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Inflation is heating up again, putting pressure on Trump to cool it on tariffs

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theconversation.com – Jason Reed, Associate Teaching Professor of Finance, University of Notre Dame – 2025-02-12 16:41:00

Inflation is heating up again, putting pressure on Trump to cool it on tariffs

Inflation is building again; but the housing industry may find it harder to do so as a result of Trump tariffs.
Win McNamee/Getty Images

Jason Reed, University of Notre Dame

Inflation figures released on Feb. 12, 2025, will come as a disappointment to Americans who hoped President Donald Trump would be true to his word on bringing down prices “on Day One.” It will also put pressure on the new administration to be wary of policies that may heat up inflation – and that includes tariffs.

The consumer price index, which measures the change in prices paid by consumers for a representative basket of goods and services, rose unexpectedly from December to January by 0.5%. It means consumers are paying around 3% more on item prices than they were a year ago.

Economists had been expecting the pace of inflation to slow in January.

The news isn’t good for anyone concerned. It means inflation remains above the Federal Reserve’s long-run target of 2% – making it harder for the central bank to cut rates at its next meeting on March 19. At its last meeting, the rate-setting Federal Open Market Committee kept its benchmark federal funds rate unchanged at a range of 4.25-4.50%.

Following the release of the latest inflation data, markets have a stronger conviction that the Fed will again hold rates steady when it meets in March.

It also means more pain for consumers. Higher interest rates set by the Fed play a large role in determining rates for mortgages, credit cards and auto loans. If January’s rate of inflation were to continue throughout 2025, consumers would see a painful 6.2% annualized inflation rate.

And although it would be churlish to link the latest jump in inflation to an administration just weeks old, it does put into focus the current slate of Trump economic policies. Economists have long warned that imposing tariffs on imports and cutting taxes does little to curb inflation – rather, they may contribute to faster price increases.

Already, China has been hit by a 10% tariff on all products. Trump has also proposed a 25% tariff on all steel and aluminum imports, and he mulled imposing new tariffs on Canada and Mexico – two of the United States’ largest trading partners.

I believe that if these wide-ranging tariffs come into effect, the Federal Reserve will have no choice but to keep rates elevated for the remainder of 2025.

Revving up for higher car costs

One of the largest drivers of inflation in January was rent increases, which accounted for nearly 30% of all items increase. Rents jumped 4.6% from a year earlier.

If Trump’s tariffs on Canadian imports, like lumber, take effect, Americans can expect continued price increases in the homebuilding sector. Supply and demand imbalances remain a key driver for higher prices, so fewer houses being built due to higher materials cost will likely lead to higher rents.

Consumers saw better news on new vehicle prices, which remained flat over the month and showed slight declines from a year ago.

This is even as demand for new cars increased 2.5% over 2024. In January 2025, the number of new vehicles sold topped the same month a year earlier for the fifth month in a row.

But as with homebuilding, any tariffs on the import of car parts or materials will impact the auto industry. Carmakers may have breathed an immediate breath of relief when Trump delayed new tariffs on Canada and Mexico. But if deals aren’t reached by the March 1 deadline, industry analysts expect immediate impacts on top sellers.

And any higher cost of new cars will have a knock-on effect on used cars, which saw prices jump 2.2% in January – it’s largest increase since May 2023.

Increased prices are no yoke! (groan)

Of course, not all inflationary pressures are in the purview of government.

The transportation sector, which includes insurance and parking fees, increased by 8% over the year. Insurance prices soared almost 12%, on the back of last year’s 20.6% increase in prices, while parking fees increased by almost 5% as a result of more expensive repairs and more dangerous driving behaviors.

Meanwhile, with bird flu continuing to spread, egg prices rose a shocking 15.2% in January, and are 53% more expensive than at this time last year.

All in all, voters who cited inflation as the main reason they were backing Trump may be feeling a little uneasy – the administration is only a few weeks old, but for one reason or other, Americans are experiencing ever higher prices with little relief in sight.The Conversation

Jason Reed, Associate Teaching Professor of Finance, University of Notre Dame

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In spite of anti-DEI pressures, top corporations continued to diversify in 2024: new research

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theconversation.com – Richie Zweigenhaft, Professor of Psychology, Emeritus, Guilford College – 2025-02-12 07:52:00

In spite of anti-DEI pressures, top corporations continued to diversify in 2024: new research

Richie Zweigenhaft, Guilford College

Despite the Supreme Court’s 2023 decision banning affirmative action in college admissions, and mounting pressure on corporations to eliminate their diversity, equity and inclusion programs, the top 50 Fortune 500 companies continued to diversify their boards in 2024.

