HigherIQ — Saturday, January 10, 2026

Hey there, it's Saturday, January tenth, twenty twenty-six. We got a lot to cover today, including the President wading back into credit card rates, a jobs report that confirms what many of us already feel, and a Supreme Court that's being reshaped in real time by emergency appeals. But let's start with your wallet. Late Friday night, President Trump took to social media calling for a one-year cap on credit card interest rates at ten percent, effective January twentieth. To understand what this means: if you're one of the forty-six percent of credit cardholders who carry a balance month-to-month, you're currently paying an average of over twenty percent interest. That's not pocket change. The average person carrying credit card debt owes about sixty-four hundred dollars. At today's rates, if you make just the minimum payment, you'll spend eighteen years paying it off and rack up over ninety-three hundred dollars in interest alone. Under a ten percent cap? You'd save more than seven thousand dollars and cut years off your repayment time. Trump framed it as protecting Americans from being "ripped off," blaming the Biden administration for letting rates spiral. Senator Josh Hawley, Republican of Missouri, immediately endorsed it, writing "Fantastic idea. Can't wait to vote for this." Hawley and Senator Bernie Sanders introduced a similar bill last year, so there's some bipartisan history here. But here's where it gets complicated. Trump didn't actually say how this would happen. A president can't unilaterally cap interest rates. That would require legislation, and the banking industry is already pushing back hard. Their argument: if banks can't charge rates that reflect lending risk, they'll stop lending to riskier borrowers altogether. And the data from other places suggests they have a point. When Illinois capped rates, loans to subprime borrowers dropped thirty-eight percent. When Chile implemented a similar cap in twenty thirteen, eighty percent of consumers ended up worse off, and two hundred thousand families were cut out of the credit market entirely. The Bank Policy Institute estimated that more than fourteen million American households could lose access to credit under a ten percent cap. The banking groups have a real concern, but so do consumer advocates. Americans collectively owe one point two three trillion dollars in credit card balances, the highest on record. And here's a telling stat: lower-income households are hit hardest. Fifty-six percent of people earning under fifty thousand dollars carry balances month-to-month, compared to just thirty-four percent of those earning over one hundred thousand. For many people, the choice isn't between a high-interest card and a low-interest card. It's between a high-interest card and payday lenders charging even more. Senator Elizabeth Warren dismissed the announcement as "begging credit card companies to play nice," arguing that without actual legislation and enforcement, nothing changes. Watch whether this gains legislative traction or fades into campaign positioning for the midterms. Speaking of how people feel about the economy, the University of Michigan's consumer sentiment index just registered fifty-four in preliminary January readings. To put that in perspective, the seventy-year average is around eighty-four. We're thirty points below normal and just four points above the all-time low hit in June twenty twenty-two during peak pandemic inflation. What's driving this? Nearly half of survey respondents spontaneously mentioned high prices as dragging on their personal finances. And here's the thing: the current annual inflation rate is two point seven percent, which isn't that high. But that number doesn't capture what people are actually experiencing. Cumulative inflation over the past five years is up about twenty-five percent. What does that mean in practice? Your grocery bill that was one hundred dollars in twenty twenty is now one hundred twenty-five dollars. That thousand-dollar monthly rent? Now twelve hundred eighty-nine dollars. Car insurance? Up fifty-seven percent since the pandemic. If you need your car fixed, that repair costs fifty-eight percent more than it did five years ago. Even wages growing at three to four percent a year can't make up for the accumulated sticker shock. A family that budgeted three hundred dollars a month for groceries in twenty nineteen now needs three hundred seventy-five dollars for the same cart of food. These aren't abstract statistics. They're the lived reality explaining why consumer sentiment is in the basement even though the unemployment rate is four point four percent. There's also an interesting divide emerging: lower-income consumers showed slight improvement in sentiment this month while higher-income households got gloomier. That's the opposite of the K-shaped economy we've been tracking, where wealthier Americans have weathered inflation better. Why the reversal? It's too early to say if it holds, but wage growth has been stronger at the lower end recently, and some pandemic-era pricing pressures are finally easing for necessities like groceries. Whether that reversal holds up in final readings remains to be seen. Tariff anxiety has also subsided somewhat. For the first time in months, fewer than half of respondents spontaneously mentioned tariffs as a concern. The sentiment data connects directly to Friday's jobs report. The economy added just fifty thousand jobs in December, capping off what's officially the worst year for hiring since twenty twenty and the second worst since two thousand nine. Total job creation for twenty twenty-five came in at five hundred eighty-four thousand, compared to two point two million in twenty twenty-four. The unemployment rate ticked down to four point four percent, but that's partly statistical noise from a government shutdown in October that distorted the data. What's happening underneath those numbers matters more than the headline. Retail lost twenty-five thousand jobs in December, concentrated in warehouse clubs, supercenters, and grocery stores. The federal government has shed two hundred seventy-seven thousand jobs since January, a nine percent drop, as the Department of Government Efficiency pursued cuts. Construction employment, which had been rising to meet demand for data centers, is now declining as that backlog clears. Meanwhile, healthcare and social assistance continue adding jobs, thirty-seven thousand in December alone. Leisure and hospitality added forty-seven thousand, but much of that reflects catch-up from disruptions during the government shutdown and a compressed holiday season. What's happening is what economists call a "low-hire, low-fire" environment. Companies scarred by the hiring difficulties of twenty twenty-one through twenty twenty-three are hoarding workers rather than laying them off, even as demand slows. Job openings fell to seven point one million in November, the lowest since late twenty twenty-four. The voluntary quits rate is stuck at two percent, meaning workers