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I remember in one of my economics courses in college the professor saying something like, “Even if you had a billion dollars, you couldn’t create something that would be able to compete with Coca Cola.” The line was about competitive moats, and how many of the best companies in the world operate in industries or product lines that are so complex or have such significant start-up expenses or switching costs that it is very difficult for an upstart company to make any inroads. Warren Buffett, widely considered to be the most successful investor of all time, has often said that a strong economic moat is one of the key things he looks for when investing in a company.

Coca Cola has always had a strong moat. First and foremost, it is because Coke essentially created the product line from scratch, so they have had a decades-long headstart. But it is also due in part to the way Coke structures its empire of bottling and distribution, not to mention the fact that Coke has steadily gobbled up other brands to add to its portfolio over the course of time. People generally know Sprite is a Coke product, as is Fanta. But Coke also owns Dasani, Smartwater, Powerade, Body Armor, Vitamin Water, Minute Maid, Fuze Tea, and close to 200 other brands and products. Coke also has a large equity stake in Monster Beverage, which is the leader in one of the fastest growing drink segments: energy drinks.

There really is no other Coca Cola company (although Pepsi is close and uses a lot of the same principles and techniques), so it’s not really fair to compare here. But something I have been struck by lately is how much drinking habits appear to be changing. In fact, that is the primary reason why Coke has diversified into so many different areas of the drinking world. Rather than be undercut by bottled water, for example, Coke has scooped up some of the top brands in that category and made them their own.

Americans (and, indeed, people around the world) still drink a great deal of soda, but consumers have become more conscious of sugar, calories, ingredients, and overall health, which has gradually reduced the dominance of traditional full-sugar soft drinks. GLP drugs that are changing tastes and drinking habits are having an impact too. At the same time, people have many more alternatives than they once did, including bottled and sparkling water, energy drinks, sports drinks, flavored seltzers, protein drinks, bottled smoothies, and all the rest. My favorite beverages of late have been Bai drinks (owned by Dr. Pepper/Snapple) and Poppi sodas (owned by Pepsi).

The Changing Face of Alcohol

What the world of sodas and sugary drinks has demonstrated is that drink choices have become much more fragmented (see last week’s article about changing habits around TV consumption, by the way, for a similar cross-industry comparative case). Nowhere is this more evident than in the universe of alcoholic beverages, however.

Before diving into the fragmentation question, however, it’s worth noting that in what feels like an increasingly unhealthy world where successful public health stories are few and far between, Americans are actually drinking less alcohol than they have in previous times, which is unequivocally a good thing. I’m not trying to cast judgment on drinkers here (I am one!), but alcohol consumption is tied to virtually every major healthcare issue, as well as so many decidedly negative social habits like domestic violence, problematic gambling, and child neglect. If Americans could collectively drink less, we’d all be better off.

And there is good news on that front. Gallup has been asking Americans about their drinking habits for nearly 90 years, and in its 2025 survey just 54% of American adults said they drink alcohol, which was the lowest percentage Gallup has ever recorded. It’s not just that there are more people abstaining entirely, either. Among those who do drink, Gallup also found people are drinking less frequently and consuming fewer drinks when they do.

The industry data tell much the same story. According to IWSR, the total volume of alcoholic beverages consumed in the United States fell about 5% in 2025. Beer and wine volumes were each down about 6%, while other types of mixed drinks dropped by 4%. One notable exception? Non-alcoholic beer volume increased by 15%!

There are probably a bunch of reasons for all of this. Health consciousness is certainly one of them. For decades, conventional wisdom even held that a modest amount of alcohol (particularly a glass of red wine) might actually be good for you. That belief has changed dramatically. In 2018, only 28% of Americans told Gallup that moderate drinking was bad for your health. By 2025, that figure had risen to 53%, the first time a majority of Americans had taken that view. Only 6% now say moderate drinking is actually good for your health.

As a quick aside, a few years ago I listened to a podcast episode from the series Maintenance Phase that traced much of the misperception that red wine is good for you to a 1991 episode of 60 Minutes called “The French Paradox,” which purported that one reason why the French were so healthy is that the wine and cheeses they eat are actually beneficial to them. In reality, this was really just some extraordinarily good marketing, as most doctors now believe that to obtain the purported benefits of the antioxidants in red wine, you would have to drink so much of it that it would overwhelm your liver and other organs, thus, of course, negating the benefits. You can find that podcast episode here, but fair warning, it may undermine a part of your joy of a glass of red wine after work.

A second quick aside: the New York Times had an article last weekend about how sales of red wine have dropped so much that some California winemakers are burning their crops. There is an interesting story there about how interest in Pinot Noir grew substantially after the moving Sideways came out, but have been dropping in recent years as consumers look to other types of drinks.

Red wine or not, younger generations appear to have a different relationship with alcohol than their parents and grandparents did. Drinking is not necessarily disappearing from social life, but abstaining or having one drink instead of three no longer seems quite as unusual. Terms like “sober curious” have entered the lexicon. Dry January has become a genuine cultural phenomenon (I have done it the past three years and have basically enjoyed it every time, or at least have recognized the importance and benefits of it). Ordering a nonalcoholic beer at a bar no longer carries quite the same stigma it might have 20 years ago.

I think at least a part of this is that drinking can be expensive, too, especially if you go out to drink. A lot of younger people are living so close to the line right now, that they may be drinking less alcohol simply as a way to save money. And I suppose this economic reality is hitting people of all ages, which is maybe part of why people are drinking less.

But the choices and the quality of products have gotten a lot better, too. It used to be that not drinking meant having a Diet Coke while everyone else had a beer. Today, virtually every grocery store has nonalcoholic beers, mocktails, sparkling drinks, botanical concoctions and other products specifically designed to give people the ritual and social experience of having a drink without the alcohol. I will actually order a non-alcoholic Athletic Brewing beer from time to time when I’m out, and it actually tastes just like a normal beer and gives me the positive sensation of drinking one even if I don’t feel like consuming alcohol that particular night. I heard a new term to me recently called “striping,” where young people will go out and they will rotate a non-alcoholic beer between each alcoholic drink, basically as a way to slow themselves down and not get too drunk or feel too hungover the next day.

There is also considerably less cultural awkwardness surrounding not drinking. A growing number of celebrities have spoken publicly about sobriety or have actually gone into business selling alcohol-free products. Spider-Man star Tom Holland has been sober for several years and founded Bero, a line of nonalcoholic beers. Elton John recently marked 36 years of sobriety while promoting his own alcohol-free sparkling wine. Rihanna announced that she went the entirety of 2024 without drinking. Even President Donald Trump doesn’t drink, a noble and worthy effort that can be acknowledged even if you’re not a fan of the guy.

None of this means America is about to become a nation of teetotalers. In fact, most buyers of nonalcoholic beer, wine and spirits still drink alcohol themselves (like me). Consumers increasingly seem less interested in identifying themselves as exclusively one kind of drinker. You might have a beer at the barbecue on Saturday, drink sparkling water at dinner on Sunday, have a Celsius on Monday morning, a protein shake after working out on Tuesday, order a mocktail at a restaurant on Wednesday and have a glass of red wine (public health studies be damned!) on Friday night.

This is basically the same phenomenon that has occurred in the soda aisle. For decades, beverage companies could count on enormous numbers of consumers repeatedly purchasing basically the same handful of drinks. Coke competed with Pepsi. Budweiser competed with Miller. Coffee competed with tea. The categories were comparatively simple and the loyalties were strong.

But today, a bottle of Coke isn’t merely competing with a bottle of Pepsi anymore. It might be competing with a flavored water, a Poppi, a Celsius, an iced coffee, a kombucha, or something that hasn’t even been invented yet. A Bud Light is competing not only with Coors Light but with a White Claw, a canned cocktail, an Athletic Brewing nonalcoholic beer, or simply the decision not to drink anything alcoholic at all. And so the beverage industry is responding exactly as you would expect it to: by fragmenting right along with the consumer.

More Choices, Smaller Kingdoms

I don’t think Coca-Cola’s economic moat is disappearing anytime soon. It still sells roughly 2.2 billion servings of its beverages around the world every day, which is an almost incomprehensible number. But the nature of that moat is changing. As discussed at the outset, the long-term success of Coca-Cola in the future may depend a little less on convincing everyone to drink Coke, Diet Coke, Coke Zero, or Sprite, and a lot more on making sure that, whatever you decide to drink instead, the Coca-Cola corporation owns that too.

Pepsi is doing the same thing. So is Keurig-Dr Pepper. And beer and liquor companies are increasingly moving in that direction as well. Rather than betting that consumer tastes will swing back to where they were 20 or 30 years ago, they are trying to build portfolios broad enough to benefit wherever tastes go next. I have friends who own a great brewery here in Maine, and in recent years they have continued to brew great bear, but have also expanded to hard seltzers, which have been wildly popular, especially with younger consumers, and great for these people’s growing company.

For consumers, more choices are a good thing. The products are getting better, and more varied. If people want less sugar, somebody will make a lower-sugar drink. If they want more protein, someone will put protein in it. If they want the taste of an IPA without the alcohol, breweries will figure out how to make one.

The economics lesson about economic moats is actually that the widest competitive moats don’t necessarily protect companies from changing consumer behavior, but they do give the best companies more resources with which to adapt to it. That may seem unsettling in that the big corporations continue to win by gobbling up the little guys, and certainly it remains hard to scale up if you’re a small producer. But on the other hand, fragmented tastes and the willingness to buy up good products even if they exist on only a small scale does provide great opportunities for upstart beverage companies who have drinks that meet certain niches. Sometimes those smaller companies actually better anticipate and react to changing drinking habits before the big corporations see what is happening. Maybe it’s possible to compete with Coke after all.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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As an Elder Millennial, I can just barely remember the television in our family living room from when I was a child, the one where you had to get up off the couch and walk over to the box to turn a knob when you wanted to change the channel or adjust the volume. I also remember certain seminal cultural events that we watched together on TV. I’m going to show my age (young to some readers and old to others) by saying that one of the first things I remember watching as a family was the 1988 American League Championship Series between the Oakland A’s and the Boston Red Sox. The Red Sox were swept, but what I remember most was the intensity of Oakland pitcher Dave Stewart. Even through the television screen, he seemed terrifying.

I remember watching a lot of PBS growing up, too, including the usual shows like Sesame Street and Mister Rogers’ Neighborhood, but also deeper cuts like 3-2-1 Contact and Square One. I remember watching Family Feud when the network interrupted the broadcast to announce that Operation Desert Storm had begun in Iraq. I was amazed (and maybe slightly nervous) at the green night-vision images of missiles and air defenses crossing the sky.

Later in the 1990s, I of course remember “Must See TV.” I can still almost recite NBC’s entire Thursday-night lineup, including Friends, Seinfeld, and Frasier. I can vividly remember O.J. Simpson and the white Ford Bronco. I remember presidential debates, Super Bowls, storm coverage, and television finales that seemed to be watched by nearly everyone.

Even as a child, you felt as though you were part of a larger togetherness surrounding these events. It was a kind of monoculture, in which Americans were brought together around their television sets not only with their families and friends, but as part of a vast network of viewers across the country, all tuned in at the same time to watch the same thing. The next morning, people talked about what they had watched. You could reasonably assume that a meaningful percentage of the people around you had seen the same program, heard the same news, or watched the same game. Such is not the case today (other than sports…more on that below).

The Last Great Television Product

There has been plenty written about how the decline of television news has shaped (or perhaps de-shaped) our civic understanding of political and societal events. There is no Walter Cronkite today to tell Americans how it is. Although, as my friend and fellow Substacker Michael Socolow would point out, television news has been and remains one of the most profitable programs the traditional networks produce. Even today, there is still a large enough audience and sufficient public interest in the news to keep the product alive.

Even so, longstanding premium news brands have found themselves in turmoil. 60 Minutes, once the most stable and prestigious institution in American television journalism, has recently experienced its own internal upheaval. Socolow, who is a media historian and journalism professor at the University of Maine, predicted on X this week that 60 Minutes ratings will decline this fall and that the greatest beneficiary of the changes at 60 Minutes may be the competing product in the same Sunday-evening time period: NBC’s Sunday Night Football.