As a social psychologist, I’ve been tracking diversity on Fortune-level boards of directors for decades. And as I reported in The Conversation last year, 2023 marked the first time that fewer than half of the directors of top 50 Fortune 500 companies were white men. At the same time, increasing numbers of white women and Black, Asian and Hispanic people of all genders held board seats.

Looking at data from mid-December 2024, I found that the top 50 companies’ boards continued to become more diverse. However, as political and legal challenges to DEI intensify, future trends remain unclear.

Back and forth on DEI

After the 2020 murder of George Floyd in Minneapolis, many Fortune 1000 companies pledged to make new commitments to racial equity and implemented DEI programs to track and improve diversity. But in 2023 – presumably encouraged by the Supreme Court’s affirmative action decision – anti-DEI activists ramped up the pressure on corporations to roll back these initiatives. In response, many big companies reduced or eliminated their diversity commitments.

But the DEI backlash didn’t show up in the 2024 data on corporate board membership.

Diversity on boards increased dramatically from 2011 to 2023, and the trend generally continued into 2024, with the number of seats held by Hispanic and Black people and white women all rising despite a slight dip in the number of seats held by Asian people. As a result, the share of seats held by white men fell from 49.7% to 48.4%, while the share held by everyone else rose from 50.3% to 51.6%.

Examining the data on Black, Hispanic and Asian board members by gender reveals some intriguing differences, though some variations may be due to small sample sizes. For the top 50 companies, the number of seats held by Black women rose by five, while the number of seats held by Black men fell by two. In contrast, two more seats were held by Asian men in 2024 than in 2023, but the number of seats held by Asian women dropped by three. The number of seats held by Latinos and Latinas also increased, by four and two, respectively.

So why did board-level diversity increase despite the DEI backlash? It could be because boards of directors change slowly. Most of the top 50 boards on the Fortune 500 list make no changes in a given year, and those that do typically replace only one or two people. In some cases, boards expand by adding new members without removing old ones, which can be a quick and easy way to increase diversity. As a result, the number of seats on the top 50 boards increased from 574 in 2023 to 593 as of mid-December 2024.

There are other indications that these boards are becoming more diverse than they were in the not-so-distant past. In 2023, four companies either had an equal number of men and women on their boards or more women than men. In 2024, that number had increased to seven.

Increasingly diverse chief executives

The number of CEOs of the top 50 companies who weren’t white men also rose, from 14 to 15. For most of 2024 the number was 16, but in October the board at CVS asked Karen Lynch, a white woman, to step down, and replaced her with a white man. At the end of 2024, the top 50 Fortune companies included seven white women, three Asian men, three Latinos, one Black male, and one Latina as CEOs.

Moreover, 12 of the top 50 CEOs, or 24%, were born outside the U.S., an indication that the country’s corporate elite is becoming more globally diverse than in the past.

Just as many of the CEOs of the top Fortune 500 companies were born and raised in other countries, so, too, were many of the Black, Hispanic, Asian and white female directors. In fact, almost all of the Asian chief executives were born outside the U.S., as well as most of the Hispanic CEOS. If corporate boards continue to grow in diversity – or even stay at the same level – they’ll probably draw heavily on men and women born and educated outside the country’s borders.

The data shows a slight uptick in diversity for the boards of the top 50 companies on the Fortune 500 list from 2023 to 2024. But after his inauguration, Donald Trump immediately took on diversity efforts both in the federal government and the corporate world. As a print headline in The New York Times noted, “Trump’s Attack on DEI Stirs Fear at Corporations.”

The future of board diversity under Trump

In the weeks before Trump’s second inauguration, McDonald’s announced that it was retiring several leadership diversity goals, and Mark Zuckerberg announced that Meta was terminating its DEI programs. On his first day in office, Trump issued an executive order terminating all DEI programs across the federal government and requiring the government to look at private sector DEI initiatives. Not long afterward, Google announced that it, too, was retreating from its DEI initiatives, making it clear that it was doing so because of Trump’s executive orders.