are increasingly cautious about leaving current roles. There's genuine disagreement about what this means. Optimists see a soft landing in progress, exactly what the Federal Reserve was trying to engineer. Pessimists see a labor market that's cooling and could crack. JPMorgan analysts note that due to an aging workforce and immigration policy changes, the U.S. now only needs sixty to seventy thousand jobs per month to keep unemployment stable, so fifty thousand isn't catastrophic. But it's not inspiring either. And here's the kicker: employers announced one point two million job cuts in twenty twenty-five, a fifty-eight percent increase from the prior year and the highest level since twenty twenty. Companies like Amazon cut jobs to rely more on artificial intelligence. The combination of weak hiring plus rising layoff announcements creates real anxiety, even if mass firings haven't arrived yet. Let's shift to Washington and the Supreme Court, which just issued its first decision of the term that began in October. But here's the thing: it wasn't the tariff ruling everyone was waiting for. It was a relatively minor case about when federal prisoners can challenge convictions. The reason for the delay is what matters. The Court is being swamped by emergency appeals, and it's fundamentally changing how the institution operates. Since January twenty twenty-five, the Court has issued at least twenty-nine emergency orders related to Trump administration actions. In about eighty percent of those cases, the Court ruled for the administration at least partially, often without explaining its reasoning. These shadow docket rulings have allowed mass firings of civil servants, defunding of research grants, and deportations to proceed while legal challenges play out below. Critics, including Justice Elena Kagan in dissent, argue the emergency docket is being used to "transfer government authority from Congress to the President." Defenders say the Court is simply maintaining the status quo while cases work through normal channels. Either way, the practical effect is that major policy changes take effect immediately while legal questions remain unresolved for months or years. The Court did rule against the administration in a few notable cases, blocking National Guard deployments and certain deportation procedures. And in the tariff case everyone's watching, justices including Trump-appointed Neil Gorsuch expressed skepticism about whether a nineteen seventy-seven emergency powers law actually authorizes sweeping tariffs. A ruling there could come any day and would have massive implications. We're talking potential refunds of over one hundred billion dollars in tariffs already collected. Now let's talk about what's actually working, which brings us to artificial intelligence in healthcare. Chinese researchers at Tsinghua University just published a breakthrough in the journal Science. They've developed an AI platform called DrugCLIP that achieves a million-fold increase in drug screening speeds. What used to take centuries of continuous computation on a single computer can now be done in a single day. Here's why that matters in practical terms. The human genome encodes over twenty thousand proteins, but only a small fraction have been explored as drug targets. Finding promising compounds means screening vast libraries of molecules against those proteins. That process has been the bottleneck preventing breakthroughs for diseases without effective treatments. DrugCLIP just removed it, at least theoretically. The team has already screened approximately ten thousand protein targets against five hundred million small molecules, generating a database of over two million potential active compounds now available to researchers worldwide. That means scientists working on everything from Alzheimer's to rare cancers now have a massive head start identifying which molecules might actually work. This fits into a broader pattern. Boston Consulting Group released their twenty twenty-six healthcare outlook this week, noting that AI agents that can autonomously plan and execute tasks are revolutionizing everything from patient care to drug discovery. Nearly half of American adults now use health apps, and about a third use wearables. AI is increasingly analyzing that data alongside genetic information to predict health problems before symptoms appear. You wear a smartwatch that tracks your heart rate variability, sleep patterns, and activity. An AI notices a pattern that precedes atrial fibrillation weeks before you'd feel symptoms. That's the future being built right now. China Media Group's annual AI trends report identified similar themes: AI for science is delivering breakthroughs in materials science, astrophysics, and life sciences, while brain-inspired computing is advancing autonomous driving and intelligent healthcare. China's embodied intelligence market, meaning robots that learn through physical interaction, is expected to reach about seven hundred fifty-nine million dollars this year, accounting for roughly twenty-seven percent of the global total. One last note on what anchors all these economic stories: housing. A new research brief from Marcus and Millichap explains why housing dominates inflation measures and shapes Fed policy. Shelter-related costs comprise forty-four percent of the Consumer Price Index, carrying about the same weight as the next four largest components combined. Think about that. Housing alone accounts for nearly half of how inflation is measured. So when we say inflation is cooling, what we really mean is that housing costs are moderating. Home price appreciation and rent growth were subdued last year at one point two and three percent respectively. Because housing data is backward-looking, that moderation should keep headline inflation near three percent through twenty twenty-six, giving the Fed flexibility to cut rates even if they hold steady in January. The housing market itself is stabilizing. Realtor.com forecasts inventory rising about nine percent this year, approaching pre-pandemic levels. Interest rates should be lower in twenty twenty-six than twenty twenty-five. But eighty percent of mortgage holders still have rates below six percent, so the lock-in effect that's kept people from selling isn't going away anytime soon. If you bought or refinanced during the pandemic at three percent, why would you sell and take on a seven percent mortgage? Expect the most balanced housing market in a decade, with neither buyers nor sellers holding the upper hand. Here's what all of this points to: We're in a moment where the economic data is genuinely mixed, consumer sentiment reflects accumulated pain that current statistics don't fully capture, and major institutions from the Fed to the Supreme Court are navigating unprecedented pressures. The gap between how the economy looks on paper and how it feels to live through it remains wide. And in a midterm election year, that gap is what politicians on both sides will be trying to define. Stay informed, stay curious, and we'll see you tomorrow.