Fact checked by Michael Logan
Reviewed by Somer Anderson

The stock markets famously display a sustained upward trend over the long term. But it’s the intermittent tailspins—like the 50% drop endured by most major markets during the 2008-09 global credit crisis—that test the fortitude of an investor.

The nimblest investors can make money no matter what is happening in the world. Trading the news should be an integral component of your investing strategy. While a day trader may trade the news constantly, a long-term investor might do so only occasionally.

Regardless of your investing horizon, learning to trade the news is an essential skill for astute portfolio management and long-term performance.

Key Takeaways

• Much of the news that moves the markets is scheduled, such as earnings reports and economic updates. Plot your strategy in advance rather than reacting on the fly.
• Most news events are good for one asset class and bad for others. Hedging your portfolio cushions losses.
• Avoid reacting to crowd sentiment. If you have confidence in your choices of investments, stick with them.

Classifying News

News can be broadly classified into two categories:

• Periodic or Recurring: This includes the scheduled releases of news that moves the markets, including interest rate announcements by the Federal Reserve, economic data releases, and quarterly earnings reports from companies.
• Unexpected or One-Time: These are bolts from the blue such as a terrorist attack, a sudden geopolitical flare-up, or the threat of debt default by an indebted nation. As a rule of thumb, unexpected news is more likely to be bad than good.

News can be specific to a particular stock or it can affect a sector, an industry, or the markets as a whole.

Trading the News

Here are a few examples of historical events and the actions that an investor could have taken in response.

A Federal Reserve Announcement

The Federal Open Market Committee’s (FOMC) interest rate announcements have always been among the biggest market-moving events, but its announcement in mid-March 2020 was of unusual interest, not least because it was issued on a Sunday.

In an effort to ease the economic effects of the 2020 coronavirus crisis, the Fed cut its main lending rate by 1%. It was the second cut of the month. It also announced plans to buy $700 billion in government securities.

The next day, the Dow Jones Industrial Average dropped 3,000 points for its worst day since the 1987 crash.

Many investors would have bet on a great day on Wall Street, and they would have been wrong. Other headlines dominated, including comments from President Donald Trump saying that the pandemic could last until August. (It turned out to be much worse.)

Nevertheless, investors who held on for just a few more weeks would have been amply rewarded when the markets started climbing again.

An investor in stocks who was looking to hedge potential downside risk could have done any of the following immediately after the Fed’s announcement:

• Trimmed positions in highly profitable equity positions to take some money off the table.
• Purchased puts either on specific stocks in the portfolio or on a broad market index like the S&P 500 or Nasdaq 100. Purchasing puts gives the investor the right to sell a stock for an agreed-upon price at a future time. If the security’s market price falls below the agreed-upon price, the investor gains by selling at the higher contractual price.
• Bought inverse exchange-traded funds (ETFs) to protect portfolio gains. These move in the opposite direction of the broad market or a specific sector.

While these reactive moves would typically be carried out after the Fed announcement, a proactive investor could implement the same steps in advance of a scheduled Fed statement.

This reactive or proactive approach to an important event or piece of news, of course, depends on the investor’s confidence in predicting the market’s near-term direction. An individual’s risk tolerance and trading approach (passive or active) also are factors.

A Jobs Report

In terms of economic data releases, few are more important than the U.S. jobs report because of its wider implications.

Traders and investors closely watch the employment level because it has a substantial impact on consumer confidence and spending, which accounts for 70% of the U.S. economy.

Job numbers that miss economists’ forecasts are generally interpreted as signs of incipient economic weakness, while payroll numbers that surge past forecasts are seen as a sign of strength.

In March 2021, the government announced that nonfarm payroll employment had increased by 916,000 the previous month, lowering the unemployment rate to 6%. About 210,000 new jobs were expected to be created. Crucially, many of the new jobs were in the travel industry, signaling a rebound in discretionary spending.

After a seesaw session, the Dow Jones Industrial Average closed up 171 points.

The investor playbook for trading jobs data is based on predictable market reactions.

• Payroll numbers below expectations: Suggests that the Fed will be forced to keep interest rates low for an extended time period. The impact on specific asset classes could be predicted in this table:

• Payroll numbers above expectations: Implies that the Fed may scale back the pace of asset purchases, which could send bond yields and market interest rates higher. The likely result:

An investor could use these market reactions to formulate an appropriate trading strategy to implement either in advance of the jobs report or after its release.

A Corporate Earnings Report

If you invest in individual stocks, it is advisable to have a trading strategy in place in advance of the relevant company earnings reports.

A stock’s price can soar or tank in minutes after releasing numbers that impress or disappoint. Imagine having a huge short position in a stock and watching it soar 40% in the after-market because its earnings were much better than expected.

Trading an earnings report is by no means required. If you’re in a stock for the long term, and you believe in its potential, you can ride out any quarterly storms.

But if you have a large position in a stock, long or short, you need to weigh the merits of leaving it unchanged over the earnings report or making changes just before the report comes out. Factors that should play a part in this decision include:

• The current state of the overall market (bullish or bearish);
• Investor sentiment for the sector to which the stock belongs;
• The current level of short interest in the stock;
• Earnings expectations (too high or comfortably low);
• Valuations for the stock;
• Its recent and medium-term price performance;
• The earnings and outlook reported by its competitors.

For example, an investor with a 15% position in a big-cap technology stock that is trading at multi-year highs may decide to trim positions in it ahead of the earnings report so that it constitutes only 10% of the portfolio.

An alternative option could be to buy puts to hedge downside risk. While this would enable the investor to leave the position unchanged at 15% of the portfolio, this hedging activity would incur a significant cost.

Key points to note: Avoid taking an unduly large position, and have a risk mitigation strategy in place to cap losses if the trade does not work out.

A Bolt from the Blue

Not surprisingly, the onset of the coronavirus pandemic in 2020 was a global event that threw stock exchanges around the world into a bear market from Feb. 20, 2020, until April 7, 2020.

Don’t worry if you don’t remember this. The stock markets then began a long upward trajectory and hit new record highs. The bull market that had begun after the 2007-2008 financial crisis resumed after a blip that lasted for less than two months.

This does not mean that bad news doesn’t matter. But it does suggest that the impulse to sell everything and take to the hills may be an overreaction. Over the years, the financial markets have demonstrated resilience.

During times of geopolitical uncertainty, it may be prudent to rotate out of more speculative stocks and into higher-quality investments. You might also consider hedging downside risk using options and inverse ETFs.

While you should scale back your stock exposure if it is uncomfortably high, bear in mind that in most cases, short-term corrections caused by unexpected geopolitical or macroeconomic events have proved to be the quintessential long-term buying opportunities.

Tips for New Traders

• Know the dates and times of important events: Information on the dates and times of key market events such as FOMC announcements, economic data releases, and earnings reports from key companies is readily available online.
• Have a strategy in place beforehand: Plot your trading strategy in advance so that you are not forced into making a rash decision in the heat of the moment. Know your exact trading entry and exit points before the action begins.
• Avoid kneejerk reactions: Make rational investment decisions based on your risk tolerance and investment objectives. This may require you to be a contrarian on occasion, but as successful long-term investors will attest, it’s the best approach for successful equity investing.
• Cap your risk levels: Avoid the temptation to make a fast buck by taking a concentrated long or short position. What if the trade goes against you?
• Have the courage of your convictions: Assuming you’ve done your homework, consider adding to an existing position if the stock plunges below its intrinsic value, or selling out to take profits in a stock that is wildly popular at the moment.
• See the big picture: Often, investor reaction to the news may not be as expected. You’d think an announcement of a dividend cut would lead to a sell-off in a stock. Sometimes, investors applaud the move as a signal that a company is investing more in its business.
• Don’t be swayed by market sentiment: Being overly swayed by market sentiment can tempt you to buy high—when euphoria runs rampant—and sell low. Many hapless investors were so spooked by the unrelenting tide of bad news in 2008 that they exited their equity positions near the lows, incurring massive losses in the process. They missed out on a stunning gain of 166% in the S&P 500 from March 2009 to October 2013.
• Know when to “fade” the news: Sometimes it is as important to ignore the news or “fade” it as it is to trade it. If you’re in it for the long term, you can ignore the noise.

What Are the Most Important Economic Indicators?

Investopedia identifies the 10 most important reports that an investor should keep an eye on to understand the big economic picture: quarterly gross domestic product; monthly employment; industrial production; consumer spending; inflation; home sales; home construction; construction spending; manufacturing demand, and retail sales.

Collectively, these reports can give you a good sense of the current state of U.S. business and its likely near-term direction.

What Is a Leading Indicator vs. a Lagging Indicator?

A leading indicator is an economic report that can be used to anticipate a trend. The new construction starts report indicates whether the home-building industry is betting on higher or lower sales in the short-term future.

A lagging indicator confirms a trend. The home sales report tells you whether home builders were correct in their assumptions.

Investors tend to pay more attention to leading indicators. They want to anticipate the news, not react to it.

What Is Market Sentiment and Should I Pay Attention to It?

Market sentiment is the mood of the market. In short, it’s the herd mentality. It’s best avoided unless you judge that the sentiment, upbeat or downbeat, has a sound basis in fact. Ignore it and you qualify as a contrarian.

The Bottom Line

Trading the news is crucial for positioning your portfolio to take advantage of market moves and boost your overall returns. But your trading decisions should be made in a thoughtful and measured way. Keep an eye on the news and watch for meaningful trends. Panic decisions are almost always a cause for regret.

Fact checked by Yarilet Perez
Reviewed by Robert C. Kelly

What Are Tariffs?

Tariffs are a type of trade barrier that makes imported products more expensive than domestic ones. Tariffs typically come in the form of taxes or duties levied on importers, and they’re eventually passed on to consumers. They’re commonly used in international trade as a protectionist measure.

For example, in February 2025, President Trump implemented a 25% tariff on imports from Canada and Mexico and a 10% tariff on imports from China. There’s also a 10% tariff on energy resources from Canada.

This article will examine how some countries react to a variety of factors that attempt to influence trade.

Key Takeaways

• Tariffs are a type of protectionist trade barrier that can come in several forms.
• Tariffs are paid by domestic consumers and not the exporting country, but they have the effect of raising the relative prices of imported products.
• Other trade barriers include quotas, licenses, and standardization, all seeking to make foreign goods more expensive or available in a limited supply.

Who Collects a Tariff?

In simplest terms, a tariff is a tax. It adds to the cost borne by consumers of imported goods and is one of several trade policies that a country can enact. Tariffs are paid to the customs authority of the country imposing the tariff.

Tariffs on imports coming into the United States, for example, are collected by Customs and Border Protection, acting on behalf of the Commerce Department. In the U.K., it’s HM Revenue & Customs (HMRC) that collects the money.

It is important to recognize that the taxes owed on imports are paid by domestic consumers and not imposed directly on the foreign country’s exports. The effect is nonetheless to make foreign products relatively more expensive for consumers, but if domestic manufacturers rely on imported components or other inputs in their production process, they will also pass the increased cost on to consumers.

Often, goods from abroad are cheaper because they offer cheaper capital or labor costs. If those goods become more expensive, then consumers will choose the relatively costlier domestic product.

Why Are Tariffs and Trade Barriers Used?

