For 13 years, the 3% annual salary boost that Ricardo M. could count on every October felt like a beacon of stability and a nod that his loyalty as a plumbing supply salesman was being rewarded.

But in the aftermath of a post-pandemic inflation surge, those raises have since lost their luster. His grocery bills have doubled. The cost of filling up his Toyota 4Runner has jumped to $70 a week, and he’s had to dip into his savings to avoid taking on credit card debt. All the while, his pay increases have stayed the same.

“Inflation has taken it all,” says Ricardo, a California resident who requested that his last name be abbreviated, so he could speak freely about his employment situation. “I know costs are going up everywhere, and I understand that a business has to make money and stay profitable. But at the same time, don’t forget about the people who are bringing you business. I don’t make enough for the sales that I generate.”

Economists have celebrated inflation’s rapid dissent, and perhaps even more, the relatively little pain it’s caused the U.S. job market. For over a year now, wages have been rising faster than inflation as prices slow and the job market holds up, giving Americans an opportunity to recover the buying power that they lost after ultralow interest rates, supply shortages and a stimulus check-fueled spending boom combined to form the worst inflation crisis in 40 years.

But the race isn’t over yet. The past 16 months of “real” wage growth — as economists have called it — haven’t been enough to offset the 25 months where prices were rising disproportionately faster than Americans’ paychecks, according to a new analysis of Bureau of Labor Statistics data from Bankrate.

Bankrate’s 2024 Wage To Inflation Index

Since the beginning of the post-pandemic inflation surge in Jan. 1, 2021, prices have risen 20.0%, compared with a 17.4% increase in wages over the same period, Bankrate’s second-annual Wage To Inflation Index found.

Inflation feels akin to taking a pay cut, helping explain why Americans have been so downtrodden about the U.S. economy. Despite a half-century low unemployment rate at the time, the majority (59%) of Americans said in a Bankrate poll from December 2023 that they felt like the U.S. economy was in a recession.

Americans could even take these frustrations to the voting booth come November. Most adults (89%) say the economy will be an important factor in determining their vote, with two-thirds (62%) calling it very important, according to Bankrate’s Biden and Americans’ Personal Finances Survey from November 2023.

To be sure, some ground has already been recovered. Thanks to over a year of “real” wage growth, the current gap between wage growth and inflation (2.6 percentage points) marks major improvement from when it was at its widest in the summer of 2022 (3.9 points).

Yet, wages have recently lost some momentum. In Bankrate’s 2023 index, Americans’ paychecks were on track to fully recover from post-pandemic inflation by the fourth quarter of this year. Now, Americans’ paychecks are on pace to bounce back by the end of the second quarter of 2025, updates to Bankrate’s index for 2024 found.

The job market has cooled more than expected this year

Wages are taking longer to recover amid a faster-than-expected cooldown in the job market, which has already stripped workers of some of their bargaining power to ask for higher pay.

Between the second quarter of 2023 and 2024, prices rose 3.194%, nearly matching the 3.187% expected increase from last year’s index. Wages, however, rose 4.03% over the same period, after previously being on pace to grow 4.6%.

The labor market functions much like any other open market, economists say. Wage growth is often a reflection of who has the upper hand: the employer or the employee.

When there are too many job openings and not enough workers, employers compete for talent by lifting pay or offering big bonuses. But too few jobs for the number of people seeking work might make Americans hesitant to leave their current positions, wary about how greener other pastures might actually be in a more competitive job market.

If they’ve been on the hunt for a while, they might be inclined to settle for a job that pays less. And if they’re so inclined to negotiate for higher pay, they might not ask for as much.

“We’re seeing wage growth cool because demand is falling,” says Sam Kuhn, labor economist at Appcast, a recruiting platform. “In 2022, there were serious labor shortages. As that gap has closed, there’s just less incentive to give out higher wages or yearly raises.”

Illustrating the shift, there’s now just one job opening per every unemployed worker, the smallest ratio since April 2018, Bureau of Labor Statistics data shows. Employers have created an average 96,000 jobs in the private sector over the past three months, a massive slowdown from a three-month moving average of 203,000 in March. The hiring rate, meanwhile, has plunged to levels that are even lower than they were before the pandemic. Unemployment is now the highest since before the pandemic.

ADP’s Chief Economist Nela Richardson has watched wage growth for job changers dip from a high of 16.4% in June 2022 to the most recent level of 7.3%, according to data that her firm collects. Americans who’ve stayed at their current positions, meanwhile, saw their pay increase 4.8% for the second month in a row, ADP data also shows. In the leisure and hospitality sector, Richardson says she’s starting to notice that workers are accepting new positions for less pay than they were making previously — echoing trends from before the pandemic and painting a picture of a slowing labor market.

“There’s a lot of reasons workers switch jobs that aren’t tied primarily to compensation,” she adds. “It could be a better shift, a better team, a better location.”

What happens next for the U.S. job market can have grave implications for Americans’ prospects of catching up. In June, economists projected that job growth over the next year would average 115,000 jobs a month, Bankrate’s quarterly Economic Indicator Survey found. That would represent an even sharper slowdown in labor demand, with job growth currently averaging 197,000 over the past 12 months.

A cooling economy means less inflation, but slower wage growth, too, setting Americans back in their game of catch up. Richardson says a valid concern is whether their wages will recover at all.

“Will workers make up the ground lost when real wages weren’t growing with inflation? From what I see in key sectors, the answer is not likely,” Richardson says. “It’s really about can the wage level remain above current inflation, to get a better picture for workers.”

Not all workers have lost ground to inflation

Some workers are even further ahead — or behind — in their race against inflation, depending on the specific industry in which they work.

Bankrate’s analysis found that pay has risen faster than inflation in two industries: leisure and hospitality (23.7%) and accommodation and food services (23.3%), compared with a 20% rise in prices from the start of 2021 to the end of June. Paychecks are furthest behind in education (13.6%), construction (14.1%) and financial activities (14.3%) during that same timeframe.

Meanwhile, after increasing at a faster rate than inflation in Bankrate’s 2023 Wage to Inflation Index, pay in the retail sector (up 19.4% since the beginning of 2021) has since fallen behind.

The industries where wage growth has boomed correspond with where labor demand was the strongest. At one point, a record 11.1% of jobs within the accommodation and food services sector and 10.9% of positions within leisure and hospitality were vacant, the most of any other industry. On the flip side, job opening rates in the industries with the slowest wage growth peaked at much lower levels, with construction at 5.4% and education hitting 4%, according to Bankrate’s analysis.

That’s not to say Americans in inflation-beating industries are feeling particularly better off. The average hourly earnings of workers in the financial activities sector ($45.73), for example, are more than two times as high as those in leisure and hospitality ($22.18).