Professional sports remains the one category capable of reliably bringing millions of Americans (and, in the case of events like the World Cup, billions of people around the globe) back to a shared live broadcast. That is why the rights to broadcast sports have become so extraordinarily expensive. The NFL’s core national media agreements are worth roughly $10 billion per year, divided among the different networks and streaming services. Amazon alone pays approximately $1 billion annually for Thursday Night Football. The current agreements run through the 2033 season. As I wrote about recently here, that is one of the main reasons (other than prestige) why professional sports teams have become so valuable; it’s because the owners are all getting a piece of these lucrative TV contracts.

The NBA’s latest package of agreements with Disney, NBCUniversal, and Amazon is reportedly worth approximately $76 billion over eleven years. The 2026 FIFA World Cup was also an enormous commercial event for its American broadcasters, with Fox and Telemundo having paid hundreds of millions of dollars for the rights, but then generating hundreds of millions of dollars more in advertising revenues.

People may be shocked by these figures, but Americans love sports. So does the rest of the world. Networks, streaming companies, and their advertisers desperately want access to those audiences. And just as importantly, there are fewer and fewer monoculture-style events left on television. Sports are virtually the only game in town for broadcasters hoping to assemble a huge audience at a specific hour on a specific night so that they can then sell ads to companies trying to reach that mega-audience. That scarcity makes sports even more valuable.

And yet even in the sports world, there is a bifurcation at play, a splitting of the audience that is reflective of this changing media landscape, not just away from network TV, but away from TVs altogether.

What Changed?

To watch every NFL game during the upcoming 2026 season, a viewer would need access to CBS, NBC, ABC, Fox, ESPN, Amazon Prime Video, Peacock, the NFL Network, and Netflix of all things, which now has the exclusive rights to Christmas games, a Week 1 international game in Australia, and a new Thanksgiving Eve game. (Just as a quick aside, I am a huge NFL fan, and it’s getting to be too much. I don’t want to have NFL games five nights a week. Part of the fun of football is that it was previously consolidated into Sunday and Mondays, but now Thursday Night Football is a regular thing and the NFL has added in Thanksgiving Eve and Black Friday games. Give us a break! I would say the NFL risks oversaturating its product, but professional football in America is as popular as ever, so who knows).

My gripes about football inundation aside, it’s fair to say that more competition in the television arena has been good for consumers in many respects. It has certainly made television more interesting. There are hundreds of viewing options today, whereas when many of us were growing up there were barely five options, which was just the traditional big network broadcasters of NBC, CBS, ABC, and eventually FOX. The television viewer of 40+ years ago could only dream of the choices available today.

The Television Is Now a Computer

I would submit to you that something has been lost in the ubiquitousness of TV options. We have gained nearly unlimited choices, but we have lost the experience of watching together. And the experience is different now, too. Cable television expanded the number of available channels. Digital cable expanded it further. The internet made it possible to deliver video without a traditional broadcast tower or cable connection. Broadband speeds increased. And what happened is that smart televisions, Roku devices, Apple TVs, Amazon Fire Sticks, smartphones, and tablets turned nearly every screen into a television. I suspect that for many kids today, the idea of a “television channel” is as foreign to them as a home phone line or a “computer room,” which was another relic of our family household growing up.

For all the talk about Netflix, Amazon Prime, Disney+, and all the others, YouTube may be the most consequential of them all. For an increasing number of people, particularly younger people, YouTube has effectively replaced television. It provides entertainment, news, education, music, sports highlights, political commentary, podcasts, product reviews, exercise videos, documentaries, and nearly everything else that television once provided. I have been shocked observing my own kids as they grow up how their interest is never for Spectrum TV. Not in a hundred years would they ask to turn the TV on to watch a traditional cable station. What they do ask for (incessantly) is to watch YouTube, and occasionally Disney+ or Netflix.

There are huge differences here in television habits today versus even 15-20 years ago let along 30-40+ years ago. Viewers today do not have to select from a predetermined schedule (other than for live sports or breaking news, but even breaking news is more typically consumed by young people on social media than on a traditional television). People can watch precisely what they want, precisely when they want it, for precisely as long as they want to watch it. More people watch YouTube than any other individual media distributor, certainly more than the traditional TV networks. And people aren’t watching it on your typical grandmother’s television set.

Separate Worlds

The fragmentation of entertainment may seem to be mostly harmless. One person watches a British murder mystery, another watches Project Runway, and someone else watches a forty-minute YouTube episode of trick shots or practical jokes. The problem, as I see it, is the separateness of it all. At any given moment, each member of a household may be watching “TV,” but one person is watching it on their phone, another on a TV in their bedroom, another in the living room, and another on a tablet. Something certainly is lost there.

The fragmentation of news is consequential in its own way. The monoculture of the network-news era had plenty of shortcomings. A small number of executives and anchors exercised enormous control over which stories Americans saw and how those stories were presented. The old system should not be remembered as perfectly objective, comprehensive, or democratic, but it did give Americans something resembling a shared starting point.

Today, audiences have decamped into separate informational worlds. One person’s understanding of the news may come from Fox News. Another’s may come from MSNBC. Someone else listens to podcasts. Another person gets information from TikTok, Facebook, YouTube, X, or a Substack newsletter written from a couch in Bangor, Maine.

A majority of American adults now say they receive at least a portion of their news through social media. The algorithms behind those platforms become individual assignment editors, deciding which stories, videos, and opinions each person is most likely to click on. That means two neighbors can live on the same street, send their children to the same school, and vote in the same municipal election while experiencing almost entirely different versions of national and local events. It is not merely that people disagree about the meaning of the news. Increasingly, they are not even being shown the same news.

I’ve shared this quote before from former New York senator Daniel Patrick Moynihan, who said, “Everyone is entitled to their own opinion, but not their own facts.” I love the quote, but I’m not so sure about the question of facts today, as people are being spoon-fed entirely different realities by those who show up in their social media fees. People see facts entirely differently from one another. The common foundation of understanding between us has been significantly weakened.

What Comes Next

Technology has not only expanded our choices, it has changed our expectations and, perhaps, our brains. There is significant evidence out there that our attention spans are getting shorter, particularly in young people just coming of age, who have lived their entire lives in a bombardment of online stimulation.

I cannot honestly tell you the last time I watched traditional network television for anything other than sports. I do also like to turn on the local news from time to time, which I have a real fondness for. Occasionally, under random circumstances, I will turn on SportsCenter, but even that is obviously sports-related. Sometimes I will watch Saturday Night Live, often when I am buttoning up the final paragraphs on these articles. When I do, the thing that stands out to me is just how many commercial breaks there are during a Sportscenter or SNL broadcast. The experience now feels almost comically slow. The hosts discuss one subject, there is a short set of clips or a skit, they tease what is coming next, and then disappear for several minutes of commercials. By the time the program returns, I may have checked my email, read two news stories, watched a video on my phone, and forgotten what SportsCenter had promised to show me, if I ever have the TV still on to begin with.

I grew up with commercial breaks (“After these messages, we’ll be riiiight back!). I remember when the commercials were unavoidable unless you left the room to get a snack. Younger viewers have grown up in a completely different environment. They can skip, scroll, swipe, pause, accelerate, or abandon almost anything the instant it stops holding their interest. Even when streaming services include advertisements, the interruptions are often shorter and less frequent than those on traditional television and sometimes you can watch for five seconds and then skip through them.

Younger viewers have significantly less tolerance for programming that does not respect their control over their time, or that does not cater to their short attention spans. A television show constructed around eight minutes of programming followed by four minutes of advertising is asking them to accept a bargain they have rarely had to make elsewhere, and I suspect this is part of why the future for traditional network TV is particularly bleak.

What Was Lost

Again, this is not really meant to be an argument that television was better when we had only four channels. More voices can now be heard today. Niche interests can support entire communities and businesses. Independent creators can reach millions of people without first receiving permission or approval from a television network. A child interested in airplanes, fashion, baseball statistics, or the history of ancient Rome can find hours of high-quality programming instantly. This is remarkable and, in many ways, should be celebrated.

But something has been lost in the transition, and that something is the simple act of coming together. Watching TV was once both a private family activity and a public civic activity. We sat in our individual living rooms, but we knew that millions of other people were sitting in theirs, watching the same images at the same moment. We felt emotions together, in a way that brought people together regardless of whether those emotions were joyous or sorrowful.

What comes next for television is probably more fragmentation, followed eventually by some form of re-bundling. Consumers are already discovering that subscribing to ten separate streaming services can be every bit as expensive and annoying as the cable packages of olden times. The companies, in turn, are beginning to bundle their products together again.

Live sports will continue to function as television’s anchor because sports lose much of their value when they are not watched live. A drama can wait until Tuesday. The fourth quarter of the Super Bowl cannot. News will also survive on television, particularly during elections, wars, storms, and other major breaking events, but again, many people, especially young people, now consumer their “news” through Facebook, TikTok, and all the rest.

But the broader monoculture is probably not coming back. We have too many choices, too many screens, and too many algorithms designed to give each of us a personalized version of the world. The days of all watching the same thing together at the same time are passing away. It’s fair to ask, then, what is left to bring people together?

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Here in Bangor, Maine, many property owners are getting a rude awakening this week as updated property tax bills start to show up in their mailboxes courtesy of City Hall. This has been the result of a city-wide revaluation of properties, and the impacts on many of those letter-openers have been quite significant thanks to the combination of rising property values over the past several years and a steadily increasing municipal budget overall.

Here in Maine, cities and towns are almost entirely dependent on property taxes to pay for local services. Every dollar of state sales tax, income tax, meals and lodging taxes, and even the revenue from speeding tickets written by local police officers goes to the state budget in Augusta, leaving municipalities with primarily one clunky source of revenue for themselves: the property tax.

It’s not just a Maine thing, though. Property taxes are on the rise throughout the country, not just here in the Northeast. Why? Well, a generally inflationary atmosphere that has impacted individual and family budgets has hit city budgets, too. Just as the costs of materials, repairs, and supplies around the house have increased in recent years, so too have these same types of expenses for cities and towns. Plus a significant portion of a city budget is personnel, and if you want to attract and retain employees in today’s economy, you of course have to pay them. A good portion of municipal labor pools are unionized as well, so city governments can typically expect annual wage increases of 3-5%+ under negotiated contracts.

But the cost of local government has also outpaced the general rate of inflation, so rising costs are not the only story. In 2015, total property tax revenues collected nationwide were about $526 billion. If that figure had simply kept pace with inflation over the past ten years, total collections in 2025 would have been about $741 billion. But the actual total of property taxes collected nationwide in 2025 was $834 billion, which is roughly 59% more than in 2015.

One reason for the increase in property taxes is that more costs have been shifted to local governments. Federal and state governments can and do issue all manner of unfunded mandates for cities and towns to comply with that don’t necessarily come with funding attached to them. These types of requirements are a constant challenge for local leaders to navigate.

But the other big reason why city budgets are swelling is that people actually like municipal services. People like the idea of fiscal restraint, and no one wants to see wasteful spending. But take it from me, after previously spending nine years on the Bangor City Council (2011-2020) including two years as mayor of Bangor, once you start to actually make meaningful cuts in order to reduce the budgetary impact to taxpayers, people often get even more upset about those cuts than they do about their rising taxes. People like their public works, police, fire, and schools, and the local library. I think there is always some fluff you can find to cut out of a local budget with relatively little impact, but this is typically only small items with a relatively meaningless impact to the budget’s bottom line.

So people understandably want it both ways: they want the municipal services they expect (and, indeed, often truly need), and they want taxes to remain low or at least reasonable. How we actually solve that problem here in Maine and elsewhere is beyond the scope of today’s article. Tax reform is simultaneously politically complicated and incredibly dry. It’s not exactly the type of issue that gets candidates for governor or the state legislature and their followers fired up on the campaign trail.

But all of that is a bit of a digression from today’s topic, which is what happens when property taxes increase by, say, 15-20% in a single year, or 20-40% or more over several years. For some homeowners, especially those living on fixed incomes, those increases create a very real financial squeeze and, sadly, may even force some people out of homes they otherwise could have continued to afford.

But what about rental properties? That is the subject of today’s analysis.

Do Rents Rise When Property Taxes Go Up?

Property taxes are one of the key expenses in the cash flow budgets of rental property owners. In many businesses, when the cost of inputs rises, those increases are ultimately passed along to customers. A restaurant paying more for beef may raise the price of a hamburger. An airline facing higher fuel costs may increase ticket prices. A manufacturer paying more for steel often charges more for the finished product. It is natural to assume rental housing works the same way, which means it would be equally natural to assume that when property taxes go up, that cost simply gets passed along to the “customers,” which in this case is the tenants, in the form of higher rents.