Tariffs are often created to protect infant industries and developing economies but are also used by more advanced economies with developed industries. Here are five of the top reasons tariffs are used.

Protecting Domestic Employment

The levying of tariffs is often highly politicized. The possibility of increased competition from imported goods can threaten domestic industries. These domestic companies may fire workers or shift production abroad to cut costs, which means higher unemployment and a less happy electorate.

The unemployment argument often shifts to domestic industries complaining about cheap foreign labor, and how poor working conditions and lack of regulation allow foreign companies to produce goods more cheaply. In economics, however, countries will continue to produce goods until they no longer have a comparative advantage (not to be confused with an absolute advantage).

Protecting Consumers

A government may levy a tariff on products that it feels could endanger its population. For example, a country may place a tariff on imported beef if it thinks that the goods could be tainted with a disease.

Infant Industries

The use of tariffs to protect infant industries can be seen by the Import Substitution Industrialization (ISI) strategy employed by many developing nations. The government of a developing economy will levy tariffs on imported goods in industries in which it wants to foster growth.

This increases the prices of imported goods and creates a domestic market for domestically produced goods while protecting those industries from being forced out by more competitive pricing. It decreases unemployment and allows developing countries to shift from agricultural products to finished goods.

Criticisms of this sort of protectionist strategy revolve around the cost of subsidizing the development of infant industries. If an industry develops without competition, it could wind up producing lower quality goods, and the subsidies required to keep the state-backed industry afloat could sap economic growth.

National Security

Barriers are also employed by developed countries to protect certain industries that are deemed strategically important, such as those supporting national security. Defense industries are often viewed as vital to state interests, and often enjoy significant levels of protection.

For example, while both Western Europe and the United States are industrialized, both are very protective of defense-oriented companies. 

Retaliation

Countries may also set tariffs as a retaliation technique if they think that a trading partner has not played by the rules. For example, if France believes that the United States has allowed its wine producers to call its domestically produced sparkling wines “Champagne” (a name specific to the Champagne region of France) for too long, it may levy a tariff on imported goods from the United States.

If the U.S. agrees to crack down on the improper labeling, France is likely to stop its retaliation. Retaliation can also be employed if a trading partner goes against the government’s foreign policy objectives.

Common Types of Tariffs

There are several types of tariffs and barriers that a government can employ:

• Specific tariffs
• Ad valorem tariffs
• Licenses
• Import quotas
• Voluntary export restraints
• Local content requirements

Specific Tariffs

A fixed fee levied on one unit of an imported good is referred to as a specific tariff. This tariff can vary according to the type of goods imported. For example, a country could levy a $15 tariff on each pair of shoes imported, but levy a $300 tariff on each computer imported.

Ad Valorem Tariffs

The phrase “ad valorem” is Latin for “according to value,” and this type of tariff is levied on a good based on a percentage of that good’s value. An example of an ad valorem tariff would be a 15% tariff levied by Japan on U.S. automobiles.

The 15% is a price increase on the value of the automobile, so a $40,000 vehicle now costs $46,000 for Japanese consumers. This price increase protects domestic producers from being undercut but also keeps prices artificially high for Japanese car shoppers.

Non-Tariff Barriers to Trade

Licenses

A license is granted to a business by the government and allows the business to import a certain type of good into the country. For example, there could be a restriction on imported cheese, and licenses would be granted to certain companies, allowing them to act as importers. This creates a restriction on competition and increases prices for consumers.

Import Quotas

An import quota is a restriction placed on the amount of a particular good that can be imported. This sort of barrier is often associated with the issuance of licenses. For example, a country may place a quota on the volume of imported citrus fruit that is allowed.

Voluntary Export Restraints (VER)

This type of trade barrier is “voluntary” in that it is created by the exporting country rather than the importing one. A voluntary export restraint (VER) is usually levied at the behest of the importing country and could be accompanied by a reciprocal VER.

For example, Brazil could place a VER on the exportation of sugar to Canada, based on a request by Canada. Canada could then place a VER on the exportation of coal to Brazil. This increases the price of both coal and sugar but protects the domestic industries.

Local Content Requirement

Instead of placing a quota on the number of goods that can be imported, the government can require that a certain percentage of a good be made domestically. The restriction can be a percentage of the good itself or a percentage of the value of the good.

For example, a restriction on the import of computers might say that 25% of the pieces used to make the computer are made domestically, or can say that 15% of the value of the good must come from domestically produced components.

Who Benefits From Tariffs?

The benefits of tariffs are uneven. Because a tariff is a tax, the government will see increased revenue as imports enter the domestic market. Domestic industries also benefit from a reduction in competition, since import prices are artificially inflated.

Unfortunately for consumers—both individual consumers and businesses—higher import prices mean higher prices for goods. If the price of steel is inflated due to tariffs, individual consumers pay more for products using steel, and businesses pay more for steel that they use to make goods.

In short, tariffs and trade barriers tend to be pro-producer and anti-consumer.

Note

The U.S. has suspended tariffs on imports of steel and aluminum from the European Union. The suspension will last until Dec. 31, 2025.

The effect of tariffs and trade barriers on businesses, consumers, and the government shifts over time. In the short run, higher prices for goods can reduce consumption by individual consumers and by businesses. During this period, some businesses will profit, and the government will see an increase in revenue from duties.

In the long term, these businesses may see a decline in efficiency due to a lack of competition, and may also see a reduction in profits due to the emergence of substitutes for their products. For the government, the long-term effect of subsidies is an increase in the demand for public services, since increased prices, especially in foodstuffs, leave less disposable income.

How Do Tariffs Affect Prices?

Tariffs increase the prices of imported goods. Because of this, domestic producers are not forced to reduce their prices from increased competition, and domestic consumers are left paying higher prices as a result. Tariffs also reduce efficiencies by allowing companies that would not exist in a more competitive market to remain open.

The figure below illustrates the effects of world trade without the presence of a tariff. In the graph, DS means domestic supply and DD means domestic demand. The price of goods at home is found at price P, while the world price is found at P*.

At a lower price, domestic consumers will consume Qw worth of goods, but because the home country can only produce up to Qd, it must import Qw-Qd worth of goods.

When a tariff or other price-increasing policy is put in place, the effect is to increase prices and limit the volume of imports. In the figure below, price increases from the non-tariff P* to P’. Because the price has increased, more domestic companies are willing to produce the good, so Qd moves right. This also shifts Qw left. The overall effect is a reduction in imports, increased domestic production, and higher consumer prices.

What Are the Main Types of Trade Barriers?

The main types of trade barriers used by countries seeking a protectionist policy or as a form of retaliatory trade barriers are subsidies, standardization, tariffs, quotas, and licenses. Each of these either makes foreign goods more expensive in domestic markets or limits the supply of foreign goods in domestic markets.

What Is an Example of a Tariff?

An example of a tariff would be a tax on a good imported from another country. For example, a 3% tariff on corn would be a 3% tax added to the cost of corn paid by any domestic importer of corn from a foreign country. This would increase the cost of importing corn, resulting in an increase in the price of corn being sold domestically by the importer in order to cover the costs and earn a profit. This hurts domestic consumers as well as businesses, as consumers may look for cheaper competitors that are selling domestic corn and not the more expensive imported corn.

Do Tariffs Cause Inflation?

Theoretically, tariffs can cause inflation. Tariffs increase the price of goods and services in domestic markets by applying a tax on imported goods that is paid by the domestic importer. To cover the increased costs, the domestic importer then charges higher prices for the goods and services. Tariffs are typically applied to specific products or industries, so may not have a wide-scale effect, which, otherwise, would cause all prices to increase, resulting in inflation.

The Bottom Line

The role tariffs play in international trade has declined in modern times, though there are exceptions, like President Trump’s February 2025 tariffs on Mexico, Canada, and China.

One of the primary reasons for the overall decline is the introduction of international organizations designed to improve globalization and free trade, such as the World Trade Organization (WTO). Such organizations make it more difficult for a country to levy tariffs and taxes on imported goods, and can reduce the likelihood of retaliatory taxes. Because of this, countries have shifted to non-tariff barriers, such as quotas and export restraints.

Administration policies can impact the stock market in many ways

Reviewed by Charles Potters

Presidents get a lot of the blame and take a lot of the credit for stock market performance while in office. However, a president’s ability to impact the economy and markets is generally indirect and marginal.

Congress sets tax rates, passes spending bills, and writes laws regulating the economy. That said, there are some ways that the president can affect the economy and the market.

Key Takeaways

• Presidents have very little impact on the stock market, but they still seem to get some credit when performance is good and more of the blame if markets are down.
• Typically, Congress and the Federal Reserve play a bigger role in directly shaping markets when compared to the president.
• Fiscal spending legislation passed by Congress can influence market sentiment.
• The independent Federal Reserve can have a significant impact by raising (bearish) or lowering (bullish) interest rates.
• Bullish stock market sentiment can improve a president’s popularity, while a bearish stock market outlook can undermine a president’s standing.

How Presidents Impact the Stock Market

Because the president is responsible for implementing and enforcing laws, they have some control over business and market regulation. This control can be direct or through the president’s ability to appoint cabinet secretaries, such as the head of the Department of Commerce, as well as trade representatives.

The president also nominates the Chair of the Federal Reserve, who sets monetary policy along with the other Fed governors and members of the Federal Open Market Committee. The Fed is an independent government body with a mission to set monetary policy that ensures economic growth, low inflation, and low unemployment.

Those monetary policy measures can impact the stock market, although the Fed typically does not consider the performance of the stock market as an isolated factor to influence its decisions. The extent to which the person picked as Fed Chair is hawkish or dovish on monetary policy will determine how they affect the economy.

All presidents would like to lead during economic expansion and a rising stock market because those usually increase their likelihood of reelection. As President Bill Clinton’s campaign manager, James Carville, once famously said, “It’s the economy, stupid.”

This chart shows the S&P 500’s price change over each four-year presidential term going back to 1953. Two of the terms have two names because President Kennedy was assassinated before the end of his term, and President Nixon resigned before the end of his second term. Their terms were finished by their vice presidents, Lyndon Johnson and Gerald Ford, respectively.

CEO Presidents

There haven’t technically been any CEOs who went on to become president. In fact, Donald Trump may be the closest contender to claim that title. He was chair and president of The Trump Organization before becoming President of the United States. Many have tried, and we’ll likely see more attempts in the future.

Presidents and the NYSE

A sitting president will rarely visit the New York Stock Exchange. Sure, President George Washington’s statue is right across the street at Federal Hall, but the exchange was barely established during his tenure.

On Jan. 31, 2007, President George W. Bush visited the New York Stock Exchange. He had just made a speech on the economy across the street at the aforementioned Federal Hall, where he chastised corporations for excessive executive compensation. Little did he know, the nation was about to slip into a financial crisis and the longest recession it had experienced since the Great Depression.

S&P 500 Under Biden

Under President Biden, the S&P 500 had a choppy ride at first but made record gains in 2024.

Biden took office in January 2021 as markets were still rebounding from the losses suffered due to the COVID-19 pandemic. After initially topping out in January 2022, the S&P was buffeted by interest rate hikes as the Fed sought to restrain inflation. Rising interest rates caused the index to fall for most of 2022. Throughout 2023, the market showed increased volatility as market participants speculated on the size and timing of further Fed rate hikes.

