Weekly Research Briefing: Remote Work

"When you look at our performance across spend, transactions, demand for new cards, retention and credit in the context of the significant macroeconomic and geopolitical developments of the past few months, what you see is remarkable resilience across our customer base." – American Express CFO Christophe Le Caillec

"Consumer spend remains resilient, especially in the nondiscretionary spend, where we are slightly overweight. Corporate and government spend was muted this quarter, reflecting caution around economic uncertainty." – U.S. Bancorp CEO Gunjan Kedia

"As we look ahead, what we see regarding the health of our clients and customers has not changed. Consumers and businesses remain strong as unemployment remains low and inflation remains in check." – Wells Fargo CEO Charles Scharf

"Our customers are still in very good shape. They maintain good liquidity much like our business customers do. They're managing their debt levels well. We're not seeing any real deterioration at all. I do think consumers are spending a little less being a little more careful, particularly on luxury items and things of that nature just because of some volatility and uncertainty." – Regions Financial CEO John Turner

"We continue to struggle to see signs of weakness. We just -- the consumer basically seems to be fine. Now a few things are true. Like if you look at indicators of stress, not surprisingly, you see a little bit more stress in the lower income bands than you see in the higher income bands. But that's always true. That's pretty much definitionally true. And nothing there is out of line with our expectations." – JPMorgan Chase CFO Jeremy Barnum

Duties paid by US importers have jumped to an average rate of more than 13%, over five times where they were last year, Bloomberg Economics estimates. Higher tariffs are enough to slash 5% or more from corporate earnings growth, according to Alastair Pinder, head of global equity strategy at HSBC.

With the S&P 500 Index trading at about 22 times forward earnings, near its richest valuations in the post-Covid era, the concern is that any disappointments in corporate profits and economic data during the remainder of the year could pull the rug out from under the latest rally. ‬‬

"We're able to pass through 90% of that through a higher Midwest premium to our customers. So while we're not particularly thrilled with the tariffs, our customers are paying significantly higher prices for aluminum in the United States than they would pay anywhere else in the world." – Alcoa CEO William Oplinger

@ernietedeschi: A strengthening dollar was supposed to offset part of the cost of tariffs. To be clear, as a *first order effect*, the tariffs may still have put upward pressure on USD. But reality doesn't stop at the first order. USD has *weakened* this year, making imports even more expensive.

The CPI print provided ample evidence that tariffs are boosting prices of exposed goods. For the raw apparel sector, the threat businesses face is existential. They're not high margin and depend on high volume, for which they depend on a foreign supply chain, Gilbert argues. And they’re starting to raise prices.

This Oxford Economics chart divides the impact on core inflation in the US, depending on whether goods are exposed to tariffs. Increases for other goods remain well under control; those impacted by tariffs are beginning to rise in a big way.

The Oxford analysis indicates that the new tariffs, if fully implemented, would reduce US GDP growth by 0.1 percentage point this year and 0.3 percentage points in 2026, thanks to a rise in core inflation. The dilemmas for companies, and central bankers, aren’t going away.

All that said, the tariff inflation shock looks like it really got going in yesterday’s CPI data for June. The top left chart shows monthly inflation for core goods, a category that makes up about 25 percent of the core CPI basket. The chart shows monthly inflation so far in 2025 (purple line), along with monthly inflation rates in 2024 (blue line) and 2023 (red line) as well as the median inflation rate throughout the calendar year for 20 years of data from 2000 to 2019. Monthly core goods inflation in June 2025 was around 80 bps above where it normally is at this time of year, which is substantial. This effect will keep building in intensity as pre-tariff inventories are depleted and as the administration cracks down on transshipments, as in the trade deal with Vietnam.

The additional charts show different components of the core goods category. Household furnishings and supplies got hit very hard (top right), as did recreational goods (bottom left). Even apparel (bottom right), where tariff front-running was especially pronounced, is seeing monthly inflation above where it normally is at this time of year. Overall, the tariff hit to goods prices is starting to hit in earnest, an effect that will continue to build in coming months.

@RenMacLLC: Retail sales beat estimates, but enthusiasm ought to be tempered somewhat given the pick-up in consumer goods prices over the month. These are nominal dollar values. Core goods CPI ex autos rose 0.6% over the month. Real goods spending was soft in June.

In all twelve Districts, businesses reported experiencing modest to pronounced input cost pressures related to tariffs, especially for raw materials used in manufacturing and construction. Rising insurance costs represented another widespread source of pricing pressure. Many firms passed on at least a portion of cost increases to consumers through price hikes or surcharges, although some held off raising prices because of customers' growing price sensitivity, resulting in compressed profit margins. Contacts in a wide range of industries expected cost pressures to remain elevated in the coming months, increasing the likelihood that consumer prices will start to rise more rapidly by late summer.

"We expect to see goods prices to start ticking up over the summer as tariffs take effect, and we have seen pauses in CapEx and hiring amongst our client base." – Citigroup CEO Jane Fraser

In the five months since President Trump first announced sweeping tariffs, Amazon quietly raised prices on low-cost products such as deodorant, protein shakes and pet care items, a Wall Street Journal analysis of nearly 2,500 items found.