In fact, during this whole discussion over Bangor’s higher property tax bills over the past few weeks, I’ve seen more than one landlord whom I’m Facebook friends with commenting on their own posts or on other people’s threads with some version of, “Welp, I guess we’re going to have to raise rents.” The implication is that it is the City Council forcing their hand, so they should be seen as the bad guys when rent increases are passed along to tenants. Rents here have already risen substantially over the past five to ten years, matching trends seen throughout much of the country, and no one wants rents to continue climbing, least of all renters, nor would I expect any local officials to want this to happen either.

One of the challenges for rental property owners is that many of the costs of owning real estate have increased dramatically over the past several years. These include property taxes, certainly, but also insurance premiums, repairs and renovations, and the cost of borrowing as interest rates are still a lot higher than they were 5-7 years ago. In fact, I have little doubt that these rising ownership costs are one of the reasons rents have increased so much over the past decade. Landlords have, in many cases, been able to pass at least some of those higher costs along to their tenants.

But a lot of the frenzy has eased from the housing market, both with regard to single-family home purchases and rental real estate. What some property owners and landlords may come to realize is that rents are not entirely determined by landlords’ costs. They are determined by the market.

I realize it may sound somewhat callous to describe housing as simply another market, but I’m speaking in economic terms. Rental housing is a business, and like virtually every other business, pricing is ultimately determined by supply and demand. What this means is that even if property owners want (or genuinely need) to increase rents to cover rising costs, they can only do so to the extent that the market allows. The question of what the market will bear is not determined by property tax levels, per se, or by any other individual expense or combination of expenses. Instead, it is determined by the overall supply of available housing, vacancy rates, local population trends, wage growth, employment conditions, and all sorts of other broader economic forces.

One particularly interesting rental market that I have written about several times over the years is Austin, Texas. It’s a case study I keep coming back to in The Sunday Morning Post, and one that policymakers all over the country should be aware of. The Austin City Council is currently working through a budget that includes a property tax increase of roughly 6-7%. But you can be fairly certain that many rental property owners there will not be able to pass those higher taxes on to tenants, because Austin rents have been declining, and they’ve been doing so more than almost anywhere else in the country.

Why? Because Austin experienced a massive wave of new apartment construction over the past decade. Thousands of new units entered the market, dramatically increasing the housing supply. That increase took much of the frenzy out of the rental market and gave tenants more choices. The competitive leverage shifted from landlords to renters. Property owners suddenly found themselves competing more aggressively for tenants who suddenly had many more choices on where to live, and rents declined.

The Pew Charitable Trusts recently summarized the situation in Austin as such:

Starting in 2015, Austin instituted an array of policy reforms aimed at encouraging the development of new housing, especially rentals. The city changed zoning regulations to allow construction of large apartment buildings, particularly near jobs and transit. In 2018, voters approved a $250 million bond measure to build and repair affordable housing. Permitting processes were reformed to speed development and reduce costs.

The efforts worked. From 2015 to 2024, Austin added 120,000 units to its housing stock—an increase of 30%, more than three times the overall rate of growth in the United States (9%).

Rents fell. In December 2021, Austin’s median rent was $1,546, near its highest level ever and 15% higher than the U.S. median ($1,346). By January 2026, Austin’s median rent had fallen to $1,296, 4% lower than that of the U.S. overall ($1,353). This decline occurred even though the city’s population grew by 18,000 residents from 2022 to 2024.

To underscore what I’ve highlighted above, during a period when rents nationwide were generally increasing, Austin rents fell by $250 per month, or just over 16%.

The policy implications are clear: If you want to improve housing affordability, increasing the supply of housing is one of the most effective tools available. That means encouraging new construction through zoning reforms, permitting improvements, and other policies that make it easier to build, if not outright subsidizing construction.

But there is an equally important lesson for rental property investors. While it is certainly necessary to understand your own expenses and cash flow, it is equally important to understand the broader market in which you operate. Investors should pay close attention to the pace of new housing construction, vacancy rates, local employment trends, population growth, and wage growth. Those factors are going to have a greater influence on future rents than whether your own property tax bill went up this year.

Fortunately for many rental property owners, dramatic market shifts like those seen in Austin are relatively uncommon. In much of the country, housing construction remains well below what economists believe is necessary to meet demand. New apartment projects can take years to move from planning to completion, and restrictive zoning, labor shortages, financing costs, and higher construction expenses have all slowed the pace of new development. That means housing supply often changes only gradually, allowing rents to remain relatively stable (or continue rising) in many markets despite higher operating costs.

Austin represents an unusually large and rapid increase in housing supply, making it one of the clearest examples in the country of how market forces can outweigh rising operating expenses. Most cities are unlikely to experience that kind of dramatic shift anytime soon. Nevertheless, the underlying economic principle remains the same regardless of location: landlords don’t set rents based solely on what they need to charge; they set rents based on what competing properties are charging and what tenants are willing and able to pay.

So, do higher property taxes lead to higher rents? The answer is yes—and no. Higher property taxes certainly increase the financial pressure on rental property owners, just as rising insurance premiums, maintenance costs, and interest rates do. Those higher costs create a strong incentive for landlords to raise rents whenever leases come up for renewal.

But incentives and outcomes are not always the same thing. In the end, rents are determined by the marketplace. In communities with limited housing and very low vacancy rates, landlords may be able to recover a good portion of those increased costs by raising rents, and they probably will. In communities with abundant housing and intense competition among property owners, they may recover very little or even experience losses themselves as the result of significant property tax increases.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Greetings from Bangor, Maine, where I am writing from my home office (actually, at the moment, from the couch) after spending the past six days on vacation in Prince Edward Island, Canada. We had a great trip that included some beaches, hikes, lots of Cows ice cream, and time spent tracing part of my wife’s family’s Scottish heritage on the island. Some of her relatives are buried quite literally around the corner from the Anne of Green Gables Heritage House. You just walk through the Haunted Woods and there they are.

Tensions have been high between the United States and Canada over the past two years, at least to the extent that it’s possible to have tensions with a Canadian person — they are all just so nice. But American politics were on our Canadian hosts’ minds, for sure. Several Canadians we spoke with on our trip wanted to talk about Donald Trump, and a couple different people also brought up the recent trials and tribulations of Graham Platner (i.e. “What is going on down there anyway!”).

The Canadians we spoke to were unfailingly welcoming of us, even if they carried some resentments about the policies and statements of the American president. More than one went out of their way to proudly tell us they would normally come to The States periodically for vacations, shopping, or to visit family members, but they mostly all shared a similar version of, “We’re simply not going to come as long as that guy is president.” “We’ll be back in three years,” they said, often with a humble add-on, “If we make it that far.” Come to think of it, I’m not sure if they meant if they would make it three more years, or if the United States would.

Canada Wants You*

America’s losses have been Canada’s gains over the past two years, at least with regard to the movement of people. Scores of Americans have moved north for ideological reasons, or just for a different pace of life. But politics and, sadly, fear, have been a big part of it. I have an LGBT friend a generation older than me who has been scoping out plans to move from Maine to Nova Scotia because she and her partner are afraid of what might come for them if certain political trends continue. There are plenty of anecdotes of people of color here in the United States feeling much safer north of the border than they do here. There is the human side to that, first and foremost, but I also worry that Trump’s current immigration policies and the general climate of disdain for immigrants and people of color is going to cost the United States a generation of entrepreneurs, doctors, scientists, and more.

Canada is trying to take advantage of this by actively recruiting Americans, especially those in certain professions. Last December, a Canadian rule was changed to allow extended citizenship opportunities to those born abroad (including in the United States) who can show they have a Canadian ancestor, and not just one generation back. If your parent, grandparent, great-grandparent, or ancestors even further back were Canadian (and you have documentation to prove it), then the Canadian government considers you to be Canadian, too. In their own plucky way, Canada now simply recognizes all of these Canadian descendants as citizens automatically. People can apply for proof of Canadian citizenship to validate their claims, a process that involves paperwork and documentation of the ancestral link, but those with Canadian ancestry are already considered to be Canadian citizens under the law (they just would not have many true rights as Canadians, such as a passport, ability to work in the country, etc. without going through the proof of citizenship process; the default into being Canadian is kind of symbolic unless you go through the proof of citizenship process).

The rule change opened up the possibility of true, active Canadian citizenship to millions of people. This has sparked significant activity here on the American side of the border, particularly in states like Maine, where huge portions of the population have some Canadian roots. The Bangor Daily News noted recently that genealogists have been especially busy on both sides of the border responding to inquiries for documentation of Canadian ancestry. I’m just guessing here, but I would estimate that at least half of Mainers can trace at least part of their lineage to a Canadian, particularly among our sizeable French-Canadian populations and those like my wife with some Scottish-Canadian roots. I have New Brunswick relatives three generations back on two branches of our family tree, so I think technically under the late 2025 rule-change, maybe we are now Canadians, eh?

There’s a Catch

This week’s article was sparked by a conversation I had on our trip with an old-timer who was mowing the lawn at our AirBNB in Morell, Prince Edward Island, who said they are getting a lot of doctors moving to the United States from Canada. Oh really, I thought. Recruitment and retention of healthcare workers has also been a problem here in Maine, so I was curious about the claim. Sure enough, there is plenty of anecdotal evidence of doctors and nurses moving into Canada. The province of Nova Scotia, for example, claims 33 new American doctors moved there in the year ending March 31, 2026, up from 12 the year before. British Columbia and some of the other more rural provinces boast similar influxes of American medical workers.

Contrary to what I expected, though, from a kneejerk understanding of American migration into Canada, there is actually not some super significant flow of people across the border northward. In fact, according to some statistics, the number of Americans moving into Canada is actually on the decline, while the number of Canadians moving out of the country including to the United States is increasing. The primary motivation? Not necessarily politics or ideology, but economics, as many Canadians are finding they can earn more in the United States and elsewhere than they can in Canada. The same lawnmowing old-timer also told me how hard it was to get started in Prince Edward Island these days — high prices for gas, groceries, and exorbitant real estate prices. “You can’t make it here right now, at least not if you’re young,” he said sadly. We can confirm gas prices are, indeed, really high in Canada right now.

So What is the True Story?

The Canadian government’s immigration policies and procedures are actually much more strategic and calculated than you might think. Rather than be essentially open to all comers, Canada’s platform on immigration is inextricably linked with labor market economics. The country prioritizes high-demand fields and skillsets rather than some more amorphous yet equitable process for open applicants. Healthcare professionals, skilled tradespeople, engineers, software developers, teachers, transportation workers, and French-speaking applicants (almost regardless of field) often receive preferential consideration in the inbound Canadian migration process because those are areas where employers across Canada from British Columbia to the Maritime Provinces are struggling to find enough qualified workers.

What this looks like in practice is that applicants for citizenship or for work permits may get priority spots “in line” if they are a part of one of the highly desired fields of work. Mechanisms have been put in place to expedite applications from people in these key groups. The Canadian government actually has a website set up to rush immigration processes for medical professionals, for example, including the ability to get a work permit processed in just 14 days.

Canada still offers pathways for immigrants from a wide variety of backgrounds including refugees and those fleeing political violence, but the system reflects an intentional economic philosophy that immigration should help solve labor shortages, support the economy, and address demographic challenges such as an aging population by bringing in younger and more technically-skilled workers. Whether one agrees with that approach or not, it is a much more targeted strategy than many people might assume when they think about Canadian immigration.

So Where Does that Leave Us?

I’m going to admit something, which is that when I started writing this week I was preparing to write about how there is this steady flow of Americans into Canada, largely, I assumed, for political and ideological reasons. And there is, indeed, plenty of this happening, such as with my friend who fears for the future in an America that feels increasingly hostile to her and her partner. This is akin to when many Americans left the country in the late 1960s or early 1970s to avoid the Vietnam War or simply because they just couldn’t abide American politics any longer. The movement of Americans across the border to Canada has a similar feel to it today.

But the selectiveness of the Canadian immigration apparatus surprised me when researching it further. For those who are not in a select field of work, the process of immigrating to Canada can be lengthy, frustrating, expensive, and ultimately, unsuccessful. So there is not this huge rush of Americans across the border in part because the Canadian system is not set up in a way that is conducive to free-wheeling inbound migration. I was also surprised by the statistics that just as many people are leaving Canada as are entering.

So in the end, my conclusion is this: politics between the United States and Canada are hot right now, and probably will remain that way for the next 2.5 years, give or take. And despite our interactions this past week with locals who refused to travel to the United States and spend any money here as long as Trump is president, plenty of Canadians are moving here even as many Americans leapfrog them back across the border to the north.