After the Fed signaled an end to rate hikes, the S&P began to climb, breaking 5,000 for the first time in February 2024. It continued to rise steadily, peaking in July 2024 and then breaking through 6,000 in December.

Does It Matter Who Is President For Stock Market Performance?

No. History shows that neither party affiliation, nor who the incumbent is, has any direct effect on the performance of stocks.

Do Government Policies Have an Effect on Stock Market Performance?

Yes, government policies can have an effect on stock market performance, especially to the extent that they deliver large fiscal spending programs. Market investors view extra government spending as a boon to consumers and then to the market.

Do Tax Cuts Count As Fiscal Spending?

Tax cuts are a form of fiscal stimulus since they leave more money in consumers’ pockets, which drives personal spending and a generally bullish sentiment among investors.

Do the Policies of the Fed Impact the Performance of the Stock Market?

Yes. The Federal Reserve is an independent government body that sets monetary policy by raising or lowering interest rates, among its main tools. Higher interest rates, or speculation on them, generally have a bearish impact on stocks. The thinking is that higher rates will raise the cost of borrowing and act as a headwind to the overall economy. Lowering interest rates can have the opposite effect unless monetary policy easing is due to a weak economy.

The Bottom Line

While the president can influence the economy through policies and economic agendas that can impact the stock market, the president probably gets too much blame and too much credit when it goes down or up. That’s because larger macro events generally drive investment sentiment over the longer term.

A strong or bullish stock market, by raising consumer optimism, can redound the president’s popularity and may benefit the incumbent come election time. The same can be said if the stock market is down and investor sentiment is bearish, auguring poorly for the incumbent at voting time. So it could be said that stock market performance has a bigger influence on who is president, rather than the other way around.

Fact checked by Vikki Velasquez
Reviewed by Gordon Scott

Adriana Kugler is an economist and a member of the Federal Reserve’s Board of Governors. She previously served as the U.S. executive director of the World Bank, a position for which she was nominated by President Joe Biden in August 2021 and confirmed by the U.S. Senate in April 2022. She also is a professor of public policy and economics at Georgetown University, where she is on a leave of absence.

Kugler left the World Bank to become a member of the Federal Reserve’s Board of Governors. Nominated by Biden in May 2023 and confirmed by the U.S. Senate on Sept. 7, 2023, she is the board’s first Latina member. She filled an unexpired term which will end on January 31, 2026.

Key Takeaways

• Adriana Kugler is a highly accomplished labor economist and professor with experience in both academia and public policy.
• Kugler was appointed to the Federal Reserve’s Board of Governors by President Joe Biden, filling an unexpired term than will end in 2026.
• In public policy, Kugler has served as chief economist of the U.S. Department of Labor and as a senior economist at the World Bank.
• Kugler is on leave from a senior position at Georgetown University to focus on public policy and serve as one of the Fed’s Board of Governors.

Early Life and Education

Adriana Kugler was born in the United States. She grew up in Colombia, where her parents were involved in social projects (her father was an economist who worked with the World Bank). Her experiences observing poverty, homelessness, child labor, poor infrastructure, and the lack of basic necessities such as drinking water and electricity led to an interest in economics and political science. She decided to pursue a bachelor’s degree in those fields at McGill University in Montreal, where she graduated with first class joint honors in 1991.

Kugler then pursued a doctoral degree in economics at the University of California at Berkeley, where she studied under the supervision of Nobel laureate George Akerlof, husband of Janet Yellen, the current U.S. Secretary of the Treasury. Her dissertation focused on labor economics, development economics, and applied econometrics. She completed her Ph.D. in 1997.

Academic Positions

Kugler has held professorships at numerous prestigious institutions, including Harvard University, the London School of Economics, and Georgetown University. Her research has primarily focused on labor markets, public policy, and the impact of globalization on the workforce. Here is a time line of her academic appointments:

• 1997 to 2003: Assistant professor of economics at Pompeu Fabra University in Barcelona, Spain
• 2003 to 2005: Associate professor of economics at Pompeu Fabra University in Barcelona, Spain
• 2005 to 2009: Associate professor of economics at the University of Houston in Texas
• 2009 to 2010: Full professor of economics at the University of Houston in Texas
• 2010 to present: Full professor of public policy and economics at Georgetown University in Washington, D.C. (on leave of absence since 2022)
• 2013 to 2016: Vice provost for faculty at Georgetown University in Washington, D.C.

In addition to her academic appointments, Kugler has been affiliated with various research organizations and networks as a research associate, research fellow, senior fellow, or board member. Some of these include:

• National Bureau of Economic Research (NBER) in the Labor Studies program
• Centre for Economic Policy Research (CEPR) in London
• Center for American Progress

Kugler also has served on the editorial boards of several academic journals and publications in the fields of economics, public policy, labor relations, and development.

Public Policy Positions

In the realm of public policy, Kugler has held high-level positions in both national and international organizations. Notably, she served as chief economist of the U.S. Department of Labor during the Obama administration and as a senior economist at the World Bank.

Her expertise in labor economics and policy has made her a sought-after consultant and speaker in global economic forums.

• 2011 to 2013: Chief economist, U.S. Department of Labor, Obama administration
• 2020: Chair, Business and Economics Section, American Statistical Association
• 2022 to 2023: U.S. executive director, the World Bank
• 2023 to present: Member of the Board of Governors of the Federal Reserve System

Federal Reserve’s Board of Governors Nomination

In May 2023 President Biden announced his intention to nominate Kugler for a seat on the Federal Reserve’s Board of Governors, the governing body of the Federal Reserve System, which is the central bank of the U.S. Confirmed by the Senate in September 2023, Kugler filled a vacancy on the board created when Lael Brainard became Biden’s director of the National Economic Council.

The Federal Reserve Board of Governors consists of seven members who are appointed by the U.S. president and confirmed by the Senate for four-year terms. The board oversees the operations of the Federal Reserve banks, sets monetary policy, regulates banks and financial institutions, and provides financial services to the government and the public.

Important

Concurrent with his selection of Kugler, President Biden nominated Philip Jefferson for promotion to the role of vice chair of the Federal Reserve’s Board of Governors. Jefferson is a Black economist who has been serving as a Fed governor since 2022, when he was appointed by Biden and confirmed by the Senate. Jefferson took office on September 13, 2023 and is the second-ever Black vice chair of the Fed, following Roger Ferguson, who served from 1997 to 2006.

Kugler is the first Latina economist to serve on the board. Her appointment not only broke barriers for women and minorities in the field of economics; it also sent a strong message about the Biden administration’s commitment to diversity and representation in key policymaking institutions.

As a member of the Board of Governors, Kugler can call on her expertise and experience in labor economics and public policy to influence the Fed’s decision-making process on monetary policy and financial regulation. She also contributes to the Fed’s research agenda and outreach efforts on topics related to labor markets, unemployment, immigration, and economic development.

How Is the Federal Reserve’s Board of Governors Chosen?

The Board of Governors of the Federal Reserve is made up of seven members. These individuals are nominated by the president and confirmed by the Senate. Each one serves a term of 14 years. A board member may serve only one full term, though a member who fills an unexpired term can be reappointed. Vice Chairs of the Federal Reserve Board are nominated by the U.S. president from among the members of the Federal Reserve Board. The nomination is subject to confirmation by the Senate, and the vice chair serves for a term of four years.

Who Is the Fed Chair?

The chair of the Federal Reserve is Jerome H. Powell. He was sworn in for a second four-year term on May 23, 2022. He assumed the role following his confirmation in February 2018. He succeeded Janet Yellen, who was the first female chair to be appointed and served from 2014 to 2018. She became President Biden’s Treasury Secretary.

Who Are the Current Members of the Fed’s Board of Governors?

The seven individuals who serve on the Board of Governors of the Federal Reserve as of February 2025 are Jerome H. Powell (chair), Philip N. Jefferson (vice chair), Michael S. Barr (vice chair for supervision), Michelle W. Bowman, Lisa D. Cook, Adriana D. Kugler, and Christopher J. Waller.

Is Adriana Kugler Still Executive Director of the World Bank?

No. Kugler stepped down from her position as the U.S. executive director for the World Bank in 2023 to take a seat on the Federal Reserve Board of Governors. She was nominated to both positions by President Joe Biden.

The Bottom Line

Adriana Kugler, a Colombian-American labor economist and former U.S. executive director of the World Bank, was sworn in as a member of the Board of Governors of the Federal Reserve on Sept. 13, 2023. As of her appointment, she was the first Hispanic member of the board in its 109-year history.

In addition to policy roles, Kugler has held several academic positions including senior positions at Georgetown University. She is on leave from her position as a full professor at Georgetown’s McCourt School of Public Policy and Economics to serve on the Board of Governors of the Federal Reserve.

Fact checked by Michael Rosenston
Reviewed by Samantha Silberstein

National debt is an extremely important issue for many American voters, and plays a significant role in their choice of president. This begs the question: how much of the U.S. national debt is each president responsible for, and which presidents increased the debt the most?

Over the past 60 years, nearly every U.S. president has run a record budget deficit at some point, with former Presidents Donald Trump, Barack Obama, and Joe Biden running the largest U.S. budget deficits in history.

The U.S. national debt has continued to climb over the years with each president as different national and global events affected debt and as each president’s budget reflected the administration’s priorities for the country. Here’s a look at how to measure debt by president and which U.S. presidents contributed the most to the nation’s overall debt. 

Key Takeaways

• U.S. national debt stands at over $36.2 trillion as of January 2025.
• A president’s decisions on how to spend government money, such as funding wars or providing government aid, affect the national debt.
• President Franklin D. Roosevelt contributed the largest percentage increase to U.S. national debt to date.
• Presidents who serve longer terms often contribute more to the national debt than those who serve shorter terms.

Measuring Debt by President

National debt can be measured by comparing the national debt level when a president enters office to the level when a president leaves to calculate the percentage of increase or decrease in debt during the presidency.

However, it is important to note that a president doesn’t have much influence over the national debt during their first year in office. Presidential influence over the budget and national debt doesn’t start until after the federal fiscal year ends on September 30, during the new president’s first year in office.  

Note

Although the terms are often used interchangeably, debt and deficit are different. A budget deficit occurs when expenses exceed revenue, and it increases the total national debt. When revenue exceeds expenses, there is a budget surplus which can be used to reduce the national debt. In any given year, the government’s budget and spending can result in a deficit or surplus. Debt is the running total of what the government owes to its creditors.

The president and government’s policies and decisions are what create budget deficits and add to the national debt. Throughout history, the president’s response to major events has typically created massive budget deficits, adding substantial amounts to our national debt. Two examples of this would be the response to the September 11 terror attacks and the government’s actions during the pandemic.

Change in Total U.S. Debt by President 

Below is a table of debt by U.S. presidents in the 20th and 21st centuries.

The data above is based on U.S. fiscal years that most closely align with a president’s inauguration.

What Type of Presidential Decisions Affect National Debt? 

War

Funding wars is one of the main expenses by a president that can increase the national debt. In fact, before 1930, almost all the budget deficits run by the American government were the results of wars. The Civil War left the U.S. government owing more than $2.6 billion at the end of the war in 1865. In 1860, the year before the Civil War started, the national debt was only $64.8 million. 