On average, prices on inexpensive goods like these increased 5% by July.

In April, Amazon AMZN 1.25% increase; green up pointing triangle.com said it would hold the line on prices. The Journal’s analysis of prices from e-commerce data firm Traject Data found that while Amazon’s price rose on 1,200 of its cheapest household goods, competitor Walmart lowered prices on the same items by nearly 2%.

The divergent strategies show how major retailers are reshaping prices on popular products as uncertainty about tariffs drags on.

"And I'd just say, anecdotally, the level of dialogue is significantly increased...The deal-making environment has been remarkably resilient. While activity was slower in the first half of the quarter, announced M&A volumes for the year-to-date are 30% higher year-over-year and 15% greater than the comparable 5-year average." – Goldman Sachs Group CEO David Solomon

@gnoble79: About that lack of speculation thing…

A bubble at the top of the art market has burst. Auction sales of paintings that cost more than $10 million fell 44% last year, and continue to be depressed in 2025, data from ArtTactic shows. The shift in the market was clear at Sotheby’s New York auction in May, when a sculpture by Alberto Giacometti with a $70 million asking price didn’t attract a single bid and had to be pulled from sale.

This is odd. In 1993 and again in 2010, Yale professor William Goetzmann analyzed more than two centuries of art-auction results, finding that painting prices are correlated with the stock market and act as a good inflation hedge.

So based on history, the high end of the art market should be doing OK with the S&P 500 bobbing around record highs, but the correlation appears to have frayed.

Is weakness at the top of the art market a sign that very wealthy collectors are growing concerned about the future? Tariffs and uncertainty about the economy may be making them wary of tying up millions of dollars in illiquid assets like paintings.

But billionaire collectors are hardly down on their luck. At the start of 2025, they controlled $15.6 trillion of wealth, according to the Art Basel & UBS Art Market report—a record high and up 80% from 2019 levels.

A possible explanation is that a vogue for treating art as an asset class that took hold after the 2008-09 global financial crisis has made the market more sensitive to interest rates.

When money was cheap between 2009 and 2022, the ultrawealthy pumped cash into rare paintings… Sales of high-end art exploded over this period: The value of art sold at auction for $10 million or more increased by 700% between 2009 and 2022 versus 12% for works priced below $50,000, the UBS report shows…

Before 2022, collectors could borrow about 50% of the appraised value of their blue-chip art collections at a sub-3% rate. Cash that would otherwise be tied up on the walls of penthouse apartments could instead be put to work in higher-yielding investments like the stock market or real estate.

The arbitrage worked until higher interest rates pushed the cost of an art-backed loan close to 8%. Finding an investment that can deliver a return acceptably above this rate is harder today, which has damped the appeal of buying art. While dedicated collectors are still spending, speculators are gone.

The chief executive officer of Prologis Inc., a real estate investment trust that owns and runs warehouses, said US immigration policy is causing a labor shortage that’s driving building costs higher.

“Construction costs are going to go up radically,” Prologis CEO Hamid Moghadam said Wednesday on Bloomberg TV. “We thought they were going to stabilize this year, but I think all of this immigration stuff is putting more pressure on construction.”…

“It is a real issue for our customers, because they need people to work in their warehouses, and often those are the same people that are having immigration issues,” Moghadam said Wednesday. “So they’re being forced into more automation, which is not necessarily economic at this point in time.”

Moghadam added that he doesn’t “know where the employees are going to come from that are going to do all this manufacturing that we are talking about.”

For his part, the CEO said the labor shortage makes Prologis’ buildings more valuable because it will cost more to replace them.

The age of remote work is coming to a close for the Fortune 100. For the first time since the pandemic, the majority of Fortune 100 companies now have a fully in-office policy for their employees, according to a new report from real estate company Jones Lang LaSalle Inc.

Compared to two years ago, when 78% of Fortune 100 companies were hybrid and 5% were fully in-office, those firms are now 41% hybrid and 54% fully in-office. The stark shift comes as the companies require workers in the office an average of 3.8 days a week compared to 2.6 days in 2023, per the report…

Though the U.S.’s largest 100 companies by revenue are reveling in bustling office spaces swelling with workers, the story of the rest of the country’s return-to-office push is much less dramatic.

Compared to the Fortune 100’s mass shift to full-time RTO, U.S. employees with remote-capable jobs have largely maintained the hybrid work status quo over the last two years, with 51% working hybrid in 2025 compared to 52% in May 2023, 28% working exclusively remote compared to 29% in May 2023; and 21% working completely in-person compared to 20% in May 2023, according to recent Gallup Poll data.

According to Mark Ma, associate professor of business administration at the University of Pittsburgh, Fortune 100 companies are leading the RTO push simply because they can afford to do so.