The more money workers make, the better positioned they are to absorb higher prices in their budgets. Low-income households tend to spend more money on essentials that they can’t cut back on, whereas upper-income Americans have more options to free up cash, such as trimming discretionary spending or their savings contributions.

Workers making less than $50,000 a year (at 43%) were nearly twice as likely as those who earn $100,000 or more a year (24%) to feel that they’re living paycheck to paycheck, according to a Bankrate survey from July.

Americans working jobs in retail, leisure and hospitality and food services were also more likely to have lost their jobs during the pandemic, making it hard to say whether they’re truly better off today, says Elise Gould, senior economist at the independent Economic Policy Institute.

“Even if their wages have risen, it has been very hard for people to make ends meet on the kinds of wages that our labor market has been delivering over the last 50 years,” Gould says. “But the fact that people are struggling doesn’t mean that they didn’t experience real wage growth. Both things can be true.”

‘I don’t know if it’ll get as good as it was’

Robert Santy, a psychotherapist based in Connecticut, has taken on 20 extra clients in the four years since the pandemic. He says the decision was equal parts personal necessity and societal urgency.

For starters, every corner of Santy’s budget has grown more expensive. Car insurance for his family of five is costing him $10,000 a year. His monthly electric bills often range between $600-$800. His cell phone bill jumped by $40 a month, and even his grocery costs can easily reach $1,000 a week. He’s taken on longer hours simply to replace some of his lost income.

“It’s nickel and dime, nickel and dime, and everyone wants a piece of the pie,” he says. “My pie keeps getting smaller and smaller and smaller.”

But whether it’s lingering stress from the pandemic or financial anxieties surrounding inflation and recession fears, Santy says he’s been in no need for clientele over the past four years, either. He often takes calls from patients after hours and goes to his office on weekends to catch up on paperwork. He estimates that he gets about four cold calls a week from new, inquiring clients, whom he has to turn away because he doesn’t have enough room for them in his schedule.

“People are highly stressed, highly anxious, struggling financially. That leads to family squabbles, relationship issues,” he says. “You get the cable company, the electric company, the cell phone company, your mortgage goes up, your taxes go up. Any one thing might be manageable, but when it’s death by a thousand needles, that just wears on people over time.”

Contributing to his rising expenditures, his two youngest children are in college, while his oldest daughter is living at home on an extended job hunt after graduating two years ago. Him and his wife are now earning nearly $300,000 a year as a household, but they feel like they had an easier time getting by when they were in their early 20s, earning just $22,000 a year. Still feeling surprised by bills or unexpected expenses, he’s had to temporarily halt his retirement contributions.

“I’m certainly in better shape financially than I’ve ever been in my life, but I’m not where I thought I was going to be or where I think I should be,” Santy says. “It’ll get better, but I don’t know if it’ll get as good as it was. I realize everything goes up and up and up, but did it have to go up so much so quickly when I didn’t have time to adjust? It felt like it just happened overnight.”

Even if wages recover, inflation may have already damaged the American psyche

Americans look at inflation differently than economists. Analysts track annual rates of change in inflation to determine whether the U.S. economy is overheating, while the typical American consumer focuses on how much the items they see everyday have risen in cost.

Just 6% of the nearly 400 items the Bureau of Labor Statistics tracks are cheaper today than before the pandemic, a Bankrate analysis of inflation data shows. Key essentials that consumers regularly buy — like gasoline, groceries, utilities, rent and more — have risen at a faster rate than overall inflation. Car insurance, meanwhile, is up almost 50% since February 2020.

Inflation can have a profound effect on consumer psychology. Nearly half of adults (47%) say money has a negative impact on their mental health at least occasionally, Bankrate’s Money and Mental Health Survey from May 2024 found. Almost two-thirds of them (65%) cited rising prices as a reason.

“It will require that workers continue to enjoy some restoration of buying power through real wage gains,” Hamrick says, referring to when Americans could start to feel better. “To the extent we see falling prices for goods within a fairly normal, not recessionary, economic environment, that would be helpful.”

Ricardo is already gearing up for his annual review next month. He’s preparing to make a case for why he deserves a bigger raise than usual, citing his sales numbers and translating how it adds to his company’s bottom line. He hopes to use the money to visit his five grandchildren, who live across the country in both Florida and Seattle.

But even if he doesn’t get the money he’s hoping for, he says he’s unlikely to quit. He hopes to retire within the next few years and is afraid of taking a pay cut by starting over somewhere else.

“I’m waiting for them to one day tell me, ‘Don’t worry, we’ll take care of you.’ That’s what you want to hear after 16 years,” he says. “Hopefully, I don’t get disappointed with what I’m going to hear.”

Visit Bankrate online at bankrate.com.

©2024 Bankrate.com. Distributed by Tribune Content Agency, LLC.

Inflation has slowed and the labor market has softened enough to satisfy the Federal Reserve. That means the central bank is about to cut interest rates.

On Aug. 23, Fed Chair Jerome Powell said, “The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”

In other words, Americans should prepare to finally catch a break when it comes to borrowing to pay for a home, buy a car or open a new credit card. There are also other implications for the health of the broader economy.

Back in March 2022, the Federal Open Markets Committee (FOMC) began to increase the federal funds rate in response to growing inflation. It hiked rates 11 times before finally pausing. The rates, set at 5.25% to 5.50%, haven’t budged since July 2023.

The first cut will almost certainly happen at the Fed’s upcoming meeting scheduled for Sept. 17-18. The futures market’s CME FedWatch Tool now predicts a 87% likelihood that the FOMC will cut the current target rate by 25 basis points; it predicts a 13% likelihood of a larger cut of 50 basis points.

But even if the Fed trims rates next week as expected, the target will still be a long way from the near-zero rate of early 2020 and immediate effects will be muted. Mortgage rates have already been easing in anticipation of a cut, for example, and most consumer credit and lending products are more dependent on your credit score than on the Fed rate. Still, this is viewed as a significant event and could build expectations for more cuts down the road.

So what happens next? NerdWallet writers teamed up to explain how upcoming Fed rate cuts could impact your personal finances and what you can do to prepare.

Credit cards

Sara Rathner, credit cards writer

Credit card interest rates are variable, meaning they adjust up or down shortly after the Fed changes the federal funds rate. So if the Fed lowers interest rates, credit card debt will cost slightly less.

The operative word here is “slightly.” Credit card debt is expensive no matter what the federal funds rate happens to be. Let’s say you have an average balance of $5,000 on a card charging 25% APR. You’ll spend around $1,250 in interest over the course of a year. If your interest rate was 24% instead, that’s just $50 less in interest for the year. Point being, a rate reduction doesn’t translate to a massive savings in interest when it comes to credit cards.