During World War II in the 1940s, then-President Franklin D. Roosevelt’s spending on the war effort created some of the largest deficits as a percentage of total gross domestic product (GDP) in American history. The U.S. government borrowed around $211 billion to help pay for WWII. 

In the early 2000s, then-President George W. Bush launched the invasion of Afghanistan and the War on Terror following the September 11 terror attacks. Less than two years later in March 2003, President Bush also invaded Iraq. The cost of these wars over 20 years was estimated at around $8 trillion in September 2021.

These wars begun by President George W. Bush added significantly to the national debt during his presidency and the presidencies of Obama and Trump. The cost of the wars is also reflected in the yearly military budget which reached record levels of more than $600 billion in 2009, as Bush’s presidency ended.

Note

In April 2024, the U.S. announced it approved a $61.3 billion aid package to help Ukraine in the ongoing conflict with Russia. This figure brings the total to $175 billion in aid from the U.S.

Government Relief: Recessions and the Pandemic

Actions taken by the government to provide relief during recessions or during a public health crisis, like the pandemic, are also ways that a president can add to the national debt. 

To fight the Great Recession that started in 2008, President Barack Obama signed the American Recovery and Reinvestment Act (ARRA) in 2009, after he took office earlier that year. The $832 billion fiscal stimulus package was intended to create jobs and recover jobs lost during the recession. 

Similarly in 2020, when the government’s response to the outbreak of COVID-19 shut down businesses and caused a sharp rise in unemployment, Congress passed a $2.2 trillion stimulus bill called the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which then-President Donald Trump signed into law in March 2020. The $2.2 trillion price tag made it the largest financial rescue package in U.S. history. The CARES Act authorized direct payments to American families of $1,200 per adult plus $500 per child for households earning up to $75,000 annually.

The following year, in March 2021, President Joe Biden signed the American Rescue Plan Act to provide further relief to American families and businesses as they recovered from the pandemic. Biden’s stimulus package cost about $1.9 trillion and included extended unemployment benefits, direct payments to Americans, increases of the Child Tax Credit, and subsidies for the COVID-19 testing and vaccination programs.

Top 5 Presidents Who Added to the National Debt by Percentage 

Here are the top five presidents in modern U.S. history who recorded the largest percentage increase in national debt during their term(s) in office. 

1. Franklin D. Roosevelt (1933 to 1945)

President Franklin D. Roosevelt (FDR) contributed the largest percentage increase to U.S. national debt to date. Roosevelt entered office when the United States was in the depths of the Great Depression, the longest economic recession in modern history. FDR’s New Deal, a series of government-funded programs to fight the devastating effects of the Great Depression, added significantly to the national debt. 

The U.S. national debt went up when FDR took office because of the New Deal. However, the biggest contributor to the national debt under FDR was World War II.

2. Woodrow Wilson (1913 to 1921)

President Woodrow Wilson added to the U.S. national debt by funding war efforts during World War I. Under Wilson, U.S. government debt increased from around $2.9 billion in 1913 when he took office to over $23.9 billion when he left office in 1921.

3. Ronald Reagan (1981 to 1989)

President Ronald Reagan added over $1.6 trillion to the U.S. national debt. The actor-turned-president supported supply-side economics and believed government intervention reduced economic growth. His economic policies involved widespread tax cuts, decreased social spending, and more military spending. Reagan increased defense spending by 35% in his two terms as president.

4. George W. Bush (2001 to 2009)

President George W. Bush added about $4 trillion to the U.S. national debt. Military spending increased to record levels under Bush due to his launching of the war in Afghanistan and the War on Terror in response to the September 11, 2001 attacks, as well as the Iraq War in 2003. Additionally, Bush supported and signed significant tax cuts into law which contributed to increases in national debt. Bush and his administration also dealt with recessions in 2001 and 2008 (the Great Recession).

5. Barack Obama (2009 to 2017)

When looking at which president added the most to the national debt in dollar amounts, President Barack Obama takes the lead. Obama’s efforts to spur recovery from the Great Recession through his $832 billion stimulus package and $858 billion in tax cuts contributed to the rise of national debt during his presidency.

Important

Presidents who serve longer terms often have larger changes in the debt than those who serve shorter terms.

National Debt Continues to Rise Under President Biden

The national debt increased by around $8.4 trillion during Biden’s four years in office, largely driven by COVID-19 relief measures. According to estimates by the Congressional Budget Office (CBO), Biden’s American Rescue Plan is projected to add $1.9 trillion to the national debt by 2031. 

• Biden also signed a bipartisan infrastructure bill into law in November 2021. It provides funding for improvements to roads, bridges, public transit, drinking water, and expanded access to the Internet, among other initiatives. The plan is estimated to cost around $375 billion over 10 years.
• Biden’s student loan forgiveness program, which would have canceled up to $20,000 of federally held student loan debt per borrower, was expected to cost the federal government about $305 billion total over 10 years, according to an estimate by the U.S. Department of Education.
• However, that plan was overturned by the Supreme Court in June 2023. A new plan called Saving on a Valuable Education (SAVE), which officially became available to student loan borrowers in August 2023, was introduced to provide a new path to relief for borrowers. The plan has been estimated to cost $230 billion over 10 years.
• On July 18, 2024, a federal appeals court blocked the SAVE plan which was pending the resolution of two court cases centered around the plan. The Department of Education moved borrowers enrolled in the SAVE plan into an interest-free forbearance while the litigation is ongoing.
• Biden’s Inflation Reduction Act, which aims to invest in green energy initiatives and reduce healthcare costs, could actually reduce the deficit by $58 billion over the next decade, according to an estimate by the CBO.

The Debt Ceiling

In January 2023, U.S. Treasury Secretary Janet Yellen announced that the government hit its debt ceiling, the maximum amount of money that the federal government can legally borrow. When this happens, the U.S. Treasury needs to find other ways to pay expenses until the debt ceiling is raised by Congress.

Yellen said the U.S. government would begin taking “extraordinary measures” to prevent a sovereign default. A hotly contested deal was finally struck between Democrats and Republicans in June, suspending the debt ceiling and allowing further spending until 2025.

The debt ceiling was last raised in late 2021 by Biden and Congress. It was raised to about $31.4 trillion—a limit that has now been raised and exceeded with the legislation of June 2023. As of August 2024, the U.S. national debt stands at over $35 trillion.

What Is the National Debt Today?

As of January 2025, the U.S. national debt has passed $36.2 trillion. 

Which Country Has the Highest National Debt?

The United States has the highest national debt in the world by amount. However, Japan has the highest national debt in terms of gross domestic product—Japan’s national debt makes up 258.2% of its GDP.

Which President Contributed the Most to U.S. National Debt?

The national debt increased by nearly 40 times under Abraham Lincoln from 1861 to 1865—the largest multiple of increase in U.S. history. Of those who were president in either the 20th or 21st century, Franklin D. Roosevelt contributed to the largest percent increase in national debt. Recent presidents Barack Obama, Donald Trump, and Joe Biden presided over the three largest increases in terms of dollar amounts.

The Bottom Line

Presidents have a significant impact on the U.S. national debt. Each president has worked to allocate government funds for specific policies and initiatives that reflect the priorities of their administration. The president plays a large role in what gets spent and how much. However, spending is not all on the president.

Congress also has a hand in the national debt. This body of government must vote on appropriations and initiatives proposed by the president. Members of Congress can introduce proposals, which must be voted on before they can signed by the president.

Unforeseen events, such as economic turmoil, natural disasters, or war, may require the government to respond immediately, sparking significant unplanned spending. However, the decision to respond, how to respond, and how much to spend on the response is still a decision made by the president, his administration, and Congress.

Fact checked by Marcus Reeves
Reviewed by Thomas J. Catalano

Here are the 11 best low-risk investments for 2025 for investors concerned with uncertainty following a White House administration change. Each offers a balance of safety, liquidity, and potential returns in a higher-rate environment.

Key Takeaways

• Safe asset classes become more attractive when there is regulatory and market uncertainty.
• Safe assets are those with a minimal risk of loss, including Treasurys, CDs, money market funds, and annuities.
• Safer assets typically offer lower expected returns in exchange for safety.
• Experts recommend maintaining a diversified portfolio that includes a mix of low-, moderate-, and higher-risk investments.

The Risk-Reward Tradeoff of Low-Risk Investing

All investments involve a natural trade-off between risk and potential returns. Generally, assets with higher return potential also carry greater risk, while low-risk investments like CDs and Treasurys provide stable but modest returns.

In general, younger investors with longer time horizons can take on more risk, knowing they have time to recover from periodic downturns in volatile assets. Older investors nearing retirement may shift toward more low-risk securities to preserve capital.

Experts typically recommend a diversified portfolio containing a mix of low, moderate, and high-risk assets tailored to your goals, timeline, and risk tolerance. Some higher-risk assets allow for growth potential, while maintaining a core of stable investments hedges against volatility. Meanwhile, a safety net of some low-risk investments can ensure you’ll be able to ride out rough patches or generate needed income in older age.

Cash

While cash isn’t officially on our list, we should begin here so you have a baseline to compare the other investments below. Cash and on-demand cash deposits are the epitome of safety in the asset world. There’s virtually no risk of loss (unless it is lost or stolen), making it a very reliable asset. However, its safety comes at a cost: it generally yields minimal returns, especially when inflation runs high, reducing its purchasing power. And if you’re keeping your cash in a piggy bank or under the mattress, it has no hope of earning any yield at all.

Cash is ideal for immediate or short-term financial needs due to its liquidity. It’s perfect for maintaining an emergency fund or paying for immediate and upcoming expenses. Indeed, the most significant benefit of holding cash is that it is instantly accessible and universally accepted.

11 Best Low-Risk Investments for 2024

1. Preferred Stock

Preferred stocks are a type of hybrid security that combines features of both stocks and bonds. They offer a fixed dividend, which is typically higher than the dividends paid on common stocks, and have a higher claim on assets if there’s a liquidation.

However, preferred stocks generally do not come with voting rights, limiting shareholders’ influence on corporate decisions. These securities are ideal for investors seeking stable income with less risk than common stocks but more potential returns than bonds. Preferred stocks are often issued by financial institutions and large corporations to raise capital without diluting voting power. They can be traded on stock exchanges, providing a level of liquidity like common stocks.

• Why invest: Higher dividends than common stocks and bonds, priority in dividends and liquidation, potential tax advantages.
• Risk of investing: Interest rate sensitivity, call risk, credit risk.
• Safety: Moderate (higher than common stocks, lower than bonds).
• Liquidity: Moderate to high (traded on stock exchanges but may have lower volumes).

2. High-Yield Savings

High-yield savings accounts offer a low-risk bank account option but with higher interest rates than regular savings accounts. Online banks that have lower overhead expenses compared with traditional brick-and-mortar banks are often able to offer such products at attractive rates.

These accounts are ideal for short-term savings goals where you want to earn a bit more interest than a regular savings account without compromising on safety. One major perk is FDIC insurance, which covers potential losses of up to $250,000 per institution and the ability to withdraw funds at any time, providing both security and liquidity. To get one, simply open an account with a bank that offers high-yield savings accounts.