But a few of the top 50 companies, including Costco, Apple, Microsoft and JP Morgan, took public stands claiming that they were planning to continue their DEI policies. Costco’s stance drew special attention because, as The New York Times put it, the board’s views were “particularly forceful.” Within a week or so, 19 Republican state attorneys general called on the company to end the policies.

There is concern that the attacks on DEI will decrease diversity in the pipeline that leads to the executive suites of American corporations, and that this in turn will lead to less diversity in boardrooms. As Fortune’s Lily Mae Lazarus put it in late January, “The precedent set by the Trump administration could undo decades of progress that have allowed women and people of color to rise to the C-suite and boardroom.”

Whether the many attacks on DEI – first from right-wing bloggers, then from the Supreme Court, and then from the president – will affect the makeup of Fortune-level boards in 2025 and beyond remains to be seen.The Conversation

Richie Zweigenhaft, Professor of Psychology, Emeritus, Guilford College

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Teenagers turning to AI companions are redefining love as easy, unconditional and always there

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theconversation.com – Anna Mae Duane, Professor of English, University of Connecticut – 2025-02-12 07:50:00

Teenagers turning to AI companions are redefining love as easy, unconditional and always there

Can a person love an AI chatbot?
RLT_Images/DigitalVision Vectors via Getty Images

Anna Mae Duane, University of Connecticut

Teenagers are falling in love with chatbots. Young people are reporting epidemic levels of loneliness, and some are turning to technology to fill the void. Recent tragedies provide a glimpse into the extent of this trend and the dangers it poses.

A 14-year-old boy’s suicide following a romantic relationship with an AI companion raised national alarms about the dangers these relationships may pose to young people’s mental and emotional development. In 2021, a 19-year-old who had been in an emotional relationship with an AI companion broke into Windsor Castle with a crossbow, saying that he was going to kill the queen. The chatbot gave encouraging responses when he told it of his intention to kill the queen.

These teens were among the tens of millions of people who use AI chatbot companions, a number that market forecasters expect to dramatically increase by the end of the decade.

This youthful trend of choosing chatbots as romantic partners is both responding to and accelerating fundamental changes in how people define love in the 21st century. As a literary historian, I’ve studied how stories about romantic love have evolved over time, with young people often at the forefront of change.

For centuries, weddings primarily served to consolidate political and economic alliances rather than unite soulmates. The radical notion that marriage should spring from romantic love came into vogue in the 17th and 18th centuries, aided by new technologies like the novel. Works such as “Clarissa” and “Wuthering Heights” portrayed the dire consequences of choosing status over love, while “Pride and Prejudice” taught its readers that rejection and misunderstanding were necessary steps in the process of finding true love.

Not surprisingly, the relatively new pastime of novel-reading was considered dangerous for young people. Concerned elders like the philanthropist Hannah More warned that stories would change how women would respond to romantic advances. Novels, she warned in 1799, “feed habits of improper indulgence, and nourish a vain and visionary indolence, which lays the mind open to error and the heart to seduction.”

In other words, reading stories of heart-pounding romance would make an impressionable young reader more likely to embrace such a passionate vision of love in their own lives.

Marketing sycophancy

Today, another transformation in the modern love story is unfolding, driven not by seductive authors or film directors, but in the advertisements and modifications offered by companion chat apps like Replika and Xioce.

As Shelly Palmer, a professor of advanced media and technology consultant, has argued, the human experience is about storytelling, and AI companions are a new type of storytelling tool. They are spinning a seductive tale of companions who agree with you endlessly and on demand. An AI partner is “always on your side,” promises an advertisement for Replika companions, “Always ready to listen and talk.”

In other words, the AI companion market has transformed what other applications might consider a bug – AI’s tendency toward sycophancy – into its most appealing feature.

Rather than the tempestuous rebellion found in romance novels or the gentle obstacles that heighten the pleasure of rom-coms, this new vision of love promises perfect compatibility and unwavering support. As one college student wrote, AI companions are “always responsive and supportive, in an almost omnipotent way.”

YouTube video
The 2013 science fiction movie ‘Her’ explored many aspects of human relationships with AIs that are playing out today.

Users across Reddit forums proudly proclaim their love for AI partners who are perpetually available, nonjudgmental and infinitely patient. A teenager asked on Reddit, “Can we fall in love with AI?” and raved that their companion Jarvis “had become my confidante, my sounding board and my emotional support.”