Still, you can use the upcoming Fed news as a reminder to check in on your debt and make a plan to pay it down as aggressively as you can. If you qualify, a balance transfer credit card could give you a year or more without interest. Lower interest rates might make a personal loan a compelling debt consolidation option.

Mortgages

Kate Wood, home and mortgages writer

Mortgage interest rates have already headed lower ahead of any action by the Fed. In April, the average interest rate on a 30-year, fixed-rate loan was 7.04%. August’s average was nearly three-quarters of a percentage point lower, at 6.31%. That 73-basis-point drop is larger than any anticipated rate cut, but rates may push even lower once the central bankers start chopping.

Homeowners with adjustable-rate mortgages or home equity lines of credit (HELOCs) should see savings right away as their interest rates ratchet downward. But lower mortgage interest rates might also be a boon to homeowners with fixed-rate mortgages. Those who bought when rates were higher could finally see a significant benefit from refinancing, while owners who feel tethered by their current low mortgage rates may feel more confident about making a move. Reducing that rate “lock in” effect could put more homes on the market, particularly at the starter-home level.

Prospective home buyers likely feel heartened by the prospect of rate cuts, but a quarter or even half of a percentage point cut from the Federal Reserve shouldn’t cause a sudden drop in mortgage rates, especially with a downward trend already in progress. So, don’t wait on the Fed: Buy when you’re ready, not when interest rates are. While you’re preparing to buy — and during your home search — work on your finances. Continue to pay down high-interest debt, try to build your credit score, don’t take out new loans and keep making on-time payments. That way, when you’re applying for a mortgage, you’ll be in a strong position to get a lender’s best possible interest rate regardless of where prevailing rates are.

Auto loans

Shannon Bradley, auto loans writer

Auto loan interest rates typically follow the path of the Fed rate, but it can take time to see. When car loan rates do begin to fall, will it be a good time to buy or refinance? Here are some considerations to help you decide.

Your APR on a car loan is determined by many factors, such as your credit history, credit score, loan term and vehicle age. Taking time to improve your credit, or to find a slightly used car rather than a new one, is likely to affect your loan rate more than a slight drop in the Fed rate.

From the car-buying perspective, your interest rate is just one part of your monthly payment, which also includes the amount you borrow to pay for the car. In July, the average transaction price for new cars was $48,401, with an average monthly payment of $753. The average listing price for used cars was $25,415. Car prices have improved compared to a year ago, but they still remain higher than pre-pandemic levels. Even when interest rates drop, you will want to focus on a vehicle’s out-the-door price and whether the resulting monthly payment fits your budget.

If you financed a car at a high interest rate, refinancing could be a way to lower the rate and your monthly payment. In general, lenders recommend reducing your rate by 1% or more, without extending the loan term, to get the most out of refinancing. And you’ll want to make sure your savings outweigh any lender or title transfer fees. Since the Fed’s rate decrease is expected to be 50 basis points or less, waiting to refinance after additional rate cuts could be more beneficial.

When you do move forward with an auto purchase or refinance loan, apply to several lenders to find the lowest rate. Most lenders offer pre-qualification with a soft credit check, which gives you an idea of the rate you might get without affecting your credit score. You can use an auto loan calculator to input pre-qualified rates and terms to see an estimated monthly payment and total loan interest.

Personal loans

Jackie Veling, personal loans writer

Prospective borrowers may see slightly lower rates on personal loans at banks, credit unions and online lenders after the Fed makes a rate cut. However, the rate a borrower gets on a personal loan is still mostly determined by information supplied on their application, such as credit score, credit history and debt-to-income ratio. There are steps borrowers can take to boost their chances of qualifying for a loan with a low rate, including building their credit and paying off small debts.

If you’re considering using a personal loan to consolidate debt, it’s probably best not to wait for additional rate cuts, especially if you’re struggling with credit card debt. Credit cards tend to have higher interest rates than personal loans, and consolidating credit card debt will begin the process of getting out of debt while saving money on interest.

If you already have a personal loan, you may consider refinancing. Not every lender offers personal loan refinancing, so make sure to research lenders before formally applying for a new loan.

A smart way to always make sure you get the best rate possible on a personal loan is by pre-qualifying. This allows you to check your potential rate with only a soft credit check and compare loan options between lenders.

Student loans

Eliza Haverstock, student loans writer

A Fed interest rate cut will impact private student loans, but not federal student loans.

Some private student loan interest rates will fall. Whether you can qualify for the lowest rates, though, depends on factors like your credit score and income. If you have an existing fixed-rate private student loan, explore refinancing options to lower your interest rate and the amount you’ll repay in total.

If you have a variable rate private student loan, your rate may fall automatically. Consider locking in that lower rate by refinancing to a fixed-rate loan.

Federal student loan interest rates only change once a year. The government sets rates each spring, ahead of the upcoming school year. The rates apply to all federal loans taken out that school year, and they remain fixed throughout repayment. For example, if you borrow an undergraduate loan for 2024-25 at the current 6.53% interest rate, you will keep that rate until you pay off the loan or refinance.

Think twice before refinancing federal student loans — even if you can get a lower rate. Refinancing will permanently turn your loan from federal to private, and you’ll forfeit access to loan forgiveness programs, generous deferment options and other borrower protections, like payments based on your income.

High-yield savings accounts

Margarette Burnette, consumer savings writer

The 2022 Fed rate increases kicked off a prolonged period of rising savings rates, and today some of the best savings accounts have annual percentage yields, or APYs, above 5%. Once the Fed reduces rates, we will likely see a dip in the highest savings rates, so expect those to top out at about 4% APY (or slightly lower). At the same time, the best savings yields will remain well above the national average rate of about half a percent. This average is low in part because some savings accounts, particularly those offered by large banks, consistently offer a next-to-nothing 0.01% APY.

If you deposit $1,000 in an account that earns a rate of 0.01%, it would earn only 10 cents in interest after one year, according to the NerdWallet savings calculator. Put that same $1,000 in a high-yield account that earns 5% and it would grow by a lot more — the interest earned would be about $51.

Even when rates fall, a high-yield account will still be one of the best and safest places for your savings. Say that an account with a 5% rate decreases its yield and now offers 4%. A $1,000 deposit would earn just under $41 in interest after a year. Not quite as much as the 5% account, but still much better than the low-rate option.

Historically, we’ve seen that savings accounts with the best yields tend to consistently outperform their competitors over time, whether overall rates increase or decrease. So if your money is already in a high-yield account, you will probably continue to earn one of the best rates available. But do monitor your rate and compare it to that of other banks, especially for the next few weeks. If your savings APY falls faster than others, consider shopping around for a better option.