The truth, as usual, is more complicated than the headlines. Yes, some Americans are heading north in search of a political climate that better matches their values or simply for a different way of life or to a place that feels safer and more welcoming. At the same time, plenty of Canadians are looking south or elsewhere for better-paying jobs, more affordable housing, and greater economic opportunity. Politics may influence where people want to live, but economics still has an extraordinary way of influencing where they actually end up. And lastly, although we think of Canada as this progressive expanse much more liberal than the United States, the way their immigration system is set up is much more tactical and calculating than one might think.

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Author’s Note

Interested in more Canada content? Check out these articles from The Sunday Morning Post archives:

May 4, 2025: Canada Elects a Banker

April 13, 2025: Travel to the United States Declines

March 9, 2025: It’s Hard to Tariff a Pencil

Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Ever since The Jetsons first aired in 1962, Americans have been anticipating a future with flying cars. We haven’t gotten there yet. But we are getting close with regard to another futuristic driving mechanism: the self-driving car. The pace of progress toward fully automated vehicles has accelerated within the last year, almost to the point that I have been wondering lately whether my own kids (all still under the age of 13, but just barely) will actually ever have to learn how to drive a car, or if the future is advancing so fast that driving will be almost entirely automated by then. I suspect we’ll still be in-between for at least the next decade, but like I said, the future is coming fast.

On the Roads Today

Self-driving vehicles are not some far-off conceptual thing; they are on the roads right now. Perhaps the best-known example is Tesla, whose Full Self-Driving system is now being used by hundreds of thousands of drivers across North America. While it still requires the driver to remain attentive (in theory) and ready to take over at any moment, the technology is already capable of navigating city streets, highways, intersections, parking lots, and complex traffic situations with surprisingly little human intervention. There have been some high-profile fails of this system, although they were often during testing phases, and by all accounts the technology has improved significantly over the past year.

Equally impressive are companies like Waymo, whose robotaxi vehicles are already operating without human drivers behind the wheel in cities including Las Vegas, Phoenix, San Francisco, Los Angeles, and Austin. Passengers simply summon a vehicle through an app, climb into an empty driver’s seat, and let the car do the rest (often to their complete delight, numerous videos of which can now be found on YouTube). Millions of fully driverless rides have now taken place, with an increasing likelihood that these robotaxis will expand to many other cities and beyond in the months and years ahead.

Other automakers and technology companies including Mercedes-Benz, General Motors, Amazon’s Zoox, and several Chinese manufacturers are investing billions of dollars in autonomous driving. The race is on to see who can best perfect this technology (but also how quickly the public will embrace it).

Is This Trend a Positive One?

Admittedly, I actually kind of like to drive. I suspect many others feel the same way. For me, it’s not about the car itself, but the Zen state you can find yourself in on a long car ride. Some of my best ideas have come during “windshield time,” often listening to podcasts or just relaxing music.

I think something would definitely be lost if we end up in an entirely self-automated driving future. A feature of the trend will probably be some generational resistance to change, with older drivers (including me!) perhaps not giving up control of their steering wheels, while younger people who are coming of age will happily take the driverless ride. There will be an in-between for a while, until someday everyone is riding instead of driving.

There will be two primary benefits of a driverless future. The first is the value of our time. Even though I like to drive, like anyone I get tired after three- or four-hour trips, and as much value as I get out of listening to podcasts, I could still listen to those while simply riding in a driverless car. More likely, I could actually get some work done, read, play games with my kids on family trips, or sleep. It would be kind of like being on an airplane, just without all the extra time of having to get to an airport, wait to board, sit on the tarmac, and so on. The closer analogy would probably be riding on a train, but with the freedom to put in your destination’s coordinates and travel privately rather than being anchored to where the tracks go and surrounded by hundreds of commuters.

But the second benefit (and in many ways the more important one over the long haul) is safety. There are estimates that the lifetime odds of dying in a car crash are roughly one in 90 to one in 100, which is a remarkably significant number for something most Americans do nearly every day. Since we drive so much, the odds of dying on any single trip are extremely low, but in aggregate, human driving is one of the most dangerous activities most of us routinely undertake. Motor vehicle crashes remain one of the leading causes of accidental death in the United States and are the leading cause of death for teenagers (although, sadly, overdose deaths are catching up).

According to the National Highway Traffic Safety Administration, the United States experiences roughly 11.5 traffic deaths per 100,000 people annually. Many of these deaths are due to human error, or some form of poor decision making, broadly defined. In fact, researchers estimate that human error contributes to more than 90% of serious crashes. People become distracted; they text, speed, drive while tired, they drive while drunk. Humans are just that — human beings, and we are prone to poor decisions. Computers, on the other hand, don’t get sleepy, they don’t glance down at notifications on their phones, and they don’t take unnecessary, irrational risks.

The challenge for society will be this: there will be crashes with self-driving cars, crashes that would not have happened if a human driver had been in control. People will die in tragic and, unfortunately, high-profile ways as the early examples of deaths and injuries involving self-driving vehicles will become media flashpoints. Lawsuits will unfold and people will be fearful at such an inflection point in technology and its impact on the seemingly ordinary, everyday activity of driving.

At the same time, I have no doubt that statistics will eventually show self-driving cars will be significantly safer than vehicles driven by human beings. They probably already are, even though the technology is still relatively young.

That would be cold comfort to the family of a loved one who dies in an accident involving a self-driving vehicle, however. It will be easy for that family to ask whether the death would have happened if self-driving cars were not a thing. How will we react collectively as a society when these deaths and injuries begin to occur even if, on par, self-driving vehicles are far safer?

We’ve already had a glimpse. In 2018, a self-driving test vehicle operated by Uber struck and killed a pedestrian while testing in Arizona, becoming the first widely publicized pedestrian death involving a fully autonomous vehicle. The accident created headlines around the world, prompted investigations, and caused many companies to slow or suspend their plans for self-driving vehicles. Every future autonomous crash in the short to intermediate term will likely receive similar attention. Tens of thousands of people die each year because of human drivers, and most of those stories never become national news. A single fatal crash involving a self-driving vehicle and all of the technology and AI therein, however, will likely dominate the news cycle. Our emotional response to these tragedies will not necessarily include a nuanced understanding of statistical risk.

What Comes Next

If self-driving technology reaches its full potential, it will change the way we drive, and also impact all sorts of things in the economy. Think, for example, of how many jobs involve driving. There are the obvious examples of truck drivers, bus drivers, delivery drivers, and taxi/Uber/Lyft drivers. Those occupations could be almost entirely obsolete in 15-20 years, and maybe sooner. This will have vast impacts on the labor market. I suppose it is also possible that robotic drivers will also bring some costs down as the expense of moving people and things around will become less over time as the technology continues to improve and the costs are amortized out over many years.

But the trend towards driverless cars is also part of a related trend in auto manufacturing in general, which is that vehicles are increasingly not just brakes, axles, and engines, but have essentially become computers on wheels. The most valuable part of a car traditionally has been the engine, but it is becoming the AI found within the vehicle that makes driving decisions in real time.

Aspects of these changes will be decidedly positive. How does the insurance market change if the software is responsible for these driving decisions, for example, rather than human drivers? Maybe car insurance will cost less (although as I wrote about in October 2024, a lot of the new technology in cars is making auto insurance cost more and not less). Maybe it is possible that the elderly and people with disabilities will enjoy enhanced mobility and independence thanks to driverless cars. Maybe there will be significant positive environmental impacts as people care less about the robustness of the engine, and care more about the technology (many of these early self-driving vehicles are either entirely electric or hybrids).

But there will be other social changes, too, that may be more mixed, or not good or bad per se, just different. Some of these changes will be psychological. For over one hundred years, driving has represented freedom. Getting your driver’s license was a rite of passage into adulthood. Someday soon, however, driver’s licenses may barely exist as the majority of vehicle rides will be facilitated by automated technology rather than a human being who is licensed to drive.

History has a way of replacing activities we love with technologies that are, objectively, more efficient. Most of us no longer saddle a horse to travel across town, even if horseback riding remains enjoyable (to some…I never much cared for it). We no longer develop photographs in darkrooms or unfold paper road maps before every trip (unless you’re my dad). We adapted because the new technology solved real problems. My guess is that driving will eventually join that list.

We’ll probably miss it a little. Some of us may even insist on keeping a steering wheel for weekend drives on quiet country roads or the one-off road trip. But if autonomous vehicles ultimately save tens of thousands of lives every year while giving us back billions of hours otherwise spent behind the wheel, future generations may look back at manual driving the same way we look back at typewriters or rotary telephones: with a sense of nostalgia, appreciation, and just a little disbelief that we ever did it any other way.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Greetings and welcome to a Fourth of July edition of The Sunday Morning Post. If you’re reading this on the weekend it is being published, it’s an exciting time here in the United States, as we celebrate our semisesquicentennial. I’m reminded of the Mark Twain quote, “Don’t use a five-dollar word when a fifty-cent word will do,” but you only get so many chances to use “semisesquicentennial” in its proper context, so there you have it.

The truth is, I’ve actually been looking forward to this day since I was a child. I remember doing the math on 1776 and wondering if I would be alive on the occasion of the nation’s 300th birthday in 2076, (here’s hoping), but then calculating out that 250, which is a big milestone itself, was already within sight. And here we are!

I have always loved the Fourth of July, for all the traditional reasons you might think of. Parades, picnics, popsicles, fireworks, people coming together: what’s not to love? The Fourth of July was also my grandmother’s birthday, and that always felt particularly special (and her husband, my grandfather’s, was July 6th!). Actually, it’s still a big birthday time in our family — although my grandparents have passed, my wife, daughter, and I all have birthdays coming up in the next two weeks. July is a great birthday month.

All in all, I put the Fourth of July on even par with Christmas and Thanksgiving as my favorite holidays. But this year, despite the rosy and patriotic feelings I generally have for this truly American holiday and for all of the anticipation about the semisesquicentennial, this year’s celebrations feel underwhelming, at least for something as consequential as a 250th birthday party.

Today’s article is not going to be some grand treatise on the state of affairs here in the United States of America. I honestly wish I had the bandwidth and intellectual fortitude to write that piece right now, but I don’t. Maybe someday. It would probably need to be its own series. But I did want to share some thoughts on America at 250 as it feels like it would be a missed opportunity for the semisesquicentennial to pass without some Sunday Morning Post commentary.

How Did We Get Here?

There is a line in the Hamilton Cabinet Battle #1 song where the Thomas Jefferson character raps, “Life, liberty, and the pursuit of happiness. We fought for these ideals, we shouldn’t settle for this.” That line has been ringing in my ears off and on for, well, the past few years, but especially the past few weeks watching this country get ready for the Fourth of July. It just seems like things should be better — more fun, more exciting, more celebratory, and less dark — for something as significant as our country’s 250th birthday. The lasting image of this year’s celebration will probably be an algae-filled reflecting pool, or perhaps the UFC claw stage set up on the White House lawn. The fireworks in Washington D.C. were probably great last night (I wasn’t home to watch them), but the overall event has been marred by questionable attendance, dire heat, and the virtual politicalization of everything. On the one hand, people are upset that certain states (including Maine!) didn’t sent representation to the Great State Fair of America, while on the other, people are upset that much of the celebrations in nation’s capital have turned into a self-reverential shrine to one particular guy. You know who I’m talking about. And it’s not George Washington.

Americans are not feeling particularly good about their country these days. American pride is at a record low, with a Gallup poll out just this week saying that a mere 33% of U.S. adults are “extremely proud” to be an American, which is the lowest mark since the poll began in 2001. In a Pew poll, almost 6 in 10 Americans think the country’s best days are behind us. Majorities of both Democrats (64%) and Republicans (53%) feel this way, although they undoubtedly feel pessimistic for different reasons. A similar poll from the Associated Press and National Opinion Research Center found that 72% of Americans believe things are generally headed in the wrong direction. A majority of people believe the United States will be worse off in 2050 than it is today. The AP poll also showed 66% of Americans disagreeing with the statement “if you work hard, you’ll get ahead.” So much for the American Dream.

The Founders’ Forgotten Insight

The list of ways we have gone astray as a nation could fill many digital pages, and indeed, you can find that content all over the internet. I want to bore down on just one of them today. One of the biggest changes over the last century of American politics has been structural. The Founders intentionally designed a government that dispersed power. Today, we've done almost the opposite. Presidents of both parties have steadily accumulated authority that once belonged to Congress or the states, leaving the White House at the center (and the top) of nearly every national debate.