“Amazon can lose 1,000 talented IT workers with no problem,” he told Fortune. “There is still a lineup of young college graduates from maybe Carnegie Mellon or other excellent universities who still want to work for Amazon because that’s the Magnificent Seven.

“But the smaller firms, it is harder for them to do it because once they lose some important employees, maybe no one else in their firm can do the job,” he continued. “It’s a completely different story for smaller firms.”

The war among some of the richest companies on the planet for talent is playing out in an unprecedented frenzy of talent raids, secret deals and betrayals, leading brainy AI researchers whose minds have never been so highly valued to become as rich as NBA players and Hollywood stars.

The most powerful CEOs in tech are dangling pay packages worth more than $300 million to their most prized recruits—and even that kind of money isn’t always enough to win them over.

Every feverish new development in the all-out brawl for talent has captivated Silicon Valley. The company at the center of the action is Meta, which is in the midst of one of the most astonishing recruiting blitzes of all time. Led by Mark Zuckerberg, who is personally assembling his AI dream team, the company has poached the leaders of promising startups, stunning their investors and employees. It has also given so-called exploding offers that expire within days to potential hires so it’s harder for Meta’s rivals to negotiate effective counters.

The playbook has left the industry to wonder whether the social, mission-first contract that once united founders and employees is unraveling. Meanwhile, some executives are bemoaning the erosion of what was once a bedrock principle of Silicon Valley: Be a missionary, not a mercenary.

When the solar arrays we studied were installed, California state solar energy policy and incentives gave farm landowners new ways to diversify their income by either leasing their land for solar arrays or building their own.

There was an obvious trade-off: Turning land used for crops to land used for solar usually means losing agricultural production. We estimated that over the 25-year life of the solar arrays, this land would have produced enough food to feed 86,000 people a year, assuming they eat 2,000 calories a day.

There was an obvious benefit, too, of clean energy: These arrays produced enough renewable electricity to power 470,000 U.S. households every year.

But the result we were hoping to identify and measure was the economic effect of shifting that land from agricultural farming to solar farming. We found that farmers who installed solar were dramatically better off than those who did not.

They were better off in two ways, the first being financially. All the farmers, whether they owned their own arrays or leased their land to others, saved money on seeds, fertilizer and other costs associated with growing and harvesting crops. They also earned money from leasing the land, offsetting farm energy bills, and selling their excess electricity.

Farmers who owned their own arrays had to pay for the panels, equipment and installation, and maintenance. But even after covering those costs, their savings and earnings added up to US$50,000 per acre of profits every year, 25 times the amount they would have earned by planting that acre.

Farmers who leased their land made much less money but still avoided costs for irrigation water and operations on that part of their farm, gaining $1,100 per acre per year – with no up-front costs.

The United States’ mismanagement of China Shock 1.0 taught us that a better trade strategy is needed. What does better look like? As Einstein supposedly said, everything should be made as simple as possible, but no simpler. In lieu of a too-simple answer, we offer four core principles.

First, policymakers must recognize that most of our difficulties with China are shared by our commercial allies. We should be acting in unison with the European Union, Japan and the many countries with which we have free trade agreements, such as Canada, Mexico and Korea, rather than punishing them with sky-high tariffs for the gall of selling us products we want to buy. Tariffs on electric vehicles would look very different if they were adopted by an expansive coalition of the willing, with the United States in the lead…

Second, America should take a page from China by aggressively promoting experimentation in new fields. Choose sectors that are strategically vital (drones, advanced chips, fusion, quantum, biotech) and invest in them. Then do it “China style,” in which the U.S. government operates big venture funds that expect to have a low success rate for any single company or project and a larger success rate in spurring new industries…

Third, choose the battles that we can win (semiconductors) or those we simply cannot afford to lose (rare earths), and make the long-term investments to reach the right outcome. The American political system has the attention span of a squirrel on cocaine. It changes the rewards and penalties so often that little good can happen. Whether or not you thought President Joe Biden’s Inflation Reduction Act was worthwhile, it’s a terrible idea to chop down all those new investments in climate technology three years after they got started, as the recent domestic policy legislation has done. Likewise, summarily terminating the talented CHIPs and Science team, which was chartered to revitalize domestic semiconductor manufacturing, as Mr. Trump has called for Congress to do, won’t advance American leadership in A.I. chips. Both sides of the aisle agree that confronting China is essential for a secure economic future, which offers a semblance of hope that some continuity in our economic policies may be feasible.

Fourth, prevent the devastating impacts of job loss from the next major shock, be it from China or somewhere else (you’ve heard of A.I., right?). The scarring effects of manufacturing-job loss have caused America a heap of economic and political trouble over the past two decades. In the interim, we’ve learned that extended unemployment insurance, wage insurance through the federal Trade Adjustment Assistance program and the right kinds of career and technical education from community colleges can help displaced workers get back on their feet. Yet we carry out these policies on too small a scale and in too poorly targeted a manner to help much, and we’re moving in the wrong direction. Inexcusably, Congress defunded Trade Adjustment Assistance in 2022.