• Why invest: Higher interest than regular savings, Federal Deposit Insurance Corp (FDIC)-insured
• Risks: Returns are still quite low, and some banks may charge account fees
• Safety: High
• Liquidity: High

3. Money Market Funds

Money market funds are low-risk as they invest in stable, short-term debt instruments and certificates of deposit. Though rates are still relatively modest, they usually offer higher yields than savings or money market accounts. Fund shares are targeted to maintain $1 per share. Returns are variable based on holdings, and money market funds are not FDIC-insured. These funds are suitable for investors seeking a bit more yield than a savings account but who also value liquidity and safety.

To invest, buy shares in a money market fund through a brokerage or a mutual fund company.

• Why invest: Higher yields than savings accounts, very safe, very liquid
• Risk of investing: Not FDIC-insured, and returns are modest
• Safety: High
• Liquidity: High

Money market funds and money market accounts are two common low-risk savings vehicles that are often confused with each other. Money market accounts are FDIC insured up to $250,000, while money market funds do not offer FDIC protection.

4. Certificates of Deposit (CDs)

CDs are low-risk, FDIC-insured investments that offer fixed interest rates over a set period (often six months to five years). Their returns are usually higher than savings accounts but still fixed and predictable. CDs can be well-suited for investors who don’t need immediate access to their funds and are looking for relatively higher, guaranteed returns over a specific period.

To invest, purchase a CD through a bank, choosing the term and rate that best fits your financial timeline.

• Why invest: Guaranteed fixed interest rates, FDIC-insured
• Risk of investing: Funds locked up until maturity, early withdrawal penalties, possible account minimums
• Safety: High
• Liquidity: Low

5. Treasurys

Treasury securities like T-bills and T-notes are very low-risk as they’re issued and backed by the U.S. government. They provide a safe way to earn a return, albeit generally lower than aggressive investments. Treasurys are generally considered “risk-free” since the federal government guarantees them and has never (yet) defaulted.

These government bonds are often best for investors seeking a safe haven for their money, particularly during volatile market periods. They offer high liquidity due to an active secondary market. You can purchase these securities through your broker or the government’s TreasuryDirect website.

• Why invest: Extremely safe, backed by the U.S. government, highly liquid
• Risk of investing: Lower returns compared with somewhat riskier bonds
• Safety: Very high
• Liquidity: High

6. TIPS

Treasury Inflation-Protected Securities (TIPS) offer low-risk investment opportunities. Their added perk is that their principal adjusts with inflation, thus providing a hedge against inflation. Like Treasurys, these are also backed by the U.S. government.

TIPS offer high liquidity and inflation protection but can underperform during periods of low inflation or when real interest rates are rising, as their value is directly tied to inflation trends. Additionally, their returns may not be as high as other fixed-income securities in a stable or deflationary economic environment. You can buy TIPS through TreasuryDirect or your brokerage account.

• Why invest: Inflation protection, backed by the U.S. government
• Risk of investing: Can underperform in low inflation environments
• Safety: High
• Liquidity: High

7. AAA Bonds

Investment-grade bonds, particularly short-duration ones and those with the highest AAA rating, are considered low to moderate risk. They are highly rated, indicating a lower default risk, and offer moderate returns. Still, bond prices are sensitive to interest rate changes and can become riskier if the issuer faces financial troubles or insolvency later on.

Corporate bonds are suitable for investors seeking steadier but potentially higher returns than government securities, with a reasonable level of risk (depending on the bond). To invest, you can buy these bonds through a brokerage account.

• Why invest: Potential for higher returns than government bonds
• Risk of investing: Comparatively higher credit & default risk, sensitive to interest rate changes
• Safety: Moderate
• Liquidity: Moderate

8. Bond Funds

Bond funds, which are managed portfolios of various bonds packaged into mutual funds or ETFs, have low to moderate risk, depending on their particular investment strategy. Diversification within the fund reduces risk, and returns are generally steady. These are particularly attractive for investors looking for diversified bond exposure without having to buy individual bonds.

You can buy bond funds through mutual fund companies or brokerage accounts.

• Why invest: Diversification reduces risk, steady returns
• Risk of investing: Returns are generally lower than stock funds and have lower fund management fees
• Safety: Moderate
• Liquidity: High

9. Municipal Bonds

Municipal bonds are low to moderate risk and are funded by tax collection or other government revenues (such as toll roads or bridges). They can offer tax-free income at the federal (and sometimes state & local) level. As such, “munis” are particularly attractive to investors in higher tax brackets.

A drawback is that municipal bonds are somewhat illiquid, with a less active secondary market compared with other securities. To invest, buy municipal bonds through a specialized municipal bond dealer or, in some cases, directly from the issuing municipality. Municipal bond funds are also available; they may be more liquid but may not cater to your particular tax situation.

• Why invest: Tax-free income, funded by government revenues
• Risk of investing: Less liquid secondary market, some municipalities may be at higher risk
• Safety: Moderate
• Liquidity: Moderate

10. Annuities

Annuities are low-risk investments that provide fixed, steady income in return for an upfront investment—guaranteed either for a set period of time or for life. The returns are backed by the insurance company issuing the annuity. However, the funds put into an annuity are often locked up or exchanged for the flow of future cash flows. Therefore, they are not liquid. Indeed, annuities are often best suited for older individuals looking for a steady, guaranteed income stream, particularly during retirement.

The process of buying involves selecting an annuity type and making an investment through an insurance company or agent.

• Why invest: Guaranteed fixed income, often for life
• Risk of investing: Funds locked up, minimal liquidity, may only be available to older individuals
• Safety: High
• Liquidity: Low

11. Cash-Value Life Insurance

Cash-value life insurance combines the protection of life insurance with the benefit of a savings component. The risk level is generally low, as it not only guarantees a payout to beneficiaries upon the policyholder’s death but also allows the cash value to grow at a set interest rate and without the risk of loss, often tax-deferred. This growth rate is often more favorable compared with traditional savings vehicles, though it typically offers lower returns than more aggressive investment options.

The cash value grows tax-deferred, and beneficiaries receive the death benefit tax-free. Additionally, policyholders can borrow against the cash value tax-free, though loans can reduce the death benefit and cash value.

This type of insurance is best suited for individuals who are looking for a long-term investment that provides both a death benefit and a potential cash accumulation. It’s particularly appealing to those who have maximized other retirement savings options and are seeking additional tax-advantaged ways to save. It can also be a strategic tool for estate planning.

• Why invest: Tax-deferred growth, tax-free loans, estate planning benefits
• Risk of investing: More complex, less liquidity, not suitable for short- or medium-term growth
• Safety: High
• Liquidity: Low

Important

Finding the right balance comes down to your specific situation and risk tolerance. Be sure to thoroughly assess your goals, timeline, as well as your psychological and emotional ability to handle swings in portfolio value. And don’t forget to diversify across asset classes to avoid overexposure to any one type of risk.

Where Is the Safest Place to Put Your Money?

The concept of the “safest investment” can vary depending on individual perspectives and economic contexts. But generally, cash and government bonds—particularly U.S. Treasury securities—are often considered among the safest investment options available. This is because there is minimal risk of loss. That said, it’s important to note that no investment is entirely risk-free. Even with cash and government bonds, there is a risk of inflation outpacing the yield, leading to a decrease in purchasing power over time.

Why Is There a Risk-Return Tradeoff?

There are several reasons proposed for the risk-return tradeoff, which is a cornerstone concept of financial economics. It implies that lower-risk investments will also offer lower expected returns.

Higher returns are often required by investors as compensation for the increased uncertainty and potential for loss associated with riskier investments. When investors put money into an asset with a high level of risk, such as a new tech startup, they face a higher chance of losing their investment. Therefore, they expect higher returns to justify this risk.

The time-value of money further states that money available now is worth more than the same amount in the future due to its potential earning capacity and opportunity costs. Riskier investments must offer higher returns to compensate for the possibility that the future value of the investment might be lower than expected or even negative.

Can Money Market Funds Ever Result in a Loss?

While money market funds are considered very low-risk, they are not entirely risk-free. Unlike bank savings accounts, they are not insured by the FDIC. There have been rare instances, such as during severe financial crises, where money market funds “broke the buck,” meaning their value dropped below the target of $1 per share, leading to losses for investors. However, regulatory changes have been made to increase their stability since the 2008 financial crisis.

Are There Safe Assets That Are Also Socially Responsible?

Yes, there are safe investment options that also consider social or environmental impacts. Green bonds, for example, are often issued by governments and corporations to fund environmentally-friendly projects. They typically carry lower risk, like other government or corporate bonds, while contributing to positive environmental outcomes. Additionally, some municipal bonds will finance projects with social or environmental benefits, combining safety with social responsibility.

The Bottom Line

Safe assets such as U.S. Treasury securities, high-yield savings accounts, money market funds, and certain types of bonds and annuities offer a lower risk investment option for those prioritizing capital preservation and steady, albeit generally lower, returns.

While they may not provide the high returns of riskier assets like stocks, they play a crucial role in a diversified portfolio, offering stability, predictable income, and protection against market volatility.

These assets are particularly appealing for risk-averse investors, those nearing retirement, or anyone looking to balance out higher-risk investments. However, it’s important to be mindful of their limitations, such as lower returns that may not keep pace with inflation and the varying degrees of liquidity and tax implications. Ultimately, the choice of safe assets should align with individual financial goals, risk tolerance, and overall investment strategy.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

Understanding each one will help you appoint the right people

Fact checked by Yarilet Perez
Reviewed by Anthony Battle

Medical Power of Attorney vs. Financial Power of Attorney: An Overview

A medical power of attorney authorizes healthcare decisions to be made on your behalf by a designated individual. It is one type of power of attorney (POA), which, in general, is a document authorizing someone to make decisions on behalf of another person. A financial power of attorney allows for an authorized individual to manage your finances if needed.

Whichever type of power of attorney you have, the person who gives the authority is called the principal, and the person who can act for the principal is called the agent, or the attorney-in-fact. You can designate both a medical and a financial power of attorney in the event that you’re unable to make those choices yourself.

A medical power of attorney and a financial power of attorney are typically created in separate legal documents. Both are known in legal terms as advance directives. Generally, the law addresses each type of advance directive separately, which limits their authority.

Choosing people you trust to hold your medical and financial powers of attorney gives you more control over your interests and ensures your wishes are followed. Knowing the differences between these two designations will help you decide whether you should appoint the same person to hold both of these directives for you.

Key Takeaways

• A power of attorney allows one person to give legal authority to another person to act on their behalf.
• A medical power of attorney allows for another person to make medical decisions for you, while a financial power of attorney authorizes another person to make financial decisions for you.
• In some cases, a financial power of attorney can be used for isolated, one-off situations where it is not convenient for you to be present.
• Financial and medical powers of attorney should be separate documents and can be designated to the same person or to two different individuals.
• Generally, both a medical power of attorney and a financial power of attorney must be signed before a notary public.

Financial Power of Attorney 

A financial power of attorney permits someone you have designated to oversee your finances. Typically, it is used so the person can step in and pay your bills or handle other financial or real estate matters.

That person can be a financial professional acting on your behalf, or you may use it to designate a trusted friend or family member to handle matters if or when you cannot physically or mentally do so yourself. In some cases it may also be used for isolated, one-off situations where it is not convenient for you to be present, such as a real estate closing in another city.