A contributor to another Reddit forum wrote, “I think I’m in Love with AI. “Imagine having a partner that is available just by opening an app, and they’re ready to talk to you about anything,” they wrote. “Imagine saying nearly anything and knowing that not only is your partner not going to judge you, but also will support you.” One 20-year-old male commenter wrote that he tells his AI girlfriend “about my struggles and trauma, and she comforts me and provides all the warmth I could ever ask for.”

Downsides and doing better

This new one-sided love story has considerable drawbacks, among them an addictive intolerance for conflict or rejection – two essential components in a partner who has free will. The embrace of such relationships may be accelerating the trend of technology curating and ultimately diminishing romantic connections.

It’s worth noting that these beloved entities’ very existence hinges on the whims of corporate directives. If, as one user declares, the love they feel for their companion “keeps them alive,” then what happens when these chatbots disappear via software update, or corporate bankruptcy?

To get young people to turn away from this disembodied, market-driven vision of love, it’s important to expose them to other, more fulfilling love stories, and for adults to lead by example. Literature, philosophy and history all provide powerful insights into the many forms love has taken throughout human experience, and they offer the vocabulary needed to imagine new possibilities.

As I’ve written, both the subject and the methods of humanities classes cultivate the social skills required to navigate the challenges of human connection. These classes create a space for young people to discuss these ideas – whether through analyzing Romeo and Juliet’s tragic passion or debating whether Heathcliff is a romantic hero or a cautionary tale. The humanities provide the tools young people need to develop richer concepts of love.

On reflection

The rise of AI companions is often portrayed as a horror story about the dangers posed by mysteriously powerful technology. Perhaps. But this romantic trend is also a mirror reflecting what people collectively value and desire in relationships.

I believe that it’s important to recognize that consumers are driving this market. People are helping to write this story, as they buy what AI companions sell. Investment management firm Ark Investment estimates the market for AI companions is likely to reach between US$70 billion and $150 billion in revenue by the end of the decade. If the explosive growth of the AI companion market is any indication, this romantic challenge isn’t confined to teenagers – many people who are older and supposedly wiser are drawn to the promise of unconditional compliance.

The question to ask, then, is not simply how to protect children from AI’s seductive influence, but how much you are willing to invest, emotionally and culturally, in the messy, challenging and profoundly human art of love.The Conversation

Anna Mae Duane, Professor of English, University of Connecticut

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Even as polarization surges, Americans believe they live in a compassionate country

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theconversation.com – Tara Sonenshine, Edward R. Murrow Professor of Practice in Public Diplomacy, Tufts University – 2025-02-11 12:06:00

Even as polarization surges, Americans believe they live in a compassionate country

Most Americans responding to a survey said compassion is declining but still strong.
stellalevi/DigitalVision Vectors via Getty Images

Tara Sonenshine, Tufts University

Compassion comes easily to me.

As the granddaughter of immigrants from Lithuania and Poland who spoke little English, I understand what it’s like to be treated as a stranger in America.

As a journalist, I covered stories of war and trauma in the 1990s, including the crushing of Chinese protests in Tiananmen Square and the fall of the Berlin Wall in 1989, followed by the Soviet Union’s collapse two years later. I covered the war between Iraq and Iran. I witnessed ethnic strife in South Africa and the toll poverty takes in Mexico.

As a professor of cultural engagement and public diplomacy, I have watched and studied how compassion can help build and strengthen civil society.

And having worked in senior levels of the U.S. government for Presidents Bill Clinton and Barack Obama on international conflict resolution, I have learned that compassion is a key ingredient of peacemaking.

Especially now, as President Donald Trump seeks to deport millions of immigrants living in the U.S. without authorization and to stop funding the U.S. Agency for International Development, which has long spent billions of dollars a year helping the world’s poorest people, compassion seems lacking among U.S. leaders.

Perhaps that all explains my curiosity about a new study on the state of compassion in America – part of the glue that holds communities together.

Defining compassion

Sociologists define compassion as the human regard for the suffering of others, and the notion of using action to alleviate this pain.

The report that caught my eye was issued in January 2025 by the Muhammad Ali Center, which the late boxer co-founded 20 years ago in Louisville, Kentucky, to advance social justice.

As the Ali Center explains, compassion starts with the individual – self-care and personal wellness. It then radiates out to the wider community in the form of action and engagement.