Certificates of deposit (CDs)

Spencer Tierney, consumer banking writer

As with savings accounts, certificates of deposit had higher interest rates in the last few years than for most of the past decade. CD rates at major online banks and credit unions exceeded 5% APY, particularly for one-year CD terms. When the Fed raised its rates from March 2022 to July 2023, banks raised CD yields. But the upcoming Fed rate cut is a sign that CD rates have likely peaked and APYs will gradually drop. August saw bigger CD rate decreases than all previous months in 2024, according to a NerdWallet analysis.

If CDs fit into your short-term savings goals, this is a good time to get them. The longer you wait, the lower rates will likely get.

What a CD can do that a regular savings account can’t do is lock in a fixed rate for a dedicated sum of savings. CDs are time-based accounts with term lengths ranging from about three months to five years. Normally, long-term rates are higher than short-term rates. But that trend flipped in recent years. In 2024, competitive five-year CD rates were closer to 4% APY while the best CDs for one year or shorter surpassed 5% APY.

CDs aren’t for everyone, though, and withdrawing from a CD before it ends generally means paying a penalty that wipes out some or all of the interest you earn. Consider CDs for preserving savings earmarked for a large purchase a few years down the road, such as car or home down payment. Or think of CDs as a way to earn steady interest without market risk, especially for folks using CDs for retirement.

The stock market

Sam Taube, investing writer

Publicly-traded companies borrow a lot of money, and the interest rates set by the Federal Reserve affect the cost of that borrowing. With that in mind, interest rate cuts have the potential to boost the bottom line of many companies, although that may affect some sectors of the market more than others.

Certain types of stocks, such as tech stocks and small-cap stocks, may be especially dependent on borrowing to stay afloat. Consumer discretionary stocks primarily make money from consumer spending — and stand to benefit from the increase in buying power brought by lower rates on credit cards and personal loans.

Bank stocks may benefit from a greater spread between the interest they pay out to depositors and the interest they collect from borrowers, as the rates they pay may decrease faster than the rates they collect. And real estate investment trusts (REITs) are income investments that behave a lot like bonds, which tend to rise in value when interest rates decrease.

So lower interest rates are generally a positive for the stock market — but there’s a catch. The Fed is cutting rates because recent jobs reports and other economic data indicate that the economy is slowing down, and a slowing economy can spook investors. Weak jobs data points toward interest rate cuts, but it can also stir recession fears and provoke stock market sell-offs, as it did back in August.

The broader economy

Elizabeth Renter, senior economist

The goal of raising interest rates (and then keeping them elevated) was to take some of the gusto out of the economy. An economy that runs too hot, with lots of spending and borrowing, is one that leads to faster-than-sustainable price growth. When the Fed begins to cut rates, they’ll be signaling they’re done with tapping the brakes. However, they won’t be punching the gas, either.

As they were throughout their rate-raising campaign, they’ll be carefully watching the economic data to determine the magnitude and speed of these cuts. And assuming the economy experiences no unanticipated shocks, they’ll be cautious. Just as the rate-hiking campaign took time to impact the whole of the economy, changing direction will too.

Over time, the ability of both businesses and consumers to borrow at lower rates will lead to increased economic activity. Employers who have been waiting to expand facilities or hire new workers will eventually see rates that entice them to take those steps. Consumers who have been sidelined by high auto loan or mortgage rates may feel a similar nudge, and make those big-ticket purchases. The goal will be to return rates to a reasonable level, one where the economy can continue to grow at a sustainable — not too fast, not too slow — pace.

The 2024 presidential election

Anna Helhoski, news writer

The Federal Reserve operates independent of the rest of government. That means the president doesn’t tell the Fed what to do and the Fed doesn’t factor politics into its decisions. The central bank’s commitment to making nonpartisan decisions is crucial to its effectiveness.

Therefore, the Fed is not going to make any rate decision intended to steer voters toward either Vice President Kamala Harris or former President Donald Trump. Still, some critics are likely to see a rate cut prior to the presidential election as a political move. The same could be said if the Fed waited until after the election to cut rates. So it goes.

The Fed’s actions do impact the economy — they’re intended to. And how an American feels about the economy could influence their vote. Still, it takes a while for the Fed’s decisions to be felt by consumers, so it’s unlikely that a Fed rate cut in September would influence a voters’ choice one way or another.

It’s possible that an avid consumer of economic policy news could be swayed by the Fed’s decision to cut rates. But it’s still unlikely; as many of those news consumers probably have their minds made up.

Meanwhile, a casual news consumer who is also an undecided voter might learn about the Fed’s decision to cut rates and feel more positive about the economy. Those good vibes could lead them to support the current administration. Or not — undecided voters can be fickle.

Hypothetical scenarios aside, the Fed’s rate cut probably won’t impact this election. But whoever wins would almost certainly enjoy presiding over an economy with lower interest rates for consumer products. Even if it’s unwarranted, the winner is pretty likely to take the credit for any economic improvements while they’re in power.

NerdWallet writes for NerdWallet. Email: articles@nerdwallet.com.

The article What Happens When the Fed Finally Cuts Rates? originally appeared on NerdWallet.

The company, known for high-quality burgers, hot dogs and craft beer and wine, acquired Anthony’s Coal Fired Pizza & Wings in 2021 but has been signaling possible financial trouble for months as it coped with rising food prices and declining sales.

In May it announced it was undergoing a “strategic review process” and offered no assurance that the process would result in an outcome “favorable to the Company or its shareholders.”

In August, it warned it had just $4.4 million on hand and expected to report a loss of $18.4 million for the second quarter. It also said then that it might have to file for bankruptcy.

In a statement released on Wednesday, the company said the filing in United States Bankruptcy Court in Delaware affected only its 67 corporate-owned locations of both brands and excluded 77 franchisee-owned locations in the United States, Puerto Rico and Saudi Arabia.

In the Hampton Roads region, BurgerFi’s website shows its only local restaurant, in the Williamsburg area at 6610 Mooretown Road, is temporarily closed.

Jimmy Rosenthal, chief restructuring officer of BurgerFi International Inc. was quoted in the statement as saying, “BurgerFi and Anthony’s Coal Fired Pizza & Wings are dynamic and beloved brands, and in the face of a drastic decline in post-pandemic consumer spending amidst sustained inflation and increasing food and labor costs, we need to stabilize the business in a structured process.”

Rosenthal added, “We are confident that this process will allow us to protect and grow our brands and to continue the operational turnaround started less than 12 months ago and secure additional capital.”