The American Revolution was the most impactful political event in human history, and we mostly see it through a lens of a plucky, upstart nation throwing off the yoke of oppressive royal power and launching the great democratic experiment. This is all true, but the other beautiful thing about the founding of the United States was that the Founders purposely set up a government of co-equal branches with checks and balances between the three. The enlightened idea behind this was to spread power out so that no one branch (or, perhaps more importantly, no one person) would have too much control. The Founders recognized the notion that power corrupts, and they intentionally designed a system of shared power with checks and balances so that power would be spread out and limited.

The Founders have been beaten up a bit in recent years, with various historians, intellectuals, and advocates pointing out the obvious flaws in the premise of a concept that All Men are Created Equal being espoused by men who were slaveholders at the time. The simple but profound phrase by definition excluded women, of course, too. And the Colonists’ displacement and ravaging of Native American societies has gained increasing credence and understanding in recent years, too.

This is all, in my opinion, fair and appropriate. History is complicated. The human beings that have been the main characters of history are just that — human and imperfect. I welcome a more inclusive (and accurate) telling of American history.

But I feel there has also been an inflection point in the way we teach U.S. history, and the Founders are being judged more for these faults than for the cataclysmic changes they brought to the world order and, indeed, the freedom of humanity for generations to come. I don’t think we should throw out the good when pointing out the flaws. So I will always admire and appreciate the Founders for the brazen act of revolution and the subsequent and, indeed, revolutionary process in its own regard of establishing the system of American government that endures to this day. I look at the beliefs, behaviors, and principles of the Founders in the context of their time. I think we should address the complexity, but also appreciate how truly special the founding of the United States was in its historical context.

So even acknowleding their flaws (and they were real) the Founders left behind an enduring political insight: power should be divided because of the very fact that human beings are imperfect. We are greedy, vengeful, proud, prone to hysteria, and all the rest. And it was for those reasons that they didn’t design a system around trusting just one leader, or even a small group of leaders; they designed a system around limiting them.

What About Today?

While “life, liberty, and the pursuit of happiness” is the headliner from the American Revolution, it was also this notion of checks and balances that was such a revolutionary concept. But we are a far cry from that notion today. Presidents from both parties over the course of time have significantly increased the power and influence of the Executive Branch of government, so much so that the “United States government,” is often thought of as the White House itself (and its occupant), with Congress and the Courts playing a secondary, lesser role.

Consider just one example: the Founders knew that wars could not only be heavily destructive to a country and its people, particularly one as young and vulnerable as the United States at the time, but they were expensive and could mark true inflection points for the nation. Given the grand scale of the decision to go to war and its consequences, the Founders specifically gave the power to declare war to Congress, and not the President. The President is the Commander in Chief, and so dictates the organization of the military and its activities once war has been declared (itself a check and balance on power), but only Congress was meant to declare war. James Madison said on the topic:

The Constitution supposes, what the History of all Governments demonstrates, that the Executive is the branch of power most interested in war, and most prone to it. It has accordingly with studied care vested the question of war in the Legislature.

But what is the modern stance on this? Almost exclusively, the ability to wage war (with some nuance behind the definition of what it means to “declare” war) has rested with the President. The obvious current example is that of the Iran War, which has been unpopular here in the United States, and which was not approved by Congress (although Congress did subsequently approve funding), and which the President seemingly executed without consulting Congressional leaders ahead of time. Congress was then left with the awkward question of voting to limit President Trump’s war powers during a war that was already going on. It was a bad look all around for the United States, in my opinion.

But while it would be easy to just point a finger at President Trump on this one (and, indeed, he has done a lot to consolidate power into the Executive Branch), Congress has not actually declared a single war since World War II. The Korean War, the Vietnam War, the Gulf War, the Global War on Terrorism including Iraq and Afghanistan and more recently in Libya, Yemen, Syria, and against Isis around the world: none of these have featured formal declarations of war by Congress. There has been a modern sidestepping of the traditional war declaration called an Authorization for Use of Military Force (AUMF) that Congress has offered to the president in many of these circumstances, and these AUMF’s are now central questions in debates on who truly gets to initiate wars with other countries, groups, or territories. At best, it’s political disagreement. At worse, it’s an ongoing Constitutional crisis.

Proponents of executive power would say modern warfare has changed so much since the time of the Founders that the president needs to have some ability to respond to global crises quickly without needing to wait for the full legislative process to unfold. Regardness of this fair concern in certain circumstances, it’s clear we are well far astray from what the Founders originally intended on the topic of war powers. At the core, the Executive Branch has seized power from the Legislative Branch and, indeed, the Legislative Branch has essentially abdicated its own responsibilities to act as that check and balance.

War powers are just one area where this syphoning of power has taken place, and, indeed, it is one of the most consequential. But there are other areas, too, including ones in which the Executive Branch has taken power from the Courts, or where the Courts have taken power from Congress and vice versa. Again, this could all fill a book.

So What Is to Be Done?

The scope of what needs to happen to correct the messes in Washington is well beyond this week’s article. It’s almost overwhelming to think about. The fact that there are so few Congressional districts that are actually in-play as toss-up election seats, for example, is one part of the problem. Probably about 90% of the seats in Congress are either “safe Republican,” or “safe Democrat,” so whoever wins the party primary in both cases is almost assured of winning the general election. This creates a skewing of candidates to their respective bases as they strive to defeat a fellow Republican or a fellow Democrat by outflanking them to the more extreme ends of the spectrum in appealing to partisan blocs of primary voters.

It may sound trite, but what is actually within all of our scopes to address is the way we ourselves interact with one another and with our elected leaders. The concentration of power in Washington has been accompanied by a concentration of our attention. Every day, millions of Americans wake up and immediately immerse themselves in political battle lines in their Facebook feeds. We know the names of cabinet secretaries but not the members of our town council. We can explain yesterday’s controversy on Facebook but couldn’t tell you who organizes the local food pantry or serves on the school committee. Every crisis, every outrage, every political battle is carried around in our pockets and is fed directly into our consciousness by algorithms that enhance agitation, anger, and distrust by design. We spend hours emotionally invested in arguments occurring hundreds or thousands of miles away while knowing less and less about the people who live a few blocks from us.

Despite the negative feelings throughout this week’s piece and my glum feelings about Independence Day this year, it actually turned out to be a good day. But I didn’t turn on the TV once, and barely opened the internet, let alone Facebook or Instagram. Two of my kids and I ran in our local 3K road race along the Fourth of July parade route before the parade began, and then later in the day we went to a Portland Sea Dogs baseball game, which was followed by fireworks. It was a great day after all.

And maybe that is the answer: to focus more inwardly on a smaller and more local scale. It’s a privilege to be able to check out of national politics. Not everyone can. But for many people, the solution for what ails us is not more Washington D.C., but more Downtown Bangor, or Main Street (wherever you live), or more baseball fields with friends and neighbors. It’s screen-free neighborhood picnics instead of an evening on the couch scrolling through algorithm-chosen feeds. It’s church bean suppers instead of eating alone.

Maybe that is one lesson worth remembering on America’s 250th birthday. The Founders certainly believed in national institutions. But they also believed in local ones. They expected citizens to participate in town meetings, churches, civic organizations, volunteer fire departments, newspapers, schools, charities, and neighborhoods. It was probably understood as a prerequisite that if the national government was going to be viable and successful, it was meant to rest on a foundation that included a citizenry that was highly engaged with the local fabric of their towns, regions, and states.

So maybe as we begin our next 250 years, we should strive to know our neighbors better, who are undoubtedly more reasonable than the caricatures and stereotypes we see of one another online. Coach a team. Join a service club. Volunteer at your library. Attend a town council meeting. Eat at the diner or the church pot luck instead of the drive-thru. Go watch your local parade. And have faith that the country will endure, and that we will continue to slowly but surely work towards that more perfect union, even if things seem not quite as celebratory on this semisesquicentennial as they should be.

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One of the more interesting World Cup trivia questions is the question of where the first World Cup took place. The first tournament was in 1930, and for all the rich soccer history throughout Europe and elsewhere, the first World Cup happened not in England, France, Spain, or Italy, but in the country of Uruguay. Not only that, but Uruguay was the first champion. It may have been a bit of home field advantage (travel to Uruguay was somewhat challenging in 1930, I’m sure), but I was fascinated to know in researching this week’s article that Uruguay was actually the dominant soccer power of the day in this era; the country won the gold medal at the Summer Olympics in 1924 in Paris AND in 1928 in the Netherlands. So shame on me for doubting the legitimate claims of Uruguayan historical soccer greatness.

There were some other specific reasons why Uruguay was chosen to host the first World Cup, which makes their selection all the more legitimate. First, the year of 1930 marked the 100th anniversary of the Uruguayan constitution. Second, the government agreed to not only build a new stadium for the event, the Estadio Centenario (Centennial Stadium), which still exists today, but also covered the travel costs of all of the teams that attended. The Estadio Centenario is, to this day, the only soccer stadium named by FIFA as an “Historic Monument of World Football,” a distinction awarded to the Uruguayans in 1983.

The reason I went down a Uruguayan rabbit hole this week was that I wanted to understand why the World Cup was created. It turns out, the driving force behind the formation of the world’s most significant sporting event was a French attorney named Jules Rimet, who championed the creation of the international soccer championship in part to bring countries together to promote “peace and fraternity,” (very similar to the motivations behind the creation of the modern Olympics). He envisioned a tournament in which "men will be able to meet in confidence without hatred in their hearts and without an insult on their lips." And so it has (mostly) come to pass.

The Power of Sports Diplomacy

Sports have often been envisioned as a substitute battleground between otherwise warring parties, which can compete with one another on the playing fields, courts, rinks, tracks, and pools rather than on actual battlefields. History offers some remarkable examples of sports serving as a bridge between bitter rivals. In 1971, for example, a chance encounter between American and Chinese table tennis players led to what became known as "Ping Pong Diplomacy," opening the door to President Richard Nixon's historic visit to China the following year and the beginning of a normalization in relations between the two countries.

At the last several Olympic games, athletes from North and South Korea have marched together under a unified flag, providing rare moments of unity between nations that remain technically at war. Also on the Korean peninsula, Japan and South Korea agreed to jointly host the 2002 World Cup, which was the first time two countries shared in the honor of hosting duties (the United States, Canada, and Mexico are similarly joint-hosting this year; the 2030 World Cup will be jointly hosted by Spain, Portugal, and Morocco). Japan and Korea have had historical tensions between themselves, so the 2002 World Cup marked a key moment of cooperation and diplomacy.

Here in the United States, the Miracle on Ice in the 1980 Olympics is probably the most memorable example of combatant nations (even in Cold War form) challenging one another in the battlefield of sports rather than on an actual one. And in researching this article this week, I also learned about a World Cup soccer match between the United States and Iran at the 1998 World Cup in which players on the Iranian team presented white flowers to the Americans before kickoff as a gesture of peace and goodwill. I’ll be honest, I think I am a fairly robust sports fan, and I am sure I would have actually watched that World Cup matchup in 1998, and I had absolutely no knowledge of this gesture until reading about it this week.

Perhaps the earliest modern example of sports diplomacy was the Christmas Truce of 1914, in which perhaps 100,000 soldiers along the Western Front shared a spontaneous ceasefire over the Christmas holiday up and down the line, with soldiers from Germany and Britain cautiously meeting one another in no man’s land and sharing gifts of cigarettes and supplies and, yes, playing soccer with one another. After military leaders on both sides condemned the interactions thinking it would lead to reduced morale, no similar exchanges took place for the rest of the war, at least none that have lived on in the historical record.

So what does it all matter? Well, what I thought about writing about this week was the vast economic impact of the World Cup. FIFA president Gianni Infantino recently said, "A World Cup is 104 Super Bowls in one month,” which he was basing on viewership and consumer spending. The hundreds of thousands of visitors (maybe millions?) to the United States, Canada, and Mexico for this year’s World Cup will collectively spend billions of dollars on their tickets, travel, meals, etc. Various companies will similarly spend hundreds of millions of dollars just to be associated with the World Cup. I can say from our own family’s experience, we have been to McDonalds three times in the past two weeks so our 12-year-old can try to collect all of the World Cup collectible McDonalds cups. So the World Cup is not just the world’s most important sporting event, it is also one of the world’s most important, albeit temporary, economic drivers.