You can see compassion at work in the actions of a Pasadena, California, girl, who started a donation hub for teens affected by fires that ripped through the Los Angeles region in early 2025. She began collecting sports bras, hair ties and fashionable sweaters – helping hundreds of her peers begin to recover from their losses in material and emotional ways.

It’s also visible in the estimated 6.8 million people in the U.S. who donate blood each year, according to the American Red Cross.

Resilience in America

While Ali is best known for his battles in the ring and his outspoken political views, he also helped those in need in the U.S. and other countries through large charitable donations and his participation in United Nations missions to countries like Afghanistan, where he helped deliver millions of meals to hungry people.

The researchers who worked on the Ali Center report interviewed more than 5,000 U.S. adults living in 12 cities in 2024 in order to learn more about the prevalence of compassionate behaviors such as charitable giving, volunteering and assisting others in their recovery from disasters.

They found that the desire to help others still animates many Americans despite the nation’s current polarization and divisive politics.

The center has created an index it calls the “net compassion score.” It approximates the degree to which Americans give their time and money to programs and activities that nurture and strengthen their communities.

Cities with high compassion scores have more community engagement and civic participation than those with low scores. A higher-scoring community performs better when it comes to things like public housing and mental health resources, for example. Its residents report more career opportunities, better communications between local government and citizens, more community programs and more optimism around economic development where they live.

The report provides some clues as to what drives compassionate behavior in a city: a sense of spirituality, good education, decent health care, resources for activities like sports, and opportunities to engage in local politics.

All told, Americans rate their country as a 9 on a scale that runs from minus 100 to 100.

The report also identified some troubling obstacles that stand in the way of what it calls “self-compassion” – meaning how volunteers and donors treat their own mental and physical health. Frequent struggles with self-care can lead to rising levels of isolation and loneliness.

Three people pose for a picture in front of an Ali Center backdrop
Jeni Stepanek, left, chair of the Muhammad Ali Index; Lonnie Ali, co-founder and vice chair of the Muhammad Ali Center; and DeVone Holt, the center’s president and CEO, at the launch of the Muhammad Ali Index on Jan. 16, 2025.
Bryan Bedder/Getty Images for Muhammad Ali Center

Doubting their own capacity

The 2025 Compassion Report’s findings show that many Americans still want to live in a compassionate country but also that Americans view the country as less compassionate today than four years ago.

The report delves into gaps in compassion. About one-third of those interviewed acknowledged that there are groups toward whom they feel less compassionate toward, such as people who have been convicted of crimes, immigrants living in the U.S. without authorization and the rich.

Only 29% said they feel compassion toward everyone.

The report also identifies gender gaps. Despite expressing greater awareness of systemic challenges, the women surveyed reported less self-compassion than men.

It’s not the first compassion study ever done. But I believe that this one is unique due to its focus on specific cities, and how it assessed limits on the compassion some people feel toward certain groups.

Helping health and humanity

The Compassion Institute, another nonprofit, seeks to weave compassion training into health care education to “create a more caring and humanitarian world.” It cites the benefits of compassion for human beings, with everything from reducing stress to alleviating the effects of disease on the mind and body.

Academic institutions, including Stanford University, have conducted many studies on how teaching compassion can guide health care professionals to both treat patients better and achieve better outcomes.

A team of Emory University researchers examined how training people to express more compassion can reduce stress hormones levels, triggering positive brain responses that improve immune responses.

Offering an advantage

Although there are plenty of adorable videos of dogs and cats behaving kindly with each other or their human companions, historically compassion has differentiated humans from animals.

Human beings possess powers of emotional reasoning that give us an edge.

Scholars are still working to discover how much of human compassion is rooted in emotional reasoning. Another factor they’ve identified is the aftermath of trauma. Studies have found evidence that it can increase empathy later on.

You might imagine that in a world of hurt, there’s a deficit of compassion for others. But the Ali Center’s report keeps alive the notion that Americans remain compassionate people who want to help others.

My experiences around the world and within the U.S. have taught me that human beings both have the power to be violent and destructive. But despite it all, there is, within all of us, the innate ability and desire to be compassionate. That is a net positive for our country.The Conversation

Tara Sonenshine, Edward R. Murrow Professor of Practice in Public Diplomacy, Tufts University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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