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(NEW YORK) — The Federal Reserve on Wednesday is set to announce its latest decision on the level of interest rates, marking its first rate move since news surfaced of a federal criminal investigation into Fed Chair Jerome Powell.

The investigation ratcheted up an extraordinary clash between the nation’s top central banker and the White House, which has urged the Fed to significantly reduce interest rates.

The central bank is widely expected to hold interest rates steady on Wednesday. The anticipated move would end a string of three consecutive quarter-point rate cuts, aligning with a cautious approach outlined by Powell last month, before reports of the investigation into his conduct.

“We’re well positioned to wait and see how the economy evolves,” Powell said at a press conference in Washington, D.C., on Dec. 10.

Futures markets expect two quarter-point interest rate cuts this year, forecasting the first in June and a second in the fall, according to CME FedWatch Tool, a measure of market sentiment.

The federal probe appears to center on Powell’s testimony to Congress last year about cost overruns in a multi-billion-dollar office renovation project. Powell, who was appointed by Trump in 2017, issued a rare video message earlier this month rebuking the investigation as a politically motivated effort to influence the Fed’s interest rate policy.

The investigation follows months of strident criticism leveled at the Fed by Trump. The president denied any involvement in the criminal investigation during a brief interview with NBC News hours after the Fed posted Powell’s video.

Over the past year, hiring has slowed dramatically while inflation has remained elevated, risking an economic double-whammy known as “stagflation.” Those conditions have put the Fed in a difficult position.

The central bank must balance a dual mandate to keep inflation under control and maximize employment. To address pressure on both of its goals, the Fed primarily holds a single tool: interest rates.

The strain on both sides of the Fed’s mandate presents a “challenging situation” for the central bank, Powell noted last month.

“There’s no risk-free path for policy as we navigate this tension between our employment and inflation goals,” Powell said.

If the Fed raises interest rates as a means of protecting against elevated inflation, it risks a deeper slowdown of the labor market. On the other hand, by lowering rates to stimulate hiring, the Fed threatens to boost spending and worsen inflation.

The criminal investigation into Powell raised concern among some analysts and former top Fed officials, who said it poses a threat to central bank independence.

In the event a central bank loses independence, policymakers tend to favor lower interest rates as a means of boosting short-term economic activity, analysts previously told ABC News. Such a posture could pose a major risk of yearslong inflation fueled by a rise in consumer demand, untethered by interest rates.

Federal law allows the president to remove the Fed chair for “cause” — though no precedent exists for such an ouster. Powell’s term as chair is set to expire in May, but he can remain on the Fed’s policymaking board until 2028. Powell has not indicated whether he intends to remain on the board.

Editor’s note: This story has been updated, and will be updated again with the Fed’s rate decision.

Copyright © 2026, ABC Audio. All rights reserved.

(NEW YORK) — Nearly 20 U.S. states are set to raise their minimum wage in 2026, boosting pay for millions of workers spanning from Arizona to New Jersey.

A mix of Republican- and Democrat-controlled states will raise their wage floors on Jan. 1 in keeping with inflation-adjusted increases or as part of scheduled hikes that take effect at the beginning of each calendar year.

The pay increases will affect about 8.3 million workers, who will gain a combined $5 billion over the course of 2026, according to the left-leaning Economic Policy Institute, or EPI.

Beginning next year, the number of workers living in a state that guarantees a $15 minimum wage will exceed the number living in a state that offers the federal wage floor of $7.25 per hour, the EPI found.

After the wave of wage hikes, Washington will become the state with the highest minimum wage, offering workers $17.13 per hour.

Workers in New York will enjoy the second-highest wage floor, as the state implements a minimum hourly wage of $17 for workers in New York City, Long Island and Westchester. Outside those areas, workers in New York will receive at least $16 per hour.

Overall, the 19 states set to raise their minimum wage on Thursday include: Arizona, California, Colorado, Connecticut, Hawaii, Maine, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, New York, Ohio, Rhode Island, South Dakota, Vermont, Virginia and Washington.

The nation’s highest wage floors will take effect in some of the nearly 50 cities and other localities that will impose minimum pay hikes.

Twenty-nine localities in California will see pay hikes, including a $20.25 an hour wage floor that will take effect in West Hollywood. Eight localities in Washington will increase their minimum wage, among them the country’s highest wage floor: $21.65 an hour in Tukwila.

The latest round of pay increases, however, will not affect 20 states concentrated in the South that lack a minimum wage or offer a minimum wage that does not exceed the federal minimum.

The last federal minimum wage hike took place in 2009, when Congress raised the pay floor to its current level. Since then, the federal minimum wage has lost more than 30% of its value due to inflation, EPI found.

Copyright © 2025, ABC Audio. All rights reserved.

(NEW YORK) — Holiday shopping season sets forth an annual gut check for the U.S. economy, prompting buyers to splurge in a show of optimism or cut back out of fear of what next year holds.

In 2025, shoppers opened their wallets with gusto, though consumers appeared to favor low-cost options and discounts, according to spending data shared with ABC News.

The performance defied concerns overhanging the economy for months, as hiring slowed and inflation ticked higher. Seemingly undeterred, shoppers flexed their strength at the close of this year, offering some reassurance for the wider economy. Consumer spending accounts for about two-thirds of U.S. economic activity.

Holiday sales climbed 3.9% compared to last year, Mastercard SpendingPulse data showed, tracking online and in-store payments from the start of November to Christmas Eve. The data leaves out car sales and does not account for inflation.

The season-long buying spree followed a strong showing early on, as consumers revved up at the outset of the holiday season.

Digital spending on Thanksgiving jumped 5% from a year earlier, totaling $6.4 billion and exceeding expectations, Adobe Analytics data showed. On Black Friday, shoppers topped the previous day’s pace, as spending soared about 9% compared to 2024, adding up to $11.8 billion, Adobe found.

Adobe attributed the strong performance to better-than-anticipated discounts, especially for electronics. Discounts also touched an array of products from furniture to appliances to toys.

The search for price-savings marked a trend that would continue over the coming weeks.

While overall spending jumped, the largest uptick could be found in low-cost categories, according to Placer.ai, a data firm.

For instance, thrift shops and off-price retailers topped the apparel market with traffic up 11.7% and 6.6% respectively, compared to last year, Placer.ai said. Luxury chains and department stores, by comparison, posted meager gains of 1.8%, the data showed.

“Bifurcation has been a defining trend of consumer behavior in 2025 and continued to shape shopping patterns during the holiday season,” said Shira Petrack, head of content at Placer.ai.

Consumer spending among middle- and low-income Americans slowed earlier this year, triggering warnings from restaurant giants such as McDonald’s and Chipotle. A report this month showed consumer sentiment has fallen to its lowest point since a peak of pandemic-era inflation in 2022, University of Michigan data showed.

As of October, roughly half of buyers planned to use a by-now-pay-later plan for holiday shopping as a means of managing their budget, PayPal said.

Still, consumers have continued to power economic growth, even as they have balked at prices.

In the fall, shoppers helped propel the fastest quarterly U.S. economic growth in two years, federal government data last week showed.

The economy grew at a robust annualized rate of 4.3% in the third quarter in the government’s initial estimate, marking an acceleration from 3.8% growth recorded in the previous quarter, the U.S. Commerce Department said.

“Just as they have for several years now, the U.S. consumer continues to carry the baton for the economy,” Bret Kenwell, U.S. investment analyst at eToro, told ABC News in a statement.

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