How a Financial Power of Attorney Works

A power of attorney can take effect as soon as you sign it, or upon the occurrence of a future event. If the power of attorney is effective immediately, it can be used even if you are not incapacitated. If its powers are “springing,” they don’t go into effect until a future event has occurred. The most common future event is the incapacity of the principal. Incapacity only occurs when the principal is certified by one or more physicians to be either mentally or physically unable to make decisions.

Incapacity can be due to such things as mental illness, Alzheimer’s disease, being in a coma, or being otherwise unable to communicate. If it never becomes necessary, your agent may never use a power of attorney. In many cases, a financial power of attorney may be designated to a professional as part of routine financial management.

Warning

A financial POA can give someone else control of your assets and it may be very difficult to revoke. Never grant a power of attorney to someone you do not completely trust.

Many states have an official financial power of attorney form. Many banks and brokerage firms also have their own power of attorney forms. If your financial concerns include buying or selling real property, or a title insurance company, the lender or closing agent may require the use of their specific form. So, it is possible you may end up with more than one financial power of attorney form.

Generally, a financial power of attorney must be signed before a notary public. Especially if the sale or purchase of real estate is involved, it may also need to be signed before witnesses. Depending on the state you live in, your agent may also be required to sign to accept the position of agent.

Once a power of attorney has been executed, the original document is given to your agent. The agent can then present it to any third party as evidence of their authority to act for you. For example, they could present it at your bank in order to withdraw money from your bank account or use it to sign papers for you at a real estate closing.

You are legally obligated to a third party who relies on the power of attorney in dealing with your agent.

How to Choose a Financial Power of Attorney

In choosing a financial power of attorney, you will want to weigh whether the person is trustworthy and has enough financial acumen to handle the responsibilities. Thanks to online banking and electronic billing, the individual you select doesn’t necessarily need to be nearby to ensure that your bills are paid promptly.

It’s important to know that there is no accepted way to amend a power of attorney. If you want to amend a financial POA, the best option is to revoke the existing document and have a new one prepared.

Steps for Establishing a Financial Power of Attorney

Here is a basic outline for the process of establishing a financial power of attorney:

1. Evaluate if one is necessary. In some cases, a financial power of attorney is not necessary. For example, if an individual’s income and assets are all in their spouse’s name, a financial power of attorney may not be necessary. Likewise, if an individual has a living trust that appoints a person to act as a trustee, then a power of attorney may not be necessary.
2. Identify an agent. One adult will be named the agent in a power of attorney. An attorney, a faith leader, or a family counselor can all help facilitate this decision-making process. A key characteristic of an appropriate person for carrying out the responsibilities of a power of attorney is being willing to consider other people’s viewpoints.
3. Take a look at the forms. Certain states have forms that you are required to use, and your financial institution may have a power of attorney form that they prefer you use. Your bank can also serve as a resource for you as you put together a power of attorney. In certain instances, financial institutions may require that their format is used. It’s a good idea to check with any banks or brokers used by your family before crafting the document.
4. Notarize the power of attorney. Once a power of attorney is written, it generally needs to be notarized. A verbal agreement is not recognized as a legal power of attorney, nor is a casually written letter or note. Once a power of attorney is written and notarized, keep a copy safely stored. Make sure the agent has a copy as well.
5. Review the document periodically. Because it may be hard to predict when you will need a power of attorney, the document may be created decades before it will be used. For this reason, it is important to review the document periodically.

Example of a Financial Power of Attorney

Roberta is a college professor who is planning a year-long sabbatical in Spain. Since she will remain in the country for a year, she will not be able to execute her financial dealings in Chicago where she teaches and lives. She appoints her mother to act as her financial power of attorney for her property and investments. Her mother will write checks and sign important documents related to her investments and property.

Note

In order to create a power of attorney, the individual must be mentally competent. If your parent or other older adult relative becomes incapacitated, it will be too late to authorize a power of attorney, and courts will likely need to get involved to appoint an individual to help manage that person’s affairs.

Medical Power of Attorney

A medical power of attorney or healthcare proxy designates an individual to make medical decisions for you when you no longer have the capacity to do so. Similar to a financial POA, the person you choose to make healthcare decisions on your behalf when you cannot is referred to as your agent.

Any competent adult can be your agent, but it’s important to keep in mind that some states do not allow your agent to be your physician or healthcare provider; an employee of your physician or healthcare provider (unless the employee is your relative); your residential healthcare provider (in a nursing home, for example); or an employee of your residential healthcare provider (unless the employee is your relative).

If an individual has any of the aforementioned designations, they cannot act as your agent for the purposes of a medical power of attorney in some states.

This may be needed temporarily (if, for example, you’re under anesthesia and surgery complications arise) or for navigating a longer-term health crisis. The medical power of attorney will only go into effect when you do not have the capacity to make decisions for yourself regarding medical treatment.

How a Medical Power of Attorney Works

A medical power of attorney will focus only on health-related decisions and will be written according to the exact specifications of the individual making the directive. As such, a medical power of attorney can include provisions for a wide range of medical actions including personal care management, hiring a personal care assistant, deciding on a medical treatment, and making decisions on medical treatments overall. The forms are available at hospitals and online.

In most states, a medical power of attorney must be signed and notarized by a notary public before it is a binding legal document. You may also be required to have witnesses present when your medical power of attorney is signed. Neither a healthcare professional nor a lawyer is necessary to create a medical power of attorney.

You can revoke your medical power of attorney at any time. You can also complete a new medical power of attorney and designate a new agent.

How to Choose a Medical Power of Attorney

Many people have strong feelings about the kind and degree of medical treatment they want. This is why it’s important to think carefully about whom to appoint. The person you choose should be someone you can expect to make decisions similar to those you would make for yourself. This person should be over 18 and someone you trust, with whom you can discuss your wishes frankly. You should ask the person you select if they feel able to take on the responsibility.

Keep in mind: This person may have to make very difficult choices, including ones that may end life by ceasing medical care. Not every person is prepared for this responsibility.

Usually, you appoint only one person as your medical power of attorney, though you can name alternates for situations when that person might not be available. You will also want to consider whether the person is close by and can meet with your doctors should the need arise.

Steps for Establishing a Medical Power of Attorney

1. Evaluate if one Is necessary. In general, if you become incapacitated, doctors will do every type of medical intervention to keep you alive. If you want to have more control over the type (and the extent of) the treatment you receive, then you will need to create a medical power of attorney that designates someone with the legal authority to decide the issue for you.
2. Consider whom to choose as an agent. You should choose someone whose judgment you trust, and someone you are confident can capably fill the role. A good agent will, most importantly, be assertive. There may be times when they need to carry out your will against the wishes of other family members. This person needs to be able to communicate effectively even when faced with resistance.
3. Find medical power of attorney forms. There are many medical power of attorney form templates online. Most states have forms that you can use on their Department of Human Services website. The American Bar Association also has links to forms that are accepted in each state.
4. Have the form notarized. A medical power of attorney needs to be notarized, which means that you will need to take the form to a notary and sign it in front of the notary. Notaries can be found in banks and at hospitals. Some states may also require you to have witnesses to the signing who attest that you appeared to be in sound mind and signed the document of your own free will.
5. Distribute copies of the form. Many people may need access to your medical power of attorney form. These individuals may include your primary care physician and any specialist who treats you regularly; those designated as your medical power of attorneys; close family members or friends; your lawyer; the administrator of your assisted living facility; any hospital or medical clinic where you receive treatment.

Example of a Medical Power of Attorney

Sharon’s mother’s kidneys are failing, and Sharon wants to organize her mother’s medical and financial documents for her. A medical power of attorney is recommended for everyone, but especially those with a serious, progressive illness. However, it is important that Sharon’s mother is well enough to understand what she is doing when she creates these documents.

A medical power of attorney will communicate the treatment wishes of Sharon’s mother in the face of a crisis. Sharon lives in Ohio, so she uses the form that is written into Ohio’s state statutes. Because Sharon wants to address all the nuances of her mom’s health and directives, she gets advice from an attorney after her mother’s medical power of attorney is drafted.

Why You Need Both Powers of Attorney

It is possible that the agent for the medical power of attorney and for the financial power of attorney is the same person. Many people choose this route, appointing one person such as a spouse or adult child to both roles. However, medical and financial powers of attorney can be created and designated for a variety of different reasons. It may sometimes be preferable and more prudent to ask different people to take on these roles.

While it is possible to assign medical and financial responsibilities in a single legal document, it’s usually not a good idea. A medical power of attorney will have access to sensitive health information that a financial broker does not necessarily need to know. Likewise, a financial power of attorney will include many details about the subject’s assets and wealth that would be superfluous to someone making medical decisions.

Selecting a different person for your financial power of attorney and your medical power of attorney may help you choose the best person for each job. If you do select different people for each role, you may want to consider how they might work together. In the event that you become incapacitated, your medical power of attorney will be responsible for making healthcare decisions, while your financial power of attorney will make sure your bills get paid. You will need to pick people who work well together in order to accomplish these tasks.

Power of Attorney vs. Executor of a Will

Both a power of attorney and an executor of a will are persons that are legally appointed to help another person manage their finances and affairs when they are incapacitated. The difference is that a power of attorney manages someone’s affairs while they are still alive, whereas an executor of a will manages someone’s affairs after they’ve died.

Power of Attorney vs. Living Will

A medical power of attorney is also called a healthcare power of attorney (HCPA). This document is different than other legal documents related to end-of-life healthcare decisions, such as a living will or a do-not-resuscitate (DNR) order.

A living will is a type of advance directive that documents one’s wishes for end-of-life medical treatment.

A do-not-resuscitate (DNR) order, also known as a do-not-attempt-resuscitation (DNAR) order, is written by a licensed physician in consultation with a patient or surrogate decision-maker. A DNR indicates whether or not the patient will receive cardiopulmonary resuscitation (CPR) in the setting of cardiac and/or respiratory arrest.

As part of your estate planning, you may also consider creating a revocable living trust. A revocable living trust is a trust document that can be changed over time. This type of trust appoints a trustee to manage and administer the property of the grantor, and it can minimize estate taxes.

What Does a Medical Power of Attorney Allow You to Do?

A medical power of attorney is a legal document you use to name an agent and give that person the authority to make medical decisions for you. An agent can decide the following for you:

• Which doctors or facilities to work with
• What tests to run
• When or if you should have surgery
• What kinds of drug treatments are best for you (if any)
• Comfort and quality of life vs. doing everything possible to extend life
• How aggressively to treat brain damage or disease
• Whether to disconnect life support if you’re in a coma

Is There a Difference Between a Power of Attorney and a Medical Power of Attorney?

A power of attorney is a general legal term for a document that gives someone you trust the legal authority to act on your behalf. A medical power of attorney specifically gives someone else (the agent) the authority to make decisions concerning the healthcare of the person who created the medical POA (the principal) if that person becomes unable to make those decisions for themselves.

How Do You Write a Medical Power of Attorney?

The basic requirements for what must be included in a medical power of attorney are similar throughout the country. However, some states require more evidence, such as the signatures of witnesses present during the execution of the document. It’s important that you research your state’s requirements. Many states have a standardized form that residents are encouraged to use. It will include all of the necessary language that makes the power of attorney designation legally effective.