But I think more importantly than that is the sentiment that this year, perhaps more than ever, the world has just needed this World Cup — the United States, in particular. There are a lot of reasons for negativity out there, but this particular World Cup has been fantastic.

Among the key storylines is that traditionally underrepresented countries have done especially well. Cape Verde, for example, with a population of just over 600,000, emerged from a group that included Spain, Saudi Arabia, and Uruguay to advance to the knockout round (multiple Uruguay references in the same SMP article, a first for sure!). This is immediately the biggest sports story in Cape Verdean history.

Morocco, Senegal, and Egypt all advanced too, marking a great World Cup for the nations of the continent of Africa. Bosnia and Herzegovina also advanced out of its initial group for the first time ever; the country will play the USA this Wednesday. And speaking of the United States, it has been arguably the nation’s best World Cup ever with two decisive victories and then a close loss Thursday evening in a game that did not actually matter much as the U.S. had already clinched its advancement. If the U.S. wins on Wednesday against Bosnia and Herzegovina, this will probably be considered the top U.S. men’s team in World Cup history.

Lastly, one of the special things about this particular World Cup is the stars have shined. Lionel Messi scored five goals in two games. Kylian Mbappé for France has scored four. Erling Haaland for Norway has matched Mbappé, and all three stars’ teams have advanced to the knockout round. Newer faces have also emerged including some from the U.S. team, but it’s been a great World Cup for the most well-known (and marketable) soccer stars from around the world.

What it All Means

So, the world needed this. By all accounts, this particular World Cup has gone exceedingly well. The United States is overflowing with charming stories of international fans being met with a warm and welcoming spirit, much to the surprise of many of those visiting a country they thought might be antagonistic to themselves as international visitors. In exchange, Americans have been similarly smitten with our international guests. A new love between Scotland and the people of Boston has formed, for example, with the Tartan Army, as they are known, virtually overtaking the city to the delight of locals. Stories abound of European fans discovering Buc-ees convenience stores and Waffle Houses throughout the American south. Of the historic Lionel Messi hat trick in the first round of the World Cup, a performance that will likely live on in World Cup lore for generations, it did not take place in a powerhouse media market like New York or Los Angeles, but right in the heart of middle America in Kansas City, Missouri, the self-proclaimed soccer capital of America. That one game is probably already one of the top historical moments in Kansas City sports history.

For the most part, the games have avoided politics. This was not necessarily the case in the lead-up to the World Cup, with the FIFA president becoming abnormally close with President Trump and creating an entirely new award for the president and offering it to him in a cringeworthy press event prior to the World Cup, much to the chagrin of many international fans. President Trump is also reportably set to present the trophy to the winning team on July 19th, which breaks with tradition and also opens him up to a true Bronx welcome (i.e. lots of boos) if he does present the trophy at MetLife Stadium in New Jersey to the winners.

FIFA itself is not without criticism, having a sordid history of awarding the games to nations under questionable circumstances, including the much-maligned decision to give the games to Qatar, a nation with very little soccer history, with the games to be played in the middle of the scorching summer. The World Cup that year was eventually moved to November, and the stadiums were air-conditioned, but FIFA still absorbed significant criticism including from the fact that it was very difficult for fans to travel to Qatar.

In addition, the event has been marred by travel restrictions deemed by some to be excessive for players and referees from countries deemed to have exposure to the Ebola virus, and on the Iranian team itself, which was notably restricted in their travel arrangements given the current conflict between the two countries. The Iranian team responded, in part, by leaving a handwritten note in their locker room in Los Angeles after their game thanking the city for their hospitality and saying, “May peace, respect, and friendship prevail among all nations.”

But the event has been positive overall. I have no doubt that this year’s World Cup in the United States (and Mexico and Canada) will have ripple effects for the next generation or more on American youth soccer. I know my own son has been gripped by the games, watching virtually all-day long and engaging with absolutely any matchup that is on. I liken it a bit to the impact of the USA Dream Team men’s basketball team at the 1992 Barcelona Olympics, which boosted basketball not only in the United States but around the world. I think you can trace much of the surge in international basketball particularly in places like Spain, France, Italy, and the nations of the former Soviet Bloc to that 1992 American team. The impact of this year’s U.S. men’s soccer team will boost youth soccer for a generation or more to come, much in the same way that the U.S. women’s team has done over the past several World Cups on the women’s side of things.

Unfortunately the World Cup will end in three weeks, and, indeed, the world will keep spinning. It should be said that the joy that so many fans have felt at watching this year’s festivities is no comfort to the countless people around the world living under the threat of violence, death, and despair. So I do not want my buoyant thoughts on sports diplomacy today to create the impression that all is well in the world, even momentarily so. A hat trick by Messi and the surprise advancement of the Cape Verde team, for example, does nothing to help the migrant in the Mediterranean, the mother in sub-Saharan Africa dealing with drought and disease, the grandparent in Ukraine caring for their orphaned little ones, or, indeed, the single parent in Appalachia here in the United States struggling with the high cost of living.

But hopefully the games at least bring a moment of entertainment and excitement, and a fleeting sense that there are still positive moments that can bring people around the world together. Sometimes symbolism does matter, and cross-border battles on the pitch are far better than armed conflict, drones, bombs, and economic strife. May we all carry the spirit of this year’s World Cup forward in our own ways, big and small.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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We are just about at the mid-year point of what has been a turbulent year for the economy. As I have written about recently, the stock market continues to hit all-time highs, while Americans are feeling as pessimistic about the economy and their own personal finances as they have at virtually any time in history (or at least over the last 60 years).

Gas prices rose this spring over 60% due to the Iran War, and although the average price per gallon is down about 60 cents in the past month thanks to rumors of a ceasefire (and, indeed, the subsequent signing of a ceasefire deal this past Thursday), Americans are fed up with prices at the pump. Gas prices are not only a highly visible marker of how the economy directly impacts people, but the actual mathematical impact of high prices ripples through to many different areas of family budgets because it raises the costs on all manner of other goods and services that have an oil component to them (which is virtually everything).

This is an important election year. Voters are complex. They care about many different things with varying levels of intensity. To some, immigration is the most important topic. To others, it is the environment, or healthcare, or any one of dozens of other topics. The American electorate is diverse and complicated.

But there is one issue that overarches most everything else. As James Carville famously said in 1992, “It’s the economy, stupid.” The economy consistently polls as the top issue on Americans’ minds. And even voters who may care about something such as, say, public education, often care about the economy at least on par if not still more so than any other topic. So when looking at electoral prospects, it’s pretty important to bore down on voters’ views on the economy. And that’s bad news right now for President Trump and his fellow Republicans.

Headwinds and Downdrafts

Putting a pin in the conversation about how Americans’ views on the economy may impact the 2026 mid-term elections, it’s worth a primer on mid-term elections in general. The party of the president in power almost always does poorly in the mid-terms, sometimes staggeringly so. Since World War II, the president’s party has lost an average of roughly 25 seats in the U.S. House of Representatives during midterm elections. The Senate often follows a similar pattern, though the results can vary depending on which seats happen to be up for election in a given cycle and how Democratic or Republican those particular states sway.

Some of the most notable examples of mid-term routes have become political landmarks and have represented significant inflection points for the country. In 1994 during the presidency of Bill Clinton, Republicans led by Newt Gingrich and his “Contract with America” gained 54 House seats and captured control of Congress for the first time in four decades. In 2010, amid voter frustration over the economy and backlash to the Affordable Care Act, Republicans picked up 63 House seats during Barack Obama’s first term, one of the largest midterm swings in modern history. More recently, Democrats gained 41 House seats in 2018 during Donald Trump’s first presidency. Given how many seats in both houses of Congress are relatively safe (i.e., it’s hard for a Democrat to win in extremely conservative districts, and vice versa), swings of 40 or more seats in one election are pretty significant.

There have been exceptions, but they are rare. Following the September 11th terrorist attacks, Republicans actually gained seats in the 2002 midterms as President George W. Bush enjoyed exceptionally high approval ratings, albeit temporarily so. In 1998, Democrats actually gained seats during Clinton’s second term as voters reacted negatively to impeachment proceedings, which they perceived to be ineptly led and overreaching in scope. Even these exceptions, however, reinforce the broader rule: midterm elections are typically a referendum on the party that occupies the White House. In the 1998 midterms, voters put their weight behind Clinton; in 2002, they did so for Bush. But more often than not, voters punish the party of the president, regardless of which party he happens to represent.

Why this pattern? It’s largely just because of how the political pendulum swings. Whichever party wins the presidency enters that first two-year period with high expectations, which are often hard to meet. Voters are more inclined to disappointment than appreciation after the emotional high of a presidential victory. Moreover, voters may just get tired of that party’s leadership after two years, plus there is the opposition party bombarding the president and their party with a negative onslaught of relentless attacks, which, fair or unfair, impact voter opinions and lead to negative sentiments. The opposition is often more motivated than the party-in-power, which not only leads to more relentless attacks, but more motivated voters come November of the mid-term cycle. Some of the president’s voters may become complacent and just stay home, dampening electoral support for his allies.

I think there is also a case to be made that voters just tend to like divided government. Americans are naturally skeptical of too much centralized power, and so they use their votes to put more power in the opposite party of the president if things get too out of balance.

Looking Ahead to November 2026

That historical backdrop creates a challenging environment for Republicans heading into 2026. You could almost strip out any policy decisions, any ebbs and flows in the economic numbers, and ignore worldwide events that may or may not occur this year, and Republicans are in trouble simply because they face the same political gravity that has pulled down presidents of both parties for decades. For that reason alone, it sets up as a bad year for Republicans.

And yet, 2026 could be potentially really bad for Republicans, and that’s because of the voters’ aforementioned views on the economy (as well as some other key issues, which I’ll touch on later). As noted above, the University of Michigan Consumer Sentiment reading hit an all-time low in May (it improved modestly in June, which is largely attributable to a modest drop in gas prices).

Polling numbers are tough for Trump on the economy right now, particularly as this had previously been an area of strength for him. A PBS/NPR/Marist poll found just 33% of Americans approve of President Trump’s handling of the economy. Just 29% of Americans say the economy is good, per CBS polling. Even Fox News polling has Trump underwater on the economy, with just 31% of Americans approving his handling of the issue. According to the Fox News poll, 44% of Americans say they are falling behind financially, while just 12% say they are getting ahead.

It’s inflation (including gas prices), frustrations with the Iran War, and even anxieties about AI’s impact on the workforce that have Americans feeling anxious, and that is bad news for the people at the top.

So What?

Republicans hold a slim 220-215 majority in the U.S. House of Representatives, which means Democrats just need to flip three seats to take back control of the House. Various prediction models show Democrats picking up anywhere from two to 25 seats, depending on how strongly historical variables are factored in. On generic ballots, Democrats are currently outpacing Republicans by about 7%.

Real elections, of course, take place between actual candidates running on a mix of local and national issues, so take the generic ballot statistic with a grain of sale. Candidate quality race-by-race matters a lot, too. But it’s safe to say Democrats should be favored to at least gain ground, however, and probably take back control of the House of Representatives.

On the Senate side, Republicans currently have a 53-45 majority, with two Independents who caucus with the Democrats. Control of the Senate is expected to narrowly stay with Republicans, although anything can happen (the Democrats’ path to regain control runs straight through Maine, by the way, with the insurgent and complicated Graham Platner taking on long-time incumbent Susan Collins).

Needless to say, control of Congress matters for a whole bunch of reasons, including how easy or difficult it becomes for the president to press through his agenda. A House or Senate (or both) in the hands of the Democrats not only provides a stronger check and balance on President Trump, but it could open up the possibility of investigations and more, including even impeachment hearings. That’s all beyond the scope of the article today, but you get a sense of the gravity on why all of this matters.

What Might Happen

At the time of this writing, there just over four months until Election Day. If everyone knows the economy is the top issue, and the stakes are as high as they can get, it begs the question of what President Trump and his Republican allies might do (or even can do) to bolster the economy or at least make people feel less anxious about it in the next 135 days.

For starters, you can make a clear case that the signing of a temporary ceasefire to bring about the end of the Iran War was done in direct response to Americans’ disdain for this conflict and the impact on the price at the pump (not to mention the loss of American lives and resources…military, monetary, and otherwise). Things went very badly for President Trump in terms of his approval rating immediately when the Iran War began, and things got progressively worse. Ending the war is perhaps an attempt to stop the bleeding, politically speaking. The Iran War was popular with very few people.