The brand has been undergoing a top-to-bottom evaluation of its operations as part of turnaround efforts that began in 2023 to address what it called “foundational issues including declining same store sales, high employee turnover and a stale menu.”

The company recently closed 19 underperforming corporate-owned locations. Its statement said its “current platform is primed for success.”

In June, the industry website Restaurant Business Online reported that Jeff Crivello, founder of TREW Capital Management, might be planning to leverage TREW’s purchase of BurgerFi debt into a takeover of the company. TREW and L Catterton, another private equity firm, had each agreed to lend BurgerFi $2 million during the strategic review process.

Crivello is known as a “fixer” who had recently turned around Minneapolis-based barbecue chain Famous Dave’s. On Wednesday, he told the South Florida Sun Sentinel that he planned to make a bid to purchase the chain during a sales process that will take place as the bankruptcy unfolds.

The company grew out of a single location in Lauderdale-by-the-Sea that was founded in 2011 by David Manero, creator of two Vic & Angelo locations. It is headquartered on Cypress Creek Road.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at rhurtibise@sunsentinel.com.

“If you don’t have between $600,000 and $800,000, you’re not buying a house out there,” Reese said. “Las Vegas has a lot of opportunity, and it was affordable in 2006, but it’s become unaffordable. We quit our jobs and moved across the country. We’re hoping this is the right decision for us.”

Reese and her family are unpacking at her parents’ Youngstown home, a temporary stop until she and her husband, who was a casino worker in Las Vegas, can find jobs and a house of their own with their young daughter. Youngstown is one of the last two metro areas in the country where a household with nearly any income should be able to find a single-family home they can afford to buy, according to an analysis of April data by the National Association of Realtors.

Before the pandemic, there were 20 states that were considered affordable as a whole under the group’s definition, including the presidential election swing states of Michigan, Pennsylvania and Wisconsin. As of this year, there is none. Even the states with the closest match between income and home prices — Iowa, West Virginia, Ohio, Indiana and Michigan — didn’t make the cut.

Since the pandemic, two states, Montana and Idaho, have surpassed California as the most unaffordable states for local homebuyers, according to the analysis. Hawaii and Oregon round out the list of the five least affordable states.

The Realtors’ analysis assigns affordability scores to states and large metro areas on a scale of 0 to 2. A score of 0 means that no household can afford any home on the market.

A score of 1 means that homes on the market are affordable to households in proportion to their position on the income ladder — in other words, 100% of families can afford at least some homes on the market. And a score of 2 would mean that all households can afford all homes on the market, but no state or metropolitan area even reached a 1.

The least affordable metro area was Los Angeles, which scored only 0.3, while the metro areas of Youngstown (0.97) and Akron (0.95) in Ohio were rated most affordable.

According to the latest estimates from July by real estate company Redfin, median single-family home sale prices were $175,000 in Youngstown and $239,500 in Akron. That compared with $487,000 in Las Vegas, $490,000 in Boise and $1 million in the Los Angeles area.

The Las Vegas area, where the Reese family had lived for 18 years, had a score of 0.5 on the Realtors’ scale. No state earned an overall score of 1, though Iowa, West Virginia and Ohio came close, at nearly 0.9. The least affordable states, Montana, Idaho, California, Hawaii and Oregon, all had scores around 0.4.

Nationwide, home affordability has evaporated over the past three years as interest rates have gone up, according to a monitoring index maintained by the Federal Reserve Bank of Atlanta. It measures affordability more simply than the Realtors’ analysis, focusing solely on the ability of a homebuyer with the median household income to buy the median-priced house.

By that measure, the national affordability percentage was above 100% between January 2019 and April 2021. But it fell as low as 67% last year and remained below 70% in June, meaning a homebuyer with the median income had only two-thirds of the earnings needed to buy the median-priced house.

Home prices have increased by 47% nationwide just since 2020, according to a June report by the Harvard Joint Center for Housing Studies. A major factor is that there aren’t many homes for sale: Many current homeowners are reluctant to sell because they’re locked into historically low interest rates. Meanwhile, investors have gobbled up single-family starter homes, reducing the supply.

Lawrence Yun, chief economist for the National Association of Realtors, said there are signs of more houses coming up for sale. For example, there was a 20% increase in houses and condos for sale in July compared with July 2023, according to the association.

“We are still short on inventory, but I think the worst is over,” Yun said. “We have seen mortgage rates begin to decline, so it’s less of a big financial penalty to move and give up a low interest rate. And the second factor is just the passage of time — life-changing events always occur, a death, a divorce, a new child or just job relocation, and that means changing residence.”

Along with high prices and interest rates, home buyers are getting slammed by higher property taxes and insurance costs, according to the Harvard Joint Center for Housing Studies.

Home prices in northeast Ohio might be lower because the area has a stable population, curbing competition and bidding wars, said Alison Goebel, executive director of the Greater Ohio Policy Center, a Columbus nonprofit aimed at revitalizing Ohio cities.

“Our population numbers have remained fairly steady in the last several decades, so we don’t have egregious demand and supply issues like you see on the West Coast and other rapidly growing areas,” Goebel said.

Montana and Idaho are the least affordable states: Housing prices are exploding in both, as deep-pocketed newcomers — many of them white-collar employees working in high-wage jobs based out of state — have driven up prices beyond what longtime residents can afford.

The city of Boise scored 0.4 on the Realtors’ affordability scale, on par with the New York City area. Like Montana, Idaho has natural beauty that is attracting people who are cashing out of more expensive areas, said Nicki Hellenkamp, Boise’s director of housing and homelessness policy.

“It’s one of the Zoom boom towns, where it’s beautiful but the wages are low, and the cost of living is low. If you sell your house in Los Angeles and buy two houses here, as my uncle did, then you can have a very different standard of living,” Hellenkamp said.

It’s not just home prices — rents are up 40% in Boise since the pandemic began, she added.

“Obviously wages didn’t go up 40%, so some people have been displaced,” Hellenkamp said.

The city is working on modest proposals to help with down payments and to create more affordable apartments, she said, but building more affordable housing will mean state and federal cooperation to help solve labor shortages and soaring material costs.

“We can’t do this alone as a city. This issue is a big one,” Hellenkamp said.

A state housing task force in Montana made recommendations in June to streamline construction of houses and apartments statewide and create incentives for cities to loosen zoning and allow denser housing.

A member of the task force, Kendall Cotton, said he personally found it impossible to buy a house in Montana, but was happy to recently purchase half a duplex for his growing family.

“We were thrilled to have that as an option, just to get our foot in the door and start on our journey to homeownership,” Cotton said. “Montana is an in-demand place. We’ve been kind of discovered in the last couple of years.”

