A recent analysis reveals that 44% of cities across the United States are grappling with significant financial challenges, painting a concerning picture of municipal budgets nationwide. The study, conducted by Moody’s Analytics using data from the U.S. Census Bureau’s Annual Survey of State and Local Government Finances, evaluated the fiscal health of over 300 cities with populations exceeding 50,000. The findings highlight a growing divide between thriving urban centers and those struggling to stay afloat.
The report identifies cities facing "financial distress," defined as those with spending outpacing revenue by at least 5% for two consecutive years, from 2021 to 2023. Among the hardest-hit are locales like Jackson, Mississippi, and Flint, Michigan—cities already burdened by aging infrastructure and shrinking populations. Jackson, for instance, has been wrestling with a crumbling water system, while Flint continues to recover from its well-documented water crisis. These systemic issues compound budgetary woes, leaving little room for recovery.
On the flip side, the analysis points to a group of financially robust cities, largely concentrated in the Southeast and West. Places like Raleigh, North Carolina, and Boise, Idaho, stand out with revenue exceeding expenditures by at least 5% over the same period. These cities benefit from population growth, strong job markets, and investments in infrastructure, creating a virtuous cycle of economic stability.
The disparity underscores broader trends. Economists note that cities reliant on declining industries or facing demographic shifts—like an exodus of residents—tend to struggle more. Meanwhile, those in regions with booming tech sectors or tourism, such as Austin, Texas, or Orlando, Florida, are better positioned to weather fiscal storms. Federal aid during the pandemic provided a temporary lifeline for many distressed cities, but as that funding dries up, the cracks in their finances are reemerging.
Moody’s Analytics warns that without intervention—whether through state support, tax restructuring, or economic revitalization—these struggling cities risk a downward spiral. For residents, this could mean cuts to essential services like public safety and education, further eroding quality of life. Conversely, the success of healthier cities offers a potential playbook: diversify revenue streams, attract new industries, and invest in long-term growth.
As the U.S. navigates an uneven economic recovery, the fiscal fate of its cities will likely shape the national landscape for years to come. For now, the data serves as a stark reminder that not all urban centers are sharing in the prosperity some regions enjoy.
Gen Z Learns the Tough Lesson: TikTok Isn’t a Financial Advisor
For many in Generation Z, TikTok has become a go-to source for life advice, including how to manage money. Quick, snappy videos promise insider tips on investing, budgeting, and even dodging taxes—delivered with the confidence of a seasoned pro. But a growing number of young adults are discovering that the app’s financial “hacks” often lead to more trouble than triumph.
Take the case of “tax-saving” schemes that flooded TikTok in recent months. Influencers with thousands of followers touted ways to slash tax bills, like claiming dubious deductions or funneling income through questionable loopholes. For 23-year-old Mia Carter, a retail worker from Ohio, it seemed like a no-brainer. She followed a creator’s advice to write off personal expenses as business costs, only to face a hefty audit from the IRS—and a $2,000 penalty she’s still scrambling to pay. “I thought I was being smart,” she says. “Turns out, I was just naive.”
Financial experts aren’t surprised. Certified financial planner Elena Ruiz warns that TikTok’s bite-sized format is a breeding ground for oversimplified or outright misleading advice. “A 60-second video can’t cover the nuance of tax law or investing,” she explains. “It’s entertainment, not education.” Yet, a 2024 survey by NerdWallet found that 38% of Gen Zers have made money moves based on social media tips—more than any other age group.
The fallout goes beyond taxes. Some users chased crypto scams hyped by TikTok influencers, losing hundreds—or thousands—when the schemes collapsed. Others piled into risky stock trades, inspired by viral “get rich quick” stories, only to watch their savings vanish. The allure is understandable: traditional financial literacy feels dry and inaccessible to many young people, while TikTok offers a relatable, flashy alternative. But the cost of that appeal is steep.
Regulators are starting to take notice. The SEC and FTC have ramped up warnings about online financial misinformation, and some creators now face lawsuits from followers who feel duped. Still, the platform’s algorithm keeps pushing the content—rewarding bold claims over boring accuracy.
For Gen Z, the lesson is sinking in: real financial wisdom doesn’t fit in a 15-second clip. As Carter puts it, “Next time, I’m Googling it—or maybe just calling an accountant.” In an era where likes and views can masquerade as credibility, the smartest move might be logging off and looking elsewhere for advice.
The number of Americans filing new applications for unemployment benefits increased moderately last week, suggesting that the labor market remained on solid ground in February.
There were no signs yet in the report from the Labor Department on Thursday of the mass layoffs of federal government workers and deep spending cuts being pursued by Republican President Donald Trump's administration.
Economists, who expect a spillover to the private sector, said it was too early for the negative effects to be felt in the broader economy. Thousands of federal government workers from scientists to park rangers, mostly those on probation, have been fired in recent days by billionaire Elon Musk's Department of Government Efficiency, or DOGE - an entity created by Trump.
