49:22 +0000

Sustainable spinouts: Innovation in action Megan Maneval Mon, 06/09/2025 - 09:49

Coloradan

From engineered "living" sidewalks to quantum-fueled leak detection systems, several �鶹��Ѱ��spinouts are bringing Earth-focused breakthroughs to the marketplace.

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What 'no tax on tips' really means for service workers—and everyone else

Katy Hill — Tue, 27 May 2025 14:38:58 +0000

What 'no tax on tips' really means for service workers—and everyone else Katy Hill Tue, 05/27/2025 - 08:38

Katy Marquardt Hill

The broad tax package passed by House Republicans last week includes a bill that would eliminate federal income taxes on tips, advancing a key campaign promise from President Trump with unexpected bipartisan support.

If enacted, the change would take effect from 2026 through 2028. The idea is straightforward: Let tipped workers keep more of their earnings. But how would the bill actually work—and what could it mean for the broader tax system, tip culture and even Social Security?

Nicole Lazzeri

�鶹��Ѱ��Boulder’s Nicole Lazzeri, a teaching assistant professor of accounting at the Leeds School of Business, sat down with �鶹��Ѱ��Boulder Today to walk through the policy proposal, what it actually covers and what workers and taxpayers should know.

At a high level, what is this “no tax on tips” idea trying to accomplish? Who benefits the most?

The biggest direct beneficiaries would be people who rely on tips for a significant portion of their income—restaurant servers, rideshare drivers, barbers, nail techs, bellhops. That part is pretty clear.

But when you look under the hood, it gets a little more complicated. The current version of this proposal—the one included in what’s been dubbed the “Big, Beautiful Bill”—doesn’t actually remove all taxes on tips. It lets workers deduct their reported tip income from their federal income taxes, but tips would still be subject to payroll taxes—that’s Social Security and Medicare, the 7.65% that’s taken out of every paycheck.

So yes, it would help some workers. But not as much as it might seem.

So this isn't the same as treating tips like gifts, which aren’t taxed at all?

Exactly. There were earlier versions of this idea that would have classified tips as gifts, which means they wouldn’t be taxed at all. But that’s not how this latest version is written.

Instead, you’d still report your tips on your W-2, and they’d still count for payroll tax purposes. The change is that you’d get what’s called an “above-the-line” deduction on your income taxes. That’s good, because it means you don’t have to itemize to take the deduction. But if you make over $160,000, you wouldn’t be eligible at all.

What’s the real-world impact for workers—especially low-income workers who may not owe much in federal taxes anyway?

This is a big one. Many workers who earn most of their income in tips—especially college students or part-time workers—often don’t owe federal income tax in the first place. In fact, a 2022 stat I found said 37% of tipped workers had too little income to owe federal income tax.

But that doesn’t mean they don’t owe any tax. Most still have to pay that 15.3% self-employment tax—or at least half of that if they’re regular employees. And that kicks in at just $400 of earnings, way below the standard deduction for income taxes. So the policy may help some people, but not necessarily the lowest earners, which is important to understand.

Would this change have any impact on Social Security or Medicare funding?

As it’s written now, no—not directly. Because tips would still be subject to payroll taxes, they’d still count toward Social Security and Medicare. If the proposal had treated tips like gifts, that would have been a bigger issue, since those programs are funded through payroll taxes.

Of course, it’s always possible that regulations change after the fact, but as of now, those contributions would still be made.

Are there any precedents in the tax code for something like this?

Not really—at least not for earned income. We have exclusions for things like scholarships, life insurance proceeds, gifts, inheritances. But those aren’t considered earned income.

This would be one of the first cases I know of where someone works for the money and then isn’t taxed on it—at least for income tax purposes. That’s pretty unusual.

What about other concerns or unintended consequences? Could this change tip culture itself?

There’s some speculation that it could go either way. On one hand, if customers know that tips won’t be taxed, they might tip less, assuming workers are keeping more of it. Tip fatigue is a real thing—people are already frustrated by how often they’re asked to tip, especially for counter service.

On the other hand, maybe workers would be more motivated knowing they’ll keep more of each dollar. So it’s hard to say how that will net out.

Another thing to remember: States don’t have to follow federal tax policy. Some may still tax those tips at the state level. During the COVID pandemic, for example, federal unemployment benefits were made tax-free retroactively—but some states kept taxing them. That could happen here, too.

Why do you think this polls so well, even though the details are so wonky?