Republicans and Democrats have come together to support fighting restrictive zoning, said Cotton, director of the Frontier Institute, a nonprofit policy and educational organization.

“We’re a free-market organization that tends to lead from right of center, but when I was at the governor’s press conference to support these issues, I was standing shoulder to shoulder with a Democratic socialist city council member and we were all united on this,” Cotton said.

Shallon Lester, a YouTube influencer who moved from New York to Montana and paid $1 million for a five-bedroom house in Bozeman in 2022, said she likes both the lower cost of living and the lifestyle there. Locals tend to think she’s an outsider “invading” the area, she said, but “people like me take nothing from this economy — we only give. We spend and spend.”

“People who are remote workers are sick of the cost of living in cities,” Lester added. “There’s a mass return to the concept of the simple life.”

Even in the Youngstown metro area, which includes a slice of Pennsylvania, housing can be a challenge for residents with low incomes. A forthcoming regional housing study has found a 4,000-unit shortage for households making less than $25,000 a year; 7,500 people are on a waiting list for subsidized housing. Black and Hispanic residents are more likely to struggle with housing costs, as are older people, young singles and families with young children, according to preliminary conclusions discussed in April.

But for many, Youngstown is a rare island of affordability. Jim Johnston, 40, a digital account executive at media company Nexstar in Youngstown, said many of his high school classmates from the area, who now live in places such as Montana, Illinois and Maryland, envy his decision to stay there and buy a $250,000 house in 2022 when interest rates were lower.

“One of them has a mortgage payment three times mine for the same size house, and a child care bill that’s bigger than my mortgage,” said Johnston. “They could put an extra $50,000 or $60,000 a year in their pockets. Remote work has opened up new possibilities for them, and they’re considering this very seriously.”

Under terms of the Thursday order, which Navient agreed to without admitting any wrongdoing, the Virginia-based financial services company would also have to pay a $20 million penalty and provide another $100 million in relief to impacted borrowers.

“Today, we are closing the book on Navient,” CFPB Director Rohit Chopra said in prepared remarks Thursday, stating that the company harmed millions of borrowers as “one of the worst offenders in the student loan servicing industry.”

Chopra said the CFPB began investigating Navient, which split off from consumer banking corporation Sallie Mae in 2014, nearly a decade ago. The agency later sued Navient, accusing the company of predatory lending practices such as steering those struggling with their debts into higher-cost repayment plans, or long-term forbearance, and failing to properly process payments.

In the years that followed, states also began to examine such allegations of forbearance steering — leading to debt cancelations for many borrowers across the country. In 2022, for example, Navient agreed to settle claims with 39 state attorneys general for $1.85 billion.

In a statement following the filing of the CFPB’s Thursday order, which should be finalized when entered by the court, Navient said the settlement agreement reached with the agency “puts these decade-old issues behind us.”

“While we do not agree with the CFPB’s allegations, this resolution is consistent with our go-forward activities and is an important positive milestone in our transformation of the company,” the company added.

Navient was once one of the largest student loan servicers in the U.S. But that’s changed. The company maintains that it is no longer a servicer or purchaser of federal student loans.

Navient’s contract with the U.S. Education Department to service direct loans ended in 2021. The company says this was transferred to a third party, Maximus, which currently services these loans under the name “Aidvantage.” And earlier this year, Navient reached an agreement to outsource servicing of legacy loans from the Federal Family Education Loan Program to another servicer, MOHELA, starting July 1.

Beyond the ban of servicing direct federal loans, the CPFB’s order would also bar Navient from acquiring most of those FFEL loans, which are federally-backed private loans distributed through a program that ended in 2010. Borrowers may still have these kinds of loans if they attended school before then.

At the time the CFPB filed its lawsuit against Navient back in 2017, the agency said that Navient was servicing student loans of more than 12 million borrowers, including more than 6 million accounts under its contract with the Education Department. In total, the CFPB added, Navient serviced over $300 billion in federal and private student loans.

“Borrowers don’t get to select who services their student loan, so more than a quarter of all student loan borrowers had no choice but to rely on Navient as their servicer,” Chopra said in his Thursday remarks — later adding that the proposed settlement “marks a significant step” for future protections. “Navient is now almost completely out of the federal student loan servicing market and we’ve ensured they cannot re-enter it in the future.”

U.S. Under Secretary of Education James Kvaal also applauded the CFPB’s action Thursday, while pointing to wider efforts from the Biden-Harris administration to “hold loan servicers accountable.” Such efforts includes more than $50 billion in debt relief for over 1 million borrowers related to servicers’ forbearance misuse and income-driven repayment plan adjustments, the Department said earlier this year.

Falling Prices opened in the former Burlington Coat Factory space at 14346 Warwick Blvd. in September. It’s the seventh store for the family-owned business that started in Santa Rosa, California, and it’s the first one on the East Coast.

The store’s unique concept is that prices successively get lower every day of the week. Falling Prices opens on Tuesdays, with everything costing $6. Each day, the prices fall — to $4 on Wednesdays, $2 on Thursdays, $1 on Fridays and 25 cents for what’s left on Saturdays.

The store is then restocked for the next week. Customers can come at the end of the week and find jackets, toys, electronics, home goods or boxes of chips for only 25 cents.

“You’ll get amazing deals, but you’ll have to search for them,” owner Ben Cawood said. “It’s like a scavenger hunt for the customer.”

Items are stocked on shelves and in bins, and the categories and types of merchandise are mixed throughout the store. Larger and higher value items are placed on shelves, and the smaller ones are found in bins. The treasure-hunt like experience encourages customers to explore and find the best deals, Cawood said.

The inventory comes from an assortment of retailers such as Amazon, Target, Home Depot, Walmart, Lowe’s and other large retailers. The items are a mix of overstock, box damage or returns. Four to six truck trailers arrive weekly and contain 10,000-80,000 new items. Employees must triage the items as trash or treasures to be sold in the store.

Cawood said Dollar Tree has often had to agree to let Falling Prices come into the same shopping centers as the new concept brings in foot traffic, which can also boost the dollar retailer’s sales.

“While Dollar Tree offers great prices on items you can expect to find every time you visit, our store provides a completely different experience,” he said. “Customers never know what they’ll find, making it exciting.”

Falling Prices offers optional line passes to help manage the order of entry into the store. The line pass system is accessed through the Falling Prices app, which is only used at 10 a.m. when the store opens. Customers can reserve their spot in line ahead of time to avoid standing in long lines before the store opens.

“We’ve seen how this model thrives on the West Coast, and I’m eager to bring the same great value and excitement to new communities,” Cawood said. “With inflation affecting everyone, it’s a way for people to access quality items at a fraction of their retail cost. It’s like Black Friday every day.”