Can a Doctor Override a Medical Power of Attorney?

No, a doctor cannot override a medical power of attorney. Your doctor is obligated to follow the direction of the person you designate as having medical power of attorney over you.

What Happens If You Don’t Have a Medical Power of Attorney?

The rules in every state are different. However, what usually happens is that the court steps in and appoints someone to take care of your medical decisions for you. This person will be called a conservator. In most cases, the court will appoint a close family member for this role.

The Bottom Line

A power of attorney allows you to make arrangements for your medical and financial decisions in the event you are incapacitated or otherwise incapable of doing so yourself. Creating a medical power of attorney and financial power of attorney is generally regarded as a smart part of every estate plan.

Fact checked by Suzanne Kvilhaug
Reviewed by Michael J Boyle

There is a lot of money in politics, and Hillary Clinton was able to raise a remarkable amount during the 2016 election cycle. The total amount raised by the official campaign committee, the DNC, super political action committees (PACs), PACs, and joint fundraising committees, was close to $1 billion. 

In six months, Clinton’s official campaign committee, Hillary for America, raised $460 million. Since there is a cap on the amount an individual can contribute to a campaign directly, super PACs remain important to big donors. According to the Center for Responsive Politics, more than half the amount raised by Clinton and her allies that election cycle came from large individual contributions, versus only 15% of Donald Trump’s campaign funds.

Dustin Moskovitz, Donald Sussman, and Jay Robert Pritzker were among the major contributors to Clinton’s campaign. We review these and other big Clinton campaign donors below.

Key Takeaways

• Although Hillary Clinton did not win the 2016 presidential election, she managed to raise millions of dollars in campaign contributions.
• Campaign finance laws state that political donations be reported to the Federal Election Committee, which makes that data public.
• Here, we profile the ten largest contributors to the Clinton campaign.

1. Dustin Moskovitz and Cari Tuna: $35 Million (Including Donations to Non-Partisan Voter Registration Efforts)

Meta (META) co-founder Dustin Moskovitz and his wife Cari Tuna revealed their plans to support the Democrats with donations in two Medium posts, one in the first week of September and one in early October.

They said, “Like many Democratic voters, we don’t support every plank of the platform, but it is clear that if Secretary Clinton wins the election, America will advance much further toward the world we hope to see. If Donald Trump wins, the country will fall backward, and become more isolated from the global community.”

In 2016, Moskovitz said they gave a total of $20 million to pro-Clinton, pro-Democrat organizations including the Hillary Victory Fund, the DSCC, the DCCC, the League of Conservation Voters Victory Fund, For Our Future PAC, MoveOn.org Political Action, Color Of Change PAC, and several nonpartisan voter registration efforts.

In October 2016, Moskovitz contributed $15 million to policy advocacy organizations, including the PUA super PAC, and $7 million to nonpartisan voter registration and get-out-the-vote efforts. He donated $2.5 million to the PUA super PAC in September and again in October, and then $1 million in November.

2. Donald Sussman, Paloma Partners: $21.1 Million

The president of this Connecticut-based hedge fund donated $21 million to the PUA super PAC and $600,000 to the Correct the Record super PAC. Correct the Record collects money to pay for personnel whose job it is to defend Clinton online.

3. Jay Robert Pritzker and Mary Pritzker, Pritzker Group and Pritzker Family Foundation: $12.6 Million

JB, the heir to the Hyatt Hotel (H) fortune and co-founder of an investment firm, donated to the PUA super PAC along with his wife. The Pritzker Family Foundation led by Jay Robert also donated to PUA super PAC.

4. Haim Saban and Cheryl Saban, Saban Capital Group: $10 Million

Chair of Univision Communications Haim Saban has been a long-time friend of Clinton, and his wife Cheryl sits on the board of the Clinton Foundation. Both donated separately to the PUA super PAC.

5. George Soros, Soros Fund Management: $9.52 million

The 85-year-old billionaire was vocal about his disdain for Trump. He donated over $9.52 million to the PUA super PAC and $25,000 to the Ready super PAC.

Note

Priorities USA Action, the main pro-Clinton super PAC, raised over $192.06 million. It raised almost $25 million in September, narrowly beating its August tally, making it the super PAC’s best fundraising month yet. FEC filings showed who was driving the surge in donations.

6. S. Daniel Abraham, SDA Enterprises: $9 Million

The 91-year-old sold his weight loss brand Slim-Fast to Unilever for $2.3 billion in 2000. He advocates for a two-state solution for Israel and Palestine and is the founder of the S. Daniel Abraham Center for Middle East Peace. He donated to the PUA super PAC.

7. Fred Eychaner, Newsweb Corporation: $8 Million

Eychaner is the founder and chair of Newsweb, a Chicago media company. The company includes for-profit companies that are privately held in addition to philanthropic groups. He donated to the PUA super PAC and Clinton’s campaign committee.

8. James Simons, Euclidean Capital: $7 Million

The billionaire hedge fund manager and mathematician donated to the PUA super PAC.

9. Henry Laufer and Marsha Laufer, Renaissance Technologies: $5.5 Million

Henry Laufer is a director at Renaissance Technologies, an investment management firm founded by James Simons. Marsha Laufer served as the chair of the Brookhaven Democratic Party. The Laufers donated to the PUA super PAC and Henry gave $500,000 to the Correct the Record Super PAC.

10. Laure Woods, Laurel Foundation: $5 Million

Laure Woods is the president and founder of Laurel Foundation, a private foundation focused on the education, health, and welfare of children. Woods donated more than $5 million to the campaign.

Other Donors

David E. Shaw, founder of D.E. Shaw & Co., donated $3 million to the PUA super PAC and $50,000 to the Ready super PAC. 

The following all contributed to the PUA super PAC: 

• Herb Sandler, whose foundation has supported the Center for Responsible Lending, ProPublica, and the Centre for American Progress, donated $3 million
• Bernard L. Schwartz, chair of BLS Investments and life-long supporter of the Democratic Party, donated $2.5 million
• Chair of Dreamworks New Media Jeffrey Katzenberg and director Steven Spielberg both donated $1 million each
• Movie producer Thomas Tull, who was responsible for such hits as “The Hangover” and “300”, donated $1.5 million

What Is a Political Action Committee?

A political action committee (PAC) pools donations and contributions from its members and distributes them to different political campaigns. There are limits to how much a PAC can contribute to a candidate’s campaign per election cycle. It must register with the U.S. Federal Election Committee within days of its formation.

How Much Can a Super PAC Fundraise for a Candidate’s Campaign?

Super PACs have no fundraising limits. This means they can raise as much as they want from different entities, including corporations, unions, and individual donors. All donors must be reported to the Federal Election Commission.

How Many Super PACs Are There?

Statistics show that there were 2,485 super PACs during the 2021-2022 election cycle. They received more than $5.02 billion in donations, covering over $2.72 billion in expenses.

The Bottom Line

Corporations aren’t allowed to directly donate money to a candidate’s campaign committee. However, they can sponsor political action committees or donate unlimited amounts to independent expenditure-only committees (super PACs). As per 2025-2026 limits, individuals can donate a maximum of $3,500 per election (the limit was $2,700 for the 2016 election) to a candidate’s campaign committee and unlimited amounts to Super PACs. Super PACs cannot make contributions to candidates, parties, or other PACs but can independently advocate for a certain candidate.

$600 direct individual payments and $300/week unemployment benefits

Reviewed by Charles Potters
Fact checked by Vikki Velasquez

Congress approved a 2,124-page, $2.3 trillion funding package on Dec. 21, 2020 that consisted of a $900 billion end-of-the-year COVID-19 stimulus bill attached to a $1.4 trillion omnibus spending bill intended to fund the government through Sept. 30, 2021. Former President Donald Trump signed the bill six days later.

The CAA stimulus legislation included $300 per week in additional jobless benefits, direct payments of $600 to individuals, $325 billion in small business loans, more than $80 billion for schools, and $69 billion for vaccine development and deployment.

Key Takeaways

• The CAA included direct payments of $600 per person including dependents 16 and under, as well as unemployment benefits of $300 per week.
• The stimulus package provided small business relief funding totaling $325 billion.
• A total of $69 billion was set aside for vaccine development and distribution.
• The plan set aside help for schools, renters, and welfare recipients.
• The CAA preceded the $1.9 trillion American Rescue Plan Act (ARPA) of 2021, signed by President Biden on March 11, 2021.

Direct Payments

The CAA package included Economic Impact Payments (EIPs) of $600 for individuals making up to $75,000 per year. Married couples who filed jointly and earned up to $150,000 per year received $1,200. Dependents age 16 and under were also eligible for $600.

Payments began within a week after the bill was signed into law. Those whose bank information was already with the IRS were paid first.

Warning

CAA legislation prohibited the IRS from disbursing stimulus payments after Jan. 15, 2021. You would have to have claimed it as a recovery rebate tax credit when you filed your 2020 tax return if you didn’t receive your payment by then.

Extra Unemployment Benefits

You would have been eligible for an additional $300 per week through March 14, 2021 if you were receiving unemployment benefits. This included self-employed persons, gig workers, and contract workers under an extension of the Pandemic Unemployment Assistance (PUA) program.

The Pandemic Emergency Unemployment Compensation (PEUC) program was also extended so anyone who had exhausted benefits would be eligible for up to 50 weeks of combined state and PUA benefits or 24 weeks of combined state and PEUC benefits. These programs expired on Sept. 6, 2021.

Small Business Relief

The bill provided $325 billion under the broad category of small business relief:

• $284 billion for forgivable first and second PPP loans
• $20 billion for EIDL grants for businesses in low-income areas
• $3.5 billion for continued SBA debt relief payments
• $2 billion for enhanced SBA lending
• $15 billion for live venues, independent movie theaters, and cultural institutions

Community Development Lending

Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) were set to receive $9 billion in additional funding through a Neighborhood Capital Investment program to help low-income and minority communities deal with the economic impact of COVID-19.

Transportation

Although state and local government assistance wasn’t included in this legislation, some local help was provided through $45 billion in transportation funding to include transit agencies, airlines and airline contractors, airports, state departments of transportation (DOTs), the motorcoach industry, and Amtrak as follows:

• $15 billion airline payroll support
• $1 billion airline contractor payroll support
• $14 billion for transit
• $10 billion for state highways
• $2 billion for airports and airport concessionaires
• $2 billion for the private motorcoach, school bus, and ferry industries
• $1 billion for Amtrak

Vaccines

Funding for COVID-19 vaccine procurement and distribution to the tune of $69.5 billion broke down like this:

• $20 billion to the Biomedical Advanced Research and Development Authority (BARDA)
• $9 billion to the CDC and individual states for vaccine distribution.
• $3 billion to build up the Strategic National Stockpile’s supplies of vaccine
• $22 billion direct aid to states for testing, tracing, and COVID mitigation
• $4.5 billion in additional mental health funding
• $9 billion to support healthcare providers
• $1 billion in funding for the National Institutes of Health (NIH) research into COVID-19
• $1 billion in direct funds to the Indian Health Service

Schools

K-12 schools, colleges, and universities were slated to receive $82 billion to help mitigate the impact of the coronavirus pandemic. Following a pattern similar to what was used with the Coronavirus Aid, Relief, and Economic Security (CARES) Act, this funding was divided as follows:

• $818.8 million for the Bureau of Indian Education and outlying areas
• $4.05 billion for the Governors Emergency Education Relief Fund for services to private K-12 schools
• $54.3 billion for the Elementary and Secondary (public K-12 schools) Emergency Relief Fund
• $22.7 billion to the Higher Education Emergency Relief Fund

Rent Assistance

State and local governments were responsible for distributing a reported $25 billion in emergency federal rent assistance. The money is targeted at families impacted by COVID-19 who struggle to pay rent and/or owe past due rent payments. Approximately $800 million of these funds are reserved for Native American housing entities.