I think it just sounds good. It’s an easy message—“Let workers keep their tips”—that appeals to a broad audience.

It could also be a way to energize younger voters or blue-collar workers in swing states. I’ve seen similar momentum with policies like legalizing marijuana or forgiving student loans—things that play well in campaign ads even if the actual implementation is complex or limited.

Could this open the door for other industries to ask for similar exemptions?

That’s a possibility. Once you carve out one type of income from taxation, it becomes harder to argue why others shouldn’t get the same treatment.

From a tax policy perspective, it’s cleaner to pass laws that apply across industries, rather than adding more exceptions to an already complicated code.

Is there anything else that people should know about this?

One small but interesting detail is that employers could also benefit. Restaurants and similar businesses could claim a credit for the payroll taxes they pay on cash tips—but only if those tips come from serving food or drinks. The “No Tax on Tips” bill proposes to extend this credit to employers in the beauty service industry.

Also, the current proposal would expire at the end of 2028. So unless Congress extends it, this could be temporary.

Bottom line?

This policy could offer some real savings for service workers—but the name doesn’t tell the full story. Tips would still be taxed in some ways, and not everyone stands to benefit equally.

A plan to eliminate federal taxes on tips is moving forward, but the benefits may be smaller than they sound. Nicole Lazzeri walks through the policy proposal and what workers and taxpayers should know.

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What the US credit downgrade means for the economy and your wallet

Katy Hill — Wed, 21 May 2025 18:48:12 +0000

What the US credit downgrade means for the economy and your wallet Katy Hill Wed, 05/21/2025 - 12:48

Katy Marquardt Hill

Moody’s recent decision to downgrade the U.S. credit rating for the first time in history has reignited concerns on Wall Street and beyond, as investors reassess the reliability of government debt. The credit rating agency cut the country’s long-standing triple-A rating by one notch last week, citing rising federal debt and mounting interest costs—factors that could make borrowing money more expensive and pressure an already strained stock market.

With this move, all three major credit rating agencies have now downgraded the United States from their highest rating: Standard & Poor’s did so in 2011, Fitch followed in 2023 and now Moody’s in 2025.

The move rattled bond markets, sending long-term Treasury yields above key thresholds and raising alarms about potential fallout for consumer loans, including mortgages and credit cards.

Nathalie Moyen

To break down what Moody’s downgrade means, �鶹��Ѱ��Boulder Today sat down with Nathalie Moyen, a finance professor at the Leeds School of Business and the W.W. Reynolds Capital Markets Program Chair. In this role, she supports the World of Business course for first-year students, which explores the role of business in society.

What does it mean when a country like the U.S. gets a Moody’s downgrade, and why is this significant?

Moody’s evaluates publicly available information about the U.S. government's financial position and offers its opinion on the country’s ability to repay its debt. Because Moody’s bases its assessments on existing data, its downgrade on May 16 did not introduce any fundamentally new information. However, many investors rely on credit rating agencies to interpret complex financial details, so the downgrade was significant to them.

What made this downgrade particularly shocking is that Moody’s had consistently rated U.S. debt as essentially risk-free since it first issued a rating in 1917. The U.S. maintained that top rating even through the Great Depression, World War II and the Great Recession in 2008.

What’s in a downgrade?

Imagine a high school graduate who leaves their job to attend the University of Colorado. While in school, their income drops and their personal credit score may fall. As educators, we view this as a worthwhile investment. Once the student graduates, they should be better off and their credit rating is likely to surge above previous levels.

The same principle applies to countries. The debt the U.S. accumulated to finance World War II could have warranted a downgrade at the time, especially since the outcome of the war was uncertain. But Moody’s did not downgrade it. Today’s rising U.S. debt levels don’t stem from such extraordinary circumstances, yet financial markets now only recognize the possibility that the U.S. may eventually struggle to meet its debt obligations.

How does a downgrade like this impact everyday Americans—for example, mortgage rates, car loans or credit card interest?

The downgrade is a reflection of higher borrowing costs. U.S. Treasury yields, used as benchmarks for many consumer borrowing rates, have been rising steadily since 2020. As a result, most Americans have already experienced higher interest rates on new mortgages, auto loans and credit card balances.

These rising rates embed growing concerns about U.S. fiscal risk and have also affected retirement savings through market volatility. Higher financing costs may lead businesses to delay hiring or investment, slowing economic growth.