"The current round of unprecedented belt-tightening and budget cuts and layoffs in Washington have not become a reality yet in terms of showing up in the national statistics," said Christopher Rupkey, chief economist at FWDBONDS. "But actions taken in the early days of the new administration may yet bring about a broader economic slowdown and is frankly a risk factor that economists did not see at the start of the year."
Initial claims for state unemployment benefits rose 5,000 to a seasonally adjusted 219,000 for the week ended February 15, the Labor Department said on Thursday. Economists polled by Reuters had forecast 215,000 claims for the latest week.
Claims have been bouncing in the 203,000-223,000 range so far this year. Historically low layoffs are keeping the labor market stable, but that could change as workers dependent on federal government contracts or funding lose their jobs.
The White House wants to slash the roughly 2.3 million federal government workforce, which excludes the military and post office, that Trump says is too bloated.
Federal government layoffs, hiring freezes and spending cuts are expected to have ripple effects on local economies, especially in Washington D.C. and the adjacent states of Virginia and Maryland, and trigger private sector job cuts.
States like California and Texas also have a large presence of federal workers, who are also spread around the country. So far, all is calm in the labor market. Unadjusted claims declined 10,118 to 222,627 last week, with a 4,922 plunge in California accounting for the bulk of the decrease.
Filings also declined in Virginia, Maryland and Texas. A small increase was reported in Washington D.C. Applications surged 2,753 in Tennessee and advanced 3,033 in Kentucky.
Federal employees are not included in the state-level claims data. Their claims are filed separately under the unemployment compensation for federal employees (UCFE) program, and the data is reported with a one-week lag.
Federal claims rose only 14 to 613 in the week ended February 8. There were only 7,110 federal workers on jobless benefits during the week ended February 1 compared to 6,893 a year ago.
"Reduced government hiring could signal budget tightening, leading to slower hiring or layoffs in private companies that depend on federal spending," said Sung Won Sohn, Finance and Economics professor at Loyola Marymount University.
For now, claims are consistent with a fairly healthy labor market and give the Federal Reserve room to keep interest rates unchanged as policymakers monitor the economic impact of the Trump administration's fiscal, trade and immigration policies, deemed inflationary by economists.
Minutes of the U.S. central bank's January 28-29 policy meeting published on Wednesday showed policymakers worried about higher inflation from Trump's initial policy proposals.
Fed officials viewed labor market conditions as "solid" and "stable" but "generally noted that labor market indicators merited close monitoring."
The Fed left its benchmark overnight interest rate unchanged in the 4.25%-4.50% range last month, having reduced it by 100 basis points since September, when it embarked on its policy easing cycle. The policy rate was hiked by 5.25 percentage points in 2022 and 2023 to tame inflation.
The claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls component of February's employment report. Claims declined between the January and February survey weeks.
Nonfarm payrolls increased by 143,000 jobs in January, partly held back by unseasonably cold temperatures and wildfires in California.
Government employment has been one of the top drivers of employment growth over the last year. Economists expect a sharp slowdown in job growth in the second half of the year.
Data next week on the number of people receiving benefits after an initial week of aid, a proxy for hiring, will offer more clues on the state of the labor market in February.
Continuing claims increased 24,000 to a seasonally adjusted 1.869 million during the week ending February 8, the claims report showed.
Americans’ Credit Card Balances Climb to $6,580, Yet Debt Management Shows Improvement
The average credit card balance for U.S. consumers has reached $6,580, according to a new report from TransUnion, signaling that Americans are increasingly relying on credit. Despite this uptick, there are encouraging signs that households are handling their debt more effectively than in recent years. Total credit card debt nationwide has hit a record $1.21 trillion, as reported by the Federal Reserve Bank of New York, reflecting a 3.5% rise in average balances from the previous year.
Charlie Wise, TransUnion’s senior vice president of global research and consulting, notes that while credit card usage remains high, the pace of debt growth has slowed significantly compared to the sharp increases seen in 2022 and 2023. “People are still tapping into their credit cards,” Wise says, “but they’re not leaning on them as heavily as before.” This shift suggests that households are adapting to a reality of elevated prices and interest rates, reducing their dependence on credit to cover daily expenses.
A positive trend emerges in delinquency rates: payments 90 days or more overdue have dropped year-over-year for the first time since 2020. “That’s a promising indicator,” Wise adds, pointing to better debt management among consumers. Still, credit cards remain a costly borrowing option, with average interest rates hovering above 20%—close to an all-time high—despite a recent Federal Reserve rate cut that left card rates largely unchanged.
For those carrying balances, experts offer practical solutions. Matt Schulz, chief credit analyst at LendingTree, suggests proactive steps: negotiate a lower rate with your card issuer, transfer balances to a zero-interest card, or consolidate debt with a lower-rate personal loan. “Doing nothing isn’t an option—it’ll only worsen the situation,” he warns. Non-profit credit counseling is another resource for those struggling to keep up.
The data paints a mixed picture: while balances are climbing, the slowdown in debt growth and declining delinquencies hint at resilience. For borrowers, tackling revolving debt strategically could ease the burden of high interest and pave the way to financial stability.