Gas prices are the most obvious area for action, as they impact so much of what people are feeling and experiencing in the economy. Beyond ending the Iran War aside (or attempting to), other actions that could be done include opening up the country’s strategic reserves, although that takes some time and the impacts are not necessarily immediate, or increasing oil production, but, again, that takes some time.

Interest rates would be another area to look at, which the president perhaps tried to do by choosing Kevin Warsh to lead the Fed. Unfortunately for President Trump, Warsh did not lead the Fed into an interest rate cut at his first meeting this past week, and instead the Fed seemed to signal that interest rate hikes may be necessary later this year in order to help quell inflation, which at 4.2% is now running at its hottest rate since April 2023.

A third thing Trump could do, which would require a pretty hard pivot from his previous stances, is to soften his language and implementation strategies on tariffs. Not only have tariffs actually increased the cost of some goods and services, they are wildly unpopular with American businesses and consumers, so softening his position may at least signal to voters there is a better path ahead on this front.

What Is Likely to Happen

There is a difference between taking steps to actually improve the economy (which is difficult to do in such a short period of time), and taking steps to improve voters’ perception of the economy. On the latter point, simply avoiding self-inflicted challenges like major trade disputes, a prolonged negotiation on Iran, sudden (and erratic) policy reversals, and avoiding political fights over shutdowns and the debt ceiling would probably go a long way. But some of the Trump appeal (to his base, at least) is that he doesn’t shy away from these things; it’s part of his core appeal.

Other policy moves (including some of what is noted above), don’t generally come together in mere months. Tax policy, for example, or infrastructure investments that would have positive economic ripples through the economy, sometimes take a president’s entire term to formulate, let alone implement.

What much of this will come down to, therefore, is public relations rather than true economic policy moves. Can Trump spin this economic ball in enough positive ways that voters don’t punish his party come November. The problem with spin on the economy, however, is that millions of Americans are actually living it day-to-day in ways that President Trump and many of his allies simply do not see or relate to.

One possible advantage Trump and the Republicans have is that fewer and fewer districts are true toss-ups. Even as compared to the examples of 1994 and 2010 noted at the outset, districts have become more starkly partisan, and therefore less likely to flip in a general election. A Blue Wave of 50 seats thirty years ago may be a more muted shift of, say, 20 seats today because fewer districts are actually prone to swing in any given cycle. If anything, some districts today will swing from a moderate Republican to a more conservative one in the primary, who then wins in November, or a more moderate Democrat getting taken out by a more progressive one in the primary.

But time will tell. The political gravity that puts Republicans at a steep disadvantage this year plus the economic woes felt by voters set up pretty squarely for some kind of Blue Wave this November, for sure. That said, elections are not won in June, and the candidates themselves and local conditions in each respective race matter too. So there is a long way to go between now and November.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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This past Friday, SpaceX became the largest IPO in history (ticker symbol: SPCX), with a launch price of $135 per share, which then ballooned to $150 per share at the immediate market open. The intraday price peaked at $176.52 just after 1:00 p.m. before settling back to end the day at $160.95.

That first-day ride alone underscores one of the risks inherent to the retail investor when investing in Initial Public Offerings. There were so many orders for SPCX queued up that many buy orders did not actually get filled until later in the day. Very few ordinary investors were able to get access to SPCX at $150, let alone $135. Instead, many of the buy orders were executed north of $170 several hours after the stock market opened. The headlines will say SPCX rose 19% on its first day of trading. In reality, however, if your order didn’t get filled until 1:00 p.m. and you held until the end of the day, you ended up down 8.5%.

There is understandably a lot of excitement about investing in IPOs. Companies that are going public are often ones with fascinating stories, compelling products, futuristic ideas, and either proven or expected future revenues that investors want a piece of. But is investing in IPOs on the first day of trading or even in the subsequent days and weeks that follow a good idea?

We’ll look at what history tells us, but first, a quick primer on how some investors gain access to IPO shares before the rest of us:

To Be An Insider

Most IPO shares are not initially distributed to ordinary investors. Instead, the investment banks underwriting the offering allocate shares to large institutional investors such as mutual funds, pension funds, hedge funds, insurance companies, and other major financial firms. These institutions often receive shares at or near the IPO price before public trading begins.

A smaller portion of shares may be allocated to wealthy clients of brokerage firms (which is actually pretty unfair, when you think about it). Company insiders, employees, venture capital firms, and early investors who backed the company before it went public also often have special access, sometimes through employee compensation plans that provided pre-public shares of the company to key individuals.

Some brokerages do offer IPO access to retail investors, but in highly anticipated offerings demand often far exceeds supply. In practical terms, many investors who want shares at the IPO price simply cannot get them. This creates an interesting dynamic, as was the case with SPCX as noted above. By the time public trading begins, much of the initial allocation has already been spoken for. The first day of trading becomes a battle between eager buyers trying to establish positions and a relatively small number of shareholders willing to sell (although as the share prices rockets upward, more sellers are brought into the market in order to try to lock in gains, often realizing the financial windfall of a lifetime in the process).

For the retail investor, the primary way to buy shares directly in a newly offered stock is simply to place an order through a brokerage account at Vanguard, Fidelity, or another brokerage firm and hope it gets filled. It might seem strange that an investor could place a trade when the market opens at 9:30 a.m. and not have it filled until hours later, but a stock trade is exactly that…a trade. For a buy order to be fulfilled, someone on the other side of the transaction must be willing to sell. In the immediate aftermath of most IPOs, there are very few sellers and countless buyers. As a result, it can take hours for all of those buyers to find willing sellers.

What History Tells Us About IPO Investing

That investing in compelling companies can make financial sense is self-evident. Virtually every publicly traded company was an IPO at one point (other than ones that were spun off from an existing customer with shares placed into trading without a typical IPO). Amazon, for example, went public in 1997 at $18 per share and finished its first day at $23.50, a gain of 31%. The stock traded as high as $29.75 during that first day, by the way, illustrating an intraday trajectory somewhat similar to that of SPCX (i.e. a sharp rise followed by the air coming out of the balloon in the latter hours of the day). Whether SPCX has a long-term trajectory similar to AMZN remains to be seen. If you had somehow been able to invest $10,000 in AMZN at the IPO price, it would be worth over $30 million today (!!!).

History, however, provides mixed evidence when it comes to investing in IPOs. Some became legendary success stories, like the clear case of AMZN. But other high-profile IPOs have had rockier starts. Facebook, for example, went public in 2012 amid tremendous excitement. Shares were priced at $38 and briefly traded above that level on opening day. Within four months, however, the stock had fallen below $18 as investors questioned the company’s ability to monetize its users. Those who declared the IPO a failure were eventually proven wrong as the company has since become one of the most valuable in the world, but it required patience as early investors took losses on paper in the early months of public trading.

The lesson is that a great company does not always make a great short-term investment. IPO investors are often paying not only for current results but also for years or even decades of expected future growth. When those expectations become too optimistic, even outstanding businesses can produce disappointing investment returns, which a lot of retail investors learn the hard way.

There are plenty of examples of IPOs that have failed. Pets.com is the classic example, having gone public in February 2000; just 268 days later, the company went out of business and investors had lost nearly everything. In 2021, Rivian went public, which was understood to be a hot new electric vehicle start-up. Shares have lost about 90% of their value since. It’s fair to say that SpaceX is not Pets.com, nor will two upcoming highly anticipated IPOs that should launch later this year: Anthropic and OpenAI, which are both slated to go public before the end of the year.

The Other Way Americans Get In On IPOs

There is another way ordinary investors participate in IPOs, often without even realizing it: through index funds.

When a newly public company eventually becomes large enough to qualify for inclusion in indexes such as the S&P 500 or Nasdaq 100, the index funds tracking those benchmarks are effectively required to buy shares. Millions of Americans therefore gain exposure to these companies automatically through their retirement accounts and investment portfolios.

This also creates a risk that many ordinary investors are probably not thinking of. While index funds remain one of the most effective long-term investment vehicles ever created, many major indexes have become increasingly concentrated in a relatively small number of large technology companies. Investors often believe they are broadly diversified when, in reality, a substantial portion of their portfolio may be riding on the fortunes of a handful of AI, technology, and communications firms. In the S&P 500, for example, the ten largest companies make up a weighted percentage of about 40% of the overall index. Since these stocks are typically highly correlated, high-tech companies, if they start to drop, it will disproportionately bring down the entire index and, with it, trillions of dollars in low-cost index funds. I wrote about this last October, saying:

If you have a 401(k), IRA, or index fund, you are likely (whether you realize it or not) participating in the AI boom. That’s not necessarily bad; innovation and long-term growth are the bedrock of markets. But it does mean you should be prepared for volatility. When a small group of stocks drives most of the market’s gains, the same dynamic can magnify losses when sentiment shifts.

That does not mean a collapse is imminent. But investors during the Dot-Com Bubble of the late 1990s learned that concentration risk can lurk beneath the surface of an otherwise diversified portfolio. If enthusiasm surrounding AI and other emerging technologies cools, many investors may discover they had more exposure to those sectors than they realized.

Are We in a Bubble?

We are nearly 2,000 words into this article, and I haven’t addressed one obvious question: What is SPCX actually worth? At Friday’s closing price, SPCX carried a market capitalization of approximately $2.1 trillion. That instantly made it the seventh-largest publicly traded company in the world. (Trivia question: Can you name the six larger companies? Answer at the end of the article.)

By traditional valuation measures, SPCX is difficult to justify. Investors are assigning an enormous value not only to the company’s current operations but also to its future potential. Most valuation models are built around present earnings, cash flow, and revenues. Judged solely by those metrics, SPCX appears extraordinarily expensive. Yet investors are not buying SPCX based on what it earned last year. They are buying it based on what they believe it might become.

Bulls argue that SpaceX is not merely a rocket company. They see it as the dominant provider of global satellite internet through Starlink, a critical player in defense and communications infrastructure, and perhaps eventually the transportation backbone for industries that do not yet fully exist. Supporters see a company whose future opportunities cannot be measured using traditional metrics. Skeptics see a company priced far beyond its current fundamentals.

The honest answer to the question of whether we are in a bubble is that no one truly knows. Bubbles are easy to identify after they burst and remarkably difficult to identify while they are inflating. In 1999, many investors recognized that technology stocks had become detached from reality, but few accurately predicted when the party would end. Likewise, many investors correctly identified the housing bubble before 2008 yet still struggled to profit from that insight because markets remained irrational longer than expected.

There are certainly signs of exuberance today. Valuations are elevated. Money for deals is flowing. Companies connected to AI are attracting enormous amounts of investor interest. Those conditions often accompany speculative periods.

At the same time, genuine technological revolutions do occur. The internet changed the world. Smartphones changed the world. AI is doing the same. The challenge for investors is distinguishing between revolutionary technologies and the excessive valuations that sometimes accompany them. Both can be true at the same time.

For ordinary investors, the broader lesson may be simpler. IPOs are exciting. They generate headlines, create overnight millionaires, and offer the allure of getting in on the ground floor of the next great company. But history suggests that excitement and investment success are not always the same thing. The simple fact of so many high-profile tech-based IPOs taking place in the same year is itself a sign of frothy, frenzied times, but then again, we do live in interesting times. More to come in the weeks ahead.

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Trivia Answer: The six publicly traded companies larger (at the moment) than SPCX are Microsoft, NVIDIA, Apple, Amazon, Google/Alphabet, and Facebook/Meta Platforms.

Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Kevin Warsh, the newly installed Chair of the Federal Reserve, finds himself in an impossible predicament. He must appease the markets, his fellow Fed Governors, and unfortunately for him, the ultimate audience of one, the man who appointed him, President Donald Trump. The goals and needs of each of these distinct forces of nature conflict. Auspiciously but perhaps not surprisingly, Warsh was introduced as the new Fed Chair at the White House and not at the Federal Reserve itself (a break from historical precedent), with Trump saying later that same day that he thinks rates will come down "very quickly.”

But will they? Not if the typical market indicators are to be believed (and acknowledged). First of all, the latest Consumer Price Index report showed inflation running at 3.8%, which is the hottest it’s been since May 2023. It would be economic malfeasance to lower rates when inflation is running hot because, in doing so, lower rates might very well spark further economic fervor, thereby causing inflation to rise even faster (at least according to traditional economic theory).