Meanwhile, the U.S. government now faces higher interest payments on its own debt. Eventually, that pressure will likely lead to higher taxes or cuts in government spending, both of which will be felt by everyday Americans.

We saw the 30-year Treasury yield briefly top 5%. Why does that matter, and what does it tell us about investor sentiment right now?

One of the most fascinating aspects of financial markets is that they reflect collective expectations about the future. Yields on the 30-year Treasury debt incorporate all currently available information and beliefs about what lies ahead. While our common law system is grounded in precedent, financial markets are inherently forward-looking. Together, these legal and financial systems help stabilize our political institutions by offering both structure and foresight.

Because markets aggregate future expectations, a loss of confidence in the economy can become a self-fulfilling prophecy. If investors and businesses expect negative outcomes, they may delay investment and innovation, actions that can themselves trigger or worsen the downturn they feared in the first place. The increase in Treasury yields signals rising concerns about future inflation, debt sustainability and policy uncertainty, all of which point to a growing unease.

Moody’s cited long-term fiscal challenges, rising interest costs and political gridlock. How should we interpret this decision and the concerns behind it?

These concerns are real and warrant attention, but it's important to step back and take a broader perspective. In the early 1980s, the 30-year Treasury yield remained above 10% for several years. Since then, borrowing costs have generally trended downward, giving rise to the “Great Moderation,” a period marked by lower inflation, milder recessions and reduced market volatility.

As recently as 2020, the 30-year Treasury yield was below 2%. Today, while it has climbed, it is hovering around 5%. In historical context, the U.S. has weathered far more turbulent conditions. That history should give us reason for cautious optimism. We’ve faced serious fiscal and economic challenges before and emerged stronger. The key now is to steer the economy toward more stable ground.

With the U.S. now rated just below triple-A by all major agencies, are Treasurys still considered a 'safe haven' investment globally?

What makes the U.S. a “safe haven” isn’t just the credit rating of the federal government, whether it’s Aaa or one notch below. The safety comes from the strength of our legal and financial institutions: the rule of law, an independent central bank, the deep, liquid financial markets and the continued role of the U.S. dollar as the world’s reserve currency. Moody’s downgrade is a stark reminder that none of this should be taken for granted.

How do Trump-era policies—like renewed tariffs and proposed tax cuts—factor into Moody’s downgrade and the broader fiscal picture?

Moody’s downgrade came on Friday, May 16, as Congress was debating the “One Big Beautiful Bill Act.” It’s tempting to view that moment as the final straw that broke the camel’s back, but the reality is that the downgrade was a long time coming.

Standard & Poor’s removed its top rating for U.S. Treasurys back in 2011 during the debt ceiling standoff between Republicans and Democrats. Fitch downgraded its rating in 2023. Now, all three major credit agencies agree: There is a non-zero probability that the U.S. may eventually find it difficult to repay its debt.

Some argue that as long as the U.S. controls its own currency, it can’t default in the traditional sense. Does that lessen the weight of these credit downgrades?

Yes, the Federal Reserve could step in and print money to prevent a technical default by the U.S. government. Doing so would inject more dollars into the system, fueling inflation and weakening the U.S. dollar relative to other currencies. As global investors see the value of their U.S. holdings decline, they would be less inclined to buy U.S. government debt. In turn, the U.S. government would need to offer even higher interest rates to persuade these investors to continue lending money.

So while printing money might avoid a traditional default, it leads to a downward spiral. It may not be default in the classic sense, but it’s still a losing strategy.

�鶹��Ѱ��Boulder Today regularly publishes Q&As with our faculty members weighing in on news topics through the lens of their scholarly expertise and research/creative work. The responses here reflect the knowledge and interpretations of the expert and should not be considered the university position on the issue. All publication content is subject to edits for clarity, brevity and university style guidelines.

Finance expert Nathalie Moyen explains why the U.S. losing its top-tier credit rating is more than a symbolic shift — and how it could impact borrowing, savings and government spending.

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Will tariffs disrupt your summer vacation plans? Probably not, finance expert says

Katy Hill — Tue, 20 May 2025 22:07:50 +0000

Will tariffs disrupt your summer vacation plans? Probably not, finance expert says Katy Hill Tue, 05/20/2025 - 16:07

Katy Marquardt Hill

As families plan summer getaways—booking flights, reserving hotels and mapping out road trips—many are also keeping a close eye on rising prices. Could new import taxes, including those recently enacted by the Trump administration, make vacations more expensive?