Note

The CAA also extended the moratorium on evictions first extended by the CARES Act. This moratorium had been extended several times since then.

Federal and state governments still have several emergency rental programs in place, originally worth $46.55 billion. As of April 3, 2023, $25 billion was disbursed with $23.14 billion going to households.

Nutrition and Agriculture

A 15% increase in SNAP benefits and additional funding for food banks and senior nutrition programs costing $13 billion made up half of the $26 billion set aside in this category. It included $614 million for nutrition assistance for Puerto Rico and other territories, emergency funds for school and daycare feeding programs, and improvements in the P-EBT program.

The second $13 billion consisted of direct payments, purchases, and loans to farmers and ranchers who suffered losses due to the pandemic. These funds would be used to support the food supply chain, purchase food, donate to food banks, and support local food systems.

U.S. Postal Service

A CARES Act $10 billion loan to the USPS was converted to direct funding with no required repayment by the CAA legislation. These funds were designed to be used to offset operational costs and expenses resulting from the pandemic.

Childcare

A Child Care and Development Block Grant of $10 billion was allocated through the legislation to provide childcare assistance to families. The funds were also used to help childcare providers cover increased operating costs during the pandemic. Also included in this allotment was $250 million for Head Start providers.

Broadband

Emergency funds totaling $3.2 billion were appropriated to go to low-income families to provide access to broadband Internet through an FCC fund. Those funds began being disbursed on May 12, 2021 as Emergency Broadband Benefit (EBB) funds.

The CAA broadband appropriation also included a $1 billion tribal broadband fund, $250 million in telehealth funding and $65 million to complete broadband maps to aid in government disbursement of broadband funds. An additional $300 million grant program was set to provide broadband in rural areas. The total set aside for broadband was almost $7 billion.

No Surprises Act

The No Surprises Act contained in Division BB of the Consolidated Appropriations Act (CAA) of 2021 took a federal approach to the problem of surprise medical billing. Most parts of the act went into effect on Jan. 1, 2022. In the meantime, the Department of Health and Human Services, Treasury, and Department of Labor were instructed to issue regulations and guidance.

The main provisions of the No Surprises Act include:

• Protect patients from surprise medical bills due to gaps in coverage for services provided for emergencies and by out-of-network providers at in-network facilities, including by air ambulances.
• Hold patients liable only for their in-network cost-sharing amount but give providers and insurers the opportunity to negotiate reimbursement.
• Allow providers and insurers to access an independent dispute resolution process in the event disputes arise around reimbursement.
• Require providers and health plans to help patients access health care cost information.

Additional Programs and Extensions

The stimulus extended the Coronavirus Relief Fund created by the CARES Act and the Employee Retention Tax Credit. It also provided a special lookback for the Earned Income Tax Credit and Child Tax Credit for low-income individuals and provided a Contractor Pay Extension, allowing federal agencies to reimburse contractors for the cost of paid leave during the COVID pandemic.

It also extended into 2021 two charitable donation benefits that had been introduced for the 2020 tax year by the CARES Act:

• Taxpayers could continue to deduct charitable donations of up to 100% of their adjusted gross income. It’s generally 60% of AGI.
• Individual taxpayers who don’t itemize their deductions and take the standard deduction were allowed up to a $300 deduction for charitable cash contributions. Married couples who filed jointly and who don’t itemize could deduct up to $600, a provision added by the Consolidated Appropriations Act, but the deduction is no longer above-the-line as it was in 2020.

Comparison With CARES Act and American Rescue Plan

This table compares Consolidated Appropriations Act (CAA) funding in several key areas with both the CARES Act, which preceded the CAA, and the American Rescue Plan Act (ARPA), which followed it.

The American Rescue Plan Act

The Democratic majority began taking steps to pass a $1.9 trillion coronavirus relief package to deliver further help, called the American Rescue Plan Act, following the inauguration of Joseph R. Biden as president.

The plan was passed by both houses of Congress and signed into law by President Biden on March 11, 2021. It called for a nationwide COVID-19 vaccination program, $1,400-per-person relief checks, financial support for small businesses, funding to help schools reopen, expanded and extended unemployment insurance payments, rent subsidies, and more.

The American Rescue Plan also includes a provision that student loan forgiveness issued between Jan. 1, 2021, and Dec. 31, 2025, will not be taxable to the recipient.

Does the No Surprises Act Apply to Specific Health Care Providers?

Yes, but it’s a loose, large basket. According to CMS.gov, “any physician or other health care provider who is acting within the scope of practice of that provider’s license or certification under applicable State law may be subject to the rules.”

Does the Consolidated Appropriations Act Affect Medicare?

Yes. The Centers for Medicare & Medicaid Services (CMS) ruled on Oct. 28, 2022 to adopt sections of the Act that will make Medicare enrollment easier and will extend coverage of certain immunosuppressive drugs.

Has Subsequent Legislation Affected the Student Loan Provisions?

Provisions of the Higher Education Relief Opportunities for Students (HEROES) Act for canceling student loan principal debt were overruled by the U.S. Supreme Court on June 30, 2023. The court decided that the ACT did not authorize the U.S. Secretary of Education to grant such relief. But President Joe Biden announced the Saving on a Valuable Education (SAVE) Plan just days later to provide income-driven assistance to student loan borrowers.

The Bottom Line

The Consolidated Appropriations Act of 2021 extended numerous provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, some of which were set to expire at the end of 2020. It addresses issues of hunger and public health, broadband capacity for rural Americans, unemployment, education issues, employee retention measures, and some temporary tax breaks.

Ongoing and future legislation may affect some of these provisions so it can be helpful to keep an eye on the news and ongoing events.

Fact checked by Pete Rathburn
Reviewed by Akhilesh Ganti

The oil industry is driven by booms and busts. Prices rise during periods of global economic strength during which demand outpaces supply. Prices fall when the reverse is true. Meanwhile, oil supply and demand are driven by at least five key factors:

• Changes in the value of the U.S. dollar
• Changes in Organization of Petroleum Exporting Countries (OPEC) policies
• Changes in oil production and inventory levels
• The state of the global economy
• The implementation (or collapse) of international agreements

Notably, 2015 offers an interesting example of how all five factors can conspire to send prices to historic lows. At that time, the price of crude oil fell by more than half in under a year, reaching lows that had not been seen since the last global recession.

At the time, many oil executives believed it would be years before oil returned to $100 per barrel. They were right. Oil topped $100 per barrel in February and March 2022, during the depths of the supply chain disruption caused by the coronavirus pandemic. Prices then dropped well below that level and remain lower as of February 2025.

Five main factors can be identified as having driven crude oil prices down and kept them down in 2015.

Key Takeaways

• The year 2015 was a perfect storm for oil prices.
• The dollar was strong. Inventories were huge. The economy was weak. And production was growing.
• All of these factors drove the price of crude oil to less than $40 per barrel.

1. The Dollar Strengthens

In 2015, the dollar was at a 12-year high against the euro.

That placed pressure on market prices because commodity prices are usually quoted in dollars, and they will fall when the U.S. dollar is strong.

For example, the surge in the dollar in the second half of 2014 caused a rare sharp decline in all of the leading commodity indexes.

2. OPEC Retains Production Levels

OPEC, the cartel of oil producers that sets production levels, was unwilling to prop up the oil markets by cutting its production levels.

The oil ministers said in a statement that they had “concurred that stable oil prices – at a level which did not affect global economic growth but which, at the same time, allowed producers to receive a decent income and to invest to meet future demand – were vital for world economic wellbeing.”

Prices of OPEC’s benchmark crude oil fell by a whopping 50% after the organization decided against cutting production at that 2014 meeting in Vienna.

3. Global Inventory Grows

The prices of crude futures declined in late September 2015 when it became clear that oil stockpiles were growing amid increased production.

The Energy Information Administration (EIA) reported that global oil inventories increased in every quarter of 2015, with a net inventory build of 1.72 million barrels per day. That was the highest rate since at least 1996. By the end of 2015, oil prices were below $40 per barrel, the lowest level since 2009.

Total oil production by the end of 2015 was expected to increase to more than 9.35 million barrels per day—higher than previous forecasts of 9.3 million barrels per day.

4. The Economy Weakens

While the supply of oil became increasingly abundant in 2015, global demand for oil was decreasing. The economies of Europe and developing countries were weakening. Vehicles were becoming more fuel-efficient.

Meanwhile, China’s devaluation of its currency suggested that its economy might be weakening as well. Since China is the world’s largest oil importer, that was a huge hit to global demand and caused a negative reaction in crude oil prices.

5. Iran Makes a Deal

In July 2015, the U.S. and other world powers signed a deal that lifted economic sanctions against Iran.

The Iran nuclear deal, as it became known, freed Iran to start exporting oil again. Investors feared it would add to the world’s oversupply of oil, dragging down prices even more.

(In 2018, President Donald Trump withdrew the U.S. from the deal. Later, President Joe Biden expressed a willingness to renew talks but no action was taken during his term in office. All terms of the agreement are set to expire by October 2025.)

How Do Global Politics Affect Oil Prices?

Global politics affect oil exports, and that affects oil supply. Lower supply drives up prices. Even the expectation of lower supply drives up prices.

Sanctions on Russia’s oil exports are a recent example. At the end of his term in office, President Joe Biden imposed broader sanctions against Russia’s oil business. On taking office in 2025, President Donald Trump signaled his willingness to impose more sanctions. That immediately caused increased speculation in oil futures trading due to its potential to reduce oil supply and drive up prices.

Can We Expect Higher or Lower Oil Prices in the Near Future?

A forecast from the U.S. Energy Administration predicts lower oil prices in 2025 and 2026.

The agency estimates that the price of Brent crude oil, a benchmark for the oil industry, will fall to $74 per barrel in 2025, from $81 per barrel in 2024. It estimates that the price will fall further to $66 per barrel in 2026.

The forecast is based on strong growth in production outside the OPEC nations and slower growth in demand for oil products.

When Are Gas Prices Cheapest?

Gas prices tend to be cheapest in times of hardship or catastrophe. A side effect of bad times is lower demand for oil products, including gasoline. Some examples from recent history: The COVID-19 pandemic, the 2008-2009 economic collapse, and the 9/11 terrorist attacks.

The Bottom Line

At least five factors combine to influence the price of crude oil and, down the line, the price of gasoline at the pump. They are changes in the U.S. dollar’s value, policy changes by the OPEC nations, changes in oil production and inventory, the state of the global economy, and the status of international agreements.

In 2015, all of these factors turned positive, a rare occurrence that brought oil prices to a historic low.