Lee Belote, jlbelote@verizon.net

WASHINGTON (AP) — Speaker Mike Johnson postponed a vote Wednesday on a temporary spending bill that would keep federal agencies and programs funded for six months as opposition from both parties thwarted his first attempt at avoiding a partial government shutdown in three weeks.

The legislation to continue government funding when the new budget year begins on Oct. 1 includes a requirement that people registering to vote must provide proof of citizenship. Johnson, R-La., signaled that he was not backing off linking the two main components of the bill.

“No vote today because we’re in the consensus building business here in Congress. With small majorities, that’s what you do,” Johnson told reporters. “We’re having thoughtful conversations, family conversations within the Republican conference and I believe we’ll get there.”

Congress needs to pass a stopgap spending bill before Oct. 1 to avoid a federal shutdown just weeks before the election. The measure had been teed up for a vote on Wednesday afternoon, but Democrats are overwhelmingly opposed and enough Republicans had voiced opposition to raise serious doubts about whether the measure would pass.

The stopgap bill would generally continue existing funding through March 28. The GOP opponents of the bill argue that it continues spending at levels they consider excessive. And some Republicans simply won’t vote for any continuing resolution, arguing that Congress must return to passing its 12 annual spending bills separately rather than through the one or two catchall bills that have become the norm in recent decades.

Despite the dim prospects for the bill, Johnson had said just the day before he would push ahead with the vote. He has embraced concerns that some of the migrants who have entered the country at the U.S.-Mexico border in recent years could swing the elections, though it’s illegal for noncitizens to vote and research has shown that such voting is extremely rare.

“Congress has a lot of responsibilities, but two primary obligations — responsibly fund the government and make sure that our elections are free and fair and secure,” Johnson said. “And that’s what we’re working on.”

The House approved a bill with the proof of citizenship mandate back in July. Republicans believe there is value in revisiting the issue and making Democrats in competitive swing districts vote again.

Democrats are calling on Johnson to “stop wasting time” on a bill that will not become law and to work with them on a short-term spending measure that has support from both parties. At the end of the day, they say no spending bill can pass without bipartisan support and buy-in from a Democratic-led Senate and White House.

“Speaker Johnson, scrap your plan. Don’t just delay the vote. Find a better one that can pass in a bipartisan way,” Senate Majority Leader Chuck Schumer said in response to Johnson’s announcement.

But Johnson wasn’t giving up on his proposal yet, saying House leadership would work on building support over the weekend. He said that ensuring that only U.S. citizens vote in federal elections is “the most pressing issue right now and we’re going to get this job done.”

Republican presidential nominee Donald Trump on Tuesday seemingly encouraged a government shutdown if Republicans in the House and Senate “don’t get assurances on Election Security.” He said on the social media platform Truth Social that they should not go forward with a stopgap bill without such assurances.

Senate Republican leader Mitch McConnell, R-Ky., disagreed when asked about Trump’s post.

“Shutting down the government is always a bad idea, no matter what time of the year it is,” McConnell said.

With an election in just a few weeks, lawmakers are wanting to avoid flirting with a partial government shutdown. They’re anxious to get home and campaign, which would indicate the two sides will work out a spending deal before the end of the month.

In addition to the proof of citizenship question, the other sticking point is how long to extend funding while negotiating terms of a full-year bill. Some House Republicans want to continue funding for six months in the belief that Trump will become president and give them a better chance at passing their priorities in the full-year bill. But others don’t want to saddle the next president, regardless of party, with the spending battle.

Rep. Tom Cole, the Republican chairman of the House Appropriations Committee, said Johnson “fought the fight he needed to fight.”

“I think it reassures people on the right. He said, ‘look, I’m trying to do what you want. You just didn’t give me the votes that I needed,’” Cole said.

Cole also suggested that the GOP’s failure to rally around Johnson’s proposal will result in a shorter extension. That’s what Democrats are seeking. Many Republicans, including Cole, also prefer going that route, saying the next president, regardless of party, already has enough work to do.

“They’ve got plenty on the table. They’ve got to get their team in place. They’ve got a budget. They have to deal with all the taxes,” Cole said. “Why should we give them a chance of a government shutdown in a matter of weeks after they’re inaugurated?”

The hardwood flooring retailer formerly known as Lumber Liquidators signed an agreement with private equity firm F9 Investments for a sale of its business on Friday afternoon. Under terms of the deal, expected to close by the end of September, F9 will acquire 219 stores and a Virginia distribution center — as well as LL Flooring’s intellectual property and other assets.

Another 211 LL Flooring stores are still set to close, however. That includes 117 locations where closings were recently initiated and 94 others that were already in the process when the Virginia company filed for Chapter 11 bankruptcy protection on Aug. 11.

Just weeks after filing for Chapter 11, LL Flooring previously said that it would be “winding down operations” and closing all of its stores after failing to find a buyer in negotiations. The retailer expected the process to take about 12 weeks.

But that changed after a deal was reached with F9 on Friday. In a statement, LL Flooring president and CEO Charles Tyson said that company was “pleased to have reached this agreement” with F9 “following significant efforts by our team and advisors to preserve the business.”

Tyson added that LL Flooring remains “committed to continuing to serve” customers and vendors as the transaction moves through bankruptcy court for approval.

F9, based in Miami, is owned by Tom Sullivan, who founded Lumber Liquidators over 30 years ago. Sullivan told The Associated Press that the 219 stores set to be purchased by F9 will open under the Lumber Liquidators name again.

“We’ll be getting back to basics,” Sullivan said. “Basically, yellow and black is coming back … We know what worked before. It’s not fancy offices in Richmond with 200 people that didn’t know the flooring business. It’s great people in our stores that know flooring (and) customers that want a great deal and know Lumber Liquidators is the place to go.”

Sullivan explained that the company plans to narrow down to a more “manageable” selection of flooring options, and getting rid of material that feels duplicative or doesn’t sell well, so customers will likely see big discounts on much of the inventory left behind from LL Flooring’s bankruptcy process. He added that the company will be closely aligned with Cabinets To Go, another F-9 owned brand that he founded, to help with shipping efficiency.

Lumber Liquidators got its start in 1993, as a modest operation in Massachusetts, and later expanded operations nationwide. The brick-and-mortar retailer officially changed its name to LL Flooring at the start of 2022.

The company previously faced turmoil after a 2015 segment of “60 Minutes” reported that laminate flooring it was selling had illegal and dangerous levels of formaldehyde. Lumber Liquidators later said it would stop selling the product and agreed to pay $36 million to settle two class-action lawsuits in 2017.