Edward Van Wesep, professor and chair of the finance division at the Leeds School of Business, studies financial decision-making and how economic policy impacts consumers. He sat down with �鶹��Ѱ��Boulder Today to explain why tariffs are unlikely to disrupt most Americans’ summer travel—and where consumers might actually feel the pinch.

Edward Van Wesep

Will tariffs increase the cost of summer travel for most Americans?

Not significantly. Most summer travel spending goes toward services—like hotels, flights and activities—and services are generally not subject to tariffs. If you're traveling internationally, tariffs are even less relevant. For example, if you go to Mexico and stay in a hotel or dine out, tariffs don’t apply to what you’re consuming there. Domestically, tariffs might slightly affect businesses that import goods, but any price increases are likely to be small and not passed on directly to consumers in a noticeable way.

Could tariffs impact prices for airfare or hotels?

Only in very limited ways. Hotels might import certain goods, but these aren't major parts of their day-to-day operating costs. What matters more for pricing is demand. If demand stays high, prices will too. If fewer people travel, prices may drop. Airlines face similar dynamics; imported parts might raise maintenance costs, but that doesn't automatically translate into higher ticket prices.

What about gas prices?

Gas prices tend to be higher in the summer, but I wouldn't expect anything drastic. The average price nationwide is $3.17 per gallon, which is the same as in 2007, 18 years ago. Oil prices lead gas prices by a few weeks and they have been trending down so, if anything, I would expect the price of gas to fall. Tariffs don't have much to do with gas prices because we are not an energy importer.

Are there types of travel-related purchases where tariffs will be felt more directly?

Low-cost imported goods are the most vulnerable. Think toys, clothes or travel gear bought from places like Walmart or online retailers such as Temu. These products are often imported with very thin profit margins, meaning companies have little room to absorb the cost increases and will pass them directly to consumers. So if you're stocking up for a family trip, you might notice higher prices on those items.

Could inflation or consumer pullback affect summer travel more than tariffs?

Possibly, but not yet. Consumer sentiment has been negative, but actual spending remains strong. Personal consumption forecasts for this quarter are reasonably strong, and people are still traveling. However, if inflation in areas like food or fuel starts to squeeze household budgets, we could see a dip in demand. If that happens, prices for travel-related services—like hotels—might fall to attract more customers.

What about less visible vacation costs like theme park tickets or attraction fees?

In most cases, those won’t change much either. Theme parks base ticket prices on demand. Even if tariffs increase the cost of imported parts or supplies used in the park, the effect on ticket pricing is minimal. The cost of letting in one more visitor is low, so prices are more about strategy than expenses. Unless there’s a major drop in attendance, prices are unlikely to shift significantly.

Is it smarter to book summer travel now or wait?

Planning ahead is wise, especially in an uncertain environment. Prices always fluctuate with demand, but current economic unpredictability adds another layer. For travelers, that means it’s a good idea to book early, secure refundable options when possible and have backup plans in place—like alternatives for accommodations or transportation in case of cancellations.

Tariffs may hit prices for toys and clothes, but your travel costs are likely safe. Finance professor Edward Van Wesep explains why.

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What the US credit downgrade means for the economy and your wallet

What does it mean when a country like the U.S. gets a Moody’s downgrade, and why is this significant?

What’s in a downgrade?

How does a downgrade like this impact everyday Americans—for example, mortgage rates, car loans or credit card interest?

We saw the 30-year Treasury yield briefly top 5%. Why does that matter, and what does it tell us about investor sentiment right now?

Moody’s cited long-term fiscal challenges, rising interest costs and political gridlock. How should we interpret this decision and the concerns behind it?

With the U.S. now rated just below triple-A by all major agencies, are Treasurys still considered a 'safe haven' investment globally?

How do Trump-era policies—like renewed tariffs and proposed tax cuts—factor into Moody’s downgrade and the broader fiscal picture?

Some argue that as long as the U.S. controls its own currency, it can’t default in the traditional sense. Does that lessen the weight of these credit downgrades?

Related Articles

Will tariffs disrupt your summer vacation plans? Probably not, finance expert says

Will tariffs increase the cost of summer travel for most Americans?

Could tariffs impact prices for airfare or hotels?

What about gas prices?

Are there types of travel-related purchases where tariffs will be felt more directly?

Could inflation or consumer pullback affect summer travel more than tariffs?

What about less visible vacation costs like theme park tickets or attraction fees?

Is it smarter to book summer travel now or wait?

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