LL Flooring has had difficulty turning a profit in recent years. Net sales fell 18.5% in 2023, according to a recent earnings report, amid declines in foot traffic and weak demand with mortgage rates and housing prices high. In its Chapter 11 filing, LL Flooring disclosed that total debts amounted to more than $416 million as of July 31, compared with assets of just over $501 million.

Ahead of filing for bankruptcy, LL Flooring also entered a proxy battle over the summer — centered on attempts to keep Sullivan, who had tried to acquire the business before, off the board. In June, company leadership wrote a letter urging shareholders to vote for other nominees, accusing Sullivan of “pushing a personal agenda.” But LL Flooring later confirmed that the founder and F9’s other nominees were elected at its annual shareholder meeting in July.

Austin said that passing a continuing resolution that caps spending at 2024 levels, rather than taking action on the proposed 2025 budget will hurt thousands of defense programs, and damage military recruiting just as it is beginning to recover after the COVID-19 pandemic.

“Asking the department to compete with (China), let alone manage conflicts in Europe and the Middle East, while under a lengthy CR, ties our hands behind our back while expecting us to be agile and to accelerate progress,” said Austin in the letter to leaders of the House and Senate appropriations committees.

Republican House Speaker Mike Johnson has teed up a vote this week on a bill that would keep the federal government funded for six more months. The measure aims to garner support from his more conservative GOP members by also requiring states to obtain proof of citizenship, such as a birth certificate or passport, when registering a person to vote.

Congress needs to approve a stop-gap spending bill before the end of the budget year on Sept. 30 to avoid a government shutdown just a few weeks before voters go to the polls and elect the next president.

Austin said the stop-gap measure would cut defense spending by more than $6 billion compared to the 2025 spending proposal. And it would take money from key new priorities while overfunding programs that no longer need it.

Under a continuing resolution, new projects or programs can’t be started. Austin said that passing the temporary bill would stall more than $4.3 billion in research and development projects and delay 135 new military housing and construction projects totaling nearly $10 billion.

It also would slow progress on a number of key nuclear, ship-building, high-tech drone and other weapons programs. Many of those projects are in an array of congressional districts, and could also have an impact on local residents and jobs.

Since the bill would not fund legally required pay raises for troops and civilians, the department would have to find other cuts to offset them. Those cuts could halt enlistment bonuses, delay training for National Guard and Reserve forces, limit flying hours and other training for active-duty troops and impede the replacement of weapons and other equipment that has been pulled from Pentagon stocks and sent to Ukraine.

Going forward with the continuing resolution, said Austin, will “subject service members and their families to unnecessary stress, empower our adversaries, misalign billions of dollars, damage our readiness, and impede our ability to react to emergent events.”

Noting that there have been 48 continuing resolutions during 14 of the last 15 fiscal years — for a total of nearly 1,800 days — Austin said Congress must break the pattern of inaction because the U.S. military can’t compete with China “with our hands tied behind our back every fiscal year.”

Johnson’s bill is not expected to get support in the Democratic-controlled Senate, if it even makes it that far. But Congress will have to pass some type of temporary measure by Sept. 30 in order to avoid a shutdown.

CUPERTINO, Calif. (AP) — Apple on Monday charged into the artificial intelligence craze with a new iPhone lineup that marks the company’s latest attempt to latch onto a technology trend and transform it into a cultural phenomenon.

The four different iPhone 16 models will all come equipped with special chips needed to power a suite if AI tools that Apple hopes will make its marquee product even more indispensable and reverse a recent sales slump.

Apple’s AI features are designed to turn its often-blundering virtual assistant Siri into a smarter and more versatile sidekick, automate a wide range of tedious tasks and pull off other crowd-pleasing tricks such as creating customized emojis within seconds.

After receiving a standing ovation for Monday’s event, Apple CEO Tim Cook promised the AI package will unleash “innovations that will make a true difference in people’s lives.”

But the breakthroughs won’t begin as soon as the new iPhones — ranging in price from $800 to $1,200 — hit the stores on September 20.

Most of Apple’s AI functions will roll out as part of a free software updates to iOS 18, the operating system that will power the iPhone 16 rolling out from October through December. U.S. English will be the featured language at launch but an update enabling other languages will come out next year, according to Apple.

It’s all part of a new approach that Apple previewed at a developers conference three months ago to create more anticipation for a next generation of iPhones amid a rare sales slump for the well-known devices.

Since Apple’s June conference, competitors such as Samsung and Google have made greater strides in AI – a technology widely expected to trigger the most dramatic changes in computing since the first iPhone came out 17 years ago.

Just as Apple elevated fledgling smartphones it into a must-have technology in 21st-century society, the Cupertino, California, company is betting it can do something similar with its tardy arrival to artificial intelligence.

In an attempt to set itself apart from the early leaders in AI, the technology being baked into the iPhone 16 is being promoted as “Apple Intelligence.” Despite the unique branding, Apple’s new approach mimics many of the features already available in the Samsung Galaxy S24 released in January and the Google Pixel 9 that came out last month.

“Apple could have waited another year for further development, but initial take up of AI- powered devices from the likes of Samsung has been encouraging, and Apple is keen to capitalize on this market,” said PP Foresight analyst Paolo Pescatore.

As it treads into new territory, Apple is trying to preserve its long-time commitment to privacy by tailoring its AI so that most of its technological tricks can processed on the device itself instead of relying on giant banks of computers located in remote data centers. When a task needs to connect to a data center, Apple promises it will be done in a tightly-controlled way that ensures that no personal data is stored remotely.

While corralling the personal information shared through Apple’s AI tools inherently reduces the chances that the data will be exploited or misused against a user’s wishes, it doesn’t guarantee iron-clad security. A device could still be stolen, for instance, or hacked through digital chicanery.

For users seeking to access even more AI tools than being offered by the iPhone, Apple is teaming up with OpenAI to give users the option of farming out more complicated tasks to the popular ChatGPT chatbot.

Although Apple is releasing a free version of its operating system to propel its on-device AI features, the chip needed to run the technology is only available on the iPhone 16 lineup and the high-end iPhone 15 models that came out a year ago.

That means most consumers who are interested in taking advantage of Apple’s approach to AI will have to buy one of the iPhone 16 models – a twist that investors are counting on will fuel a surge in demand heading into the holiday season.

The anticipated sales boom is the main reason Apple’s stock price has climbed by more than 10%, including a slight uptick Monday after the shares initially slipped following the showcase for the latest iPhones.

Besides its latest iPhones, Apple also introduced a new version of its smartwatch that will include a feature to help detect sleep apnea as well the next generation of its wireless headphones, the AirPods Pro, that will be able to function as a hearing aid with an upcoming software update.