At the same time, the unemployment rate is 4.3%. This rate has been creeping upward since the recent multi-year lows in the 3.5% range three years ago, but overall, the labor market has been fairly stable (concerns and anxieties around AI and a possible workplace wipeout aside). If anything, the primary stress in the job market is that people don’t feel they are making enough money to keep up, which is largely a reflection of inflation, and not the health of the labor market itself.

A strong jobs report just this past Friday showing 192,000 new jobs created actually sent the stock market spiraling, as the good jobs numbers signaled to investors that rate cuts would be less likely now. It may feel backwards that a strong jobs report ended up leading to a stock market rout on Friday (the S&P 500 fell 2.6%), but it’s because interest rates are such a key variable in the investment world. Anything that suggests rates will stay elevated or even climb is bad news for stock investors, who want the frenzy that might come from lower rates. So it’s good that there were a lot of new jobs created, but bad for the stock market. Like I said, kind of backwards, but that’s how it goes sometimes.

Who is Kevin Warsh?

It’s all fair to ask, then, why would the Fed lower rates now, with inflation too high and employment basically stable. Well, it all depends on whether you think Fed Chair Warsh’s nomination came with strings attached (i.e. “I will appoint you, but you must lower rates.”). Or perhaps Kevin Warsh himself may believe rates need to come down, so it’s less of a puppet scenario and actually just a reflection that Trump appointed him because they share similar philosophies. So, do they?

Kevin Warsh is not an everyday name that many Americans will recognize (other than through recent news coverage), but he is a well-known figure in Federal Reserve circles. Before becoming Chair, Warsh served as a member of the Federal Reserve Board of Governors from 2006 through 2011, putting him in the room during the financial crisis and the Great Recession. Prior to that, he worked in investment banking at Morgan Stanley and later served as a special assistant to President George W. Bush.

Since leaving the Fed, Warsh has spent much of the past fifteen years as one of the institution’s most prominent outside critics. He has repeatedly argued that the Federal Reserve was too slow to recognize the inflation surge that followed the pandemic, and has often emphasized the importance of maintaining price stability. In congressional testimony earlier this year, he stated bluntly that “inflation is the Fed’s choice,” reflecting his belief that the central bank bears primary responsibility for controlling inflation.

That history makes Warsh a, well…interesting…choice for a president who has consistently pushed for lower interest rates. Traditionally, Warsh has been viewed as someone who is more concerned about inflation than about stimulating economic growth through lower rates.

The question investors are trying to answer is whether Warsh the critic will resemble Warsh the chairman. Will he prioritize inflation control above all else, consistent with much of his public commentary over the past decade? Or will he prove more flexible now that he sits in the most powerful monetary policy seat in the world? Time will tell.

How Interest Rates Actually Move

To answer the question of how interest rates fluctuate, it’s important to distinguish between several different types of rates. Treasury notes and bonds, for example, fluctuate all day long because they are bought and sold continuously on the open market. Home mortgage rates, which typically correlate with Treasuries, also move daily (although some banks and mortgage brokers might only update their menu of rate options once or twice a week, if that).

The Federal Reserve, however, directly controls only a short-term benchmark known as the federal funds rate. This is the rate banks charge one another for overnight lending. While consumers generally never borrow at the federal funds rate itself, it influences a wide range of other rates throughout the economy. Closely related is the Prime Rate, which commercial banks use as a benchmark for many business loans, credit cards, and home equity lines of credit. When the Fed changes the federal funds rate, the Prime Rate usually moves almost immediately afterward.

The Federal Open Market Committee (FOMC), the Fed’s monetary policy arm, typically meets eight times per year to determine whether rates should rise, fall, or remain unchanged. While emergency meetings are possible, they are rare. The most notable recent example occurred in March 2020, when the Fed held two emergency meetings in the span of two weeks and slashed rates by 150 basis points as the COVID-19 pandemic threatened to shut down large portions of the global economy.

So can Warsh just move rates on his own? The short answer is no. The FOMC consists of twelve voting members: the seven members of the Federal Reserve Board of Governors, the president of the Federal Reserve Bank of New York (by default), and four rotating presidents from regional Federal Reserve Banks around the country. The Chair leads the discussion and often exerts significant influence, but the Chair does not possess unilateral authority. In the end, policy decisions are determined by a majority vote of the committee based on their own read of the economic indicators and their own economic perspectives and philosophies.

So What’s in Store?

There are a lot of variables moving in seemingly opposite directions. Inflation is elevated; employment is stable. Trump wants rates to come down, but Warsh has signaled, at the very least, that he will strive for independence. Plus, as noted, rate decisions are not entirely his alone to make as he works in concert with a board of Fed Governors.

A quick note on inflation: there are signs that inflation is likely to ease back down, which may help make the case for lowering interest rates. The key variable right now is gas prices, which, fortunately for the consumer, have been actually going down over the past two weeks. According to GasBuddy, the average price of a gallon of regular was $4.51 as recently as May 24th. But now, just two weeks later, the price has fallen to $4.13, which is a pretty notable drop in a relatively short period of time. The key reason for this is the hope of a true ceasefire in Iran and the re-opening of the Strait of Hormuz, which will get oil flowing globally again. Countries around the world have also been tapping their oil stockpiles to help ease price pressures at home while they wait for resolution in the Middle East.

If oil does continue to drop, it should have the effect of helping inflation get back towards the desired 2% level. Not only is the price at the pump a key piece of the overall inflation rate, but oil is baked into so many different products and services that an anticipated drop in prices helps ease prices throughout the wider spectrum.

The Odds

In my earlier draft of this article at the beginning of the week, I had the odds at 50-50 for interest rate cuts later this year via the Fed. This was based on analysis from the CME FedWatch Tool. Regrettably I did not capture a screenshot of the 50-50 odds via CME from earlier in the week, and as of this writing late Saturday evening, the website link is broken, so you’re just going to trust me on this one. The 50-50 odds were a 50% chance of rate cuts and a 50% chance of rates generally staying where they are or increasing modestly.

The story was different by the end of the day on Friday, however. Friday’s strong jobs report moved the odds to 60-40 in favor of interest rate hikes by the end of the year. Prediction markets like Kalshi now have a 77% chance of zero rate cuts this year, and a 47% chance of interest rate hikes. The odds climb to a 65% chance of rate hikes by July 2027. In other words, there is now a low likelihood of rate cuts for the remainder of 2026, and by this time next year, interest rates could actually be higher than they are today.

This is not good news for borrowers and would-be borrowers who are anxious for some rate relief. To be sure, rates have actually come down 100-200 basis points (for all intents and purposes, 1-2%), in the past 18-24 months, so there has already been some help for borrowers compared to the interest rate peaks we saw from 2023-2024. But the conventional wisdom at the beginning of 2026 was that rates would ease down throughout 2026, perhaps by a quarter point two or three separate times. Stubborn inflation that has been amplified by an Iran War oil spike and, more positively, a strong jobs market, has not only backed up the timeline of interest rate cuts, but started to bake in rising rates.

We’ll see what happens over the coming months. I expect gas prices to continue to ease down. Oil is just one variable (albeit it a notable one) in complicated mess of politics, economics, and global affairs leading up to the November midterm elections here in the United States.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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An ominous milestone was reached this past week with the S&P 500 hitting yet another all-time high while, simultaneously, the University of Michigan’s consumer sentiment report, which has been issued monthly for nearly 75 years, hit an absolute all-time low. Holy cow. Even to someone who follows this stuff pretty closely, the stark juxtaposition feels jarring. The stock market is quite literally better than it has ever been, while people in aggregate are feeling worse than they ever have about the economy.

A quick look at the numbers: The S&P 500 actually hit all-time highs for four consecutive days this week, closing higher on the week for the ninth week in a row, which is the longest winning streak the index has seen since 2023. The index is up 10.5% for the year so far.

Moreover, not only is the 10.5% rise this year a bit surprising based on everything that is going on in the world, it comes on the heels of double-digit increases in each of the last three years; The S&P 500 was up 24% in 2023, 23% in 2024, and 16% in 2025. Although the stock market historically has more good years than bad, it is relatively rare to see such robust gains over such a sustained period, which is why many market observers (including me) have been anticipating a pullback. Yet the market keeps climbing.

I remember an old cliché I would share with customers when I was in the investment business that was meant to temper expectations and remind people that there is always a risk of loss when investing in the stock market. “You know, someone could sneeze in the Middle East, and the markets could drop 25%,” we would say. Obviously, that has not been the case this year. Markets have been amazingly resilient not just to conflict in the Middle East, which has resulted in disruption to global supply chains and sharply higher gas prices around the world, but also to political turmoil here at home and a general sense of economic unease throughout various industries and geographies from Silicon Valley to New York to London to Asia.

So, why?

The answer begins with an important reminder: the stock market is not a measure of how average Americans are doing. It is a measure of what investors believe companies are worth based on their current and future earnings. And right now, corporate America is doing pretty well.

Profits remain remarkably strong, first and foremost. Per Charles Schwab, first quarter earnings for companies in the S&P 500 were up about 28% year-over-year, which is a remarkably robust rate of growth. At the beginning of the year, analysts were projecting 15% growth. Per Liz Ann Sonders from Schwab:

That 13-plus percentage point upward revision is one of the more pronounced positive intra-quarter upgrades in recent cycles and reflects a combination of genuine outperformance—particularly in the Technology and Communication Services sectors…

…So far during this reporting season, both the earnings and revenues beat rates have moved higher and are tracking well above historical medians. Absent a significant shift in the macro landscape, it’s expected that earnings growth can remain strong in the second quarter.

Most of the largest companies in the stock market operate on a global scale, meaning their fortunes are not tied exclusively to the health of the American consumer. Companies such as Apple, Microsoft, Alphabet, Amazon, and Nvidia generate revenue from around the world. Their earnings are influenced by global demand, technological innovation, and productivity gains as much as by what is happening in any particular part of the U.S.

But among those variables, productivity gains and expense reductions are the two key points here. Businesses have been aggressively managing costs, and, of course, to many businesses, one of the most significant costs is labor. Businesses large and small have been managing their expenses through hiring freezes, layoffs, and automation, including the sudden and robust implementation of AI. Those decisions may create anxiety for workers, but they generally improve profitability, for better or worse, for companies.

The rise of artificial intelligence has only accelerated investor enthusiasm. Whether AI ultimately transforms the economy as dramatically as its proponents claim remains to be seen, but investors are increasingly betting that many companies will be able to produce more output with fewer workers, which will lead to higher stock prices.

In Q4 of 2025, 331 earnings calls among S&P 500 companies saw their CEOs mention “AI,” an all-time high. My belief on this is that AI is, indeed, being implemented in widespread ways, so of course it is going to be noted in earnings reports. But executives are almost compelled to discuss AI in order to meet investor demands for AI implementation, or at least to signal to the investor community that they are mindful of the productivity gains and expense reductions that can be potentially found therein.

The irony is that at a time when Americans are most pessimistic about their long-term job prospects due to AI, corporate America is not only embracing it, but signaling their adoption of it as a way to attract and retain shareholders and, ultimately, to boost their share prices.

AI productivity gains and personnel reductions are not the only factors at play, of course. Most notably, an increasingly business-friendly regulatory environment that is more permissive of mergers and acquisitions, less concerned about monopolies, and more willing to reduce red tape and restrictions on various types of business activity have all helped lead to a generally less regulated business landscape. These topics are all a bit beyond the scope of today’s article, but worth mentioning for sure, as AI is the headliner right now, but the more permissive business landscape under current leadership in Washington D.C. is a major factor, as well. Some aspects of deregulation may be even more impactful on certain industries over the long haul than AI, in fact.

One additional quick note: AI-related stocks have done particularly well over the past few years, so much so that they represent a larger and larger portion of the S&P 500 as a whole. Not all 500 stocks in the index are weighted equally. Nvidia, for example, is just one company, but it represents about 8% of the index due to its size and stature. When the overweight stocks like Nvidia do well, which they generally have over the past 3-4 years, it helps pull the entire index along. Someday, if there is a sharp pullback in AI-related technology stocks, the overall index will correspondingly drop in an exaggerated way. For now, a portion of the gains in the S&P 500 index as a whole are attributable to certain industries, including technology, doing particularly well of late.

What About Regular Americans?

The question on the opposite side of the coin that should be asked alongside why the stock market is doing so well is why ordinary Americans are feeling so bad.

You might reasonably expect people to feel better about their own finances thanks to swelling balances in their investment accounts, especially retirement accounts. In fact, more Americans are invested in the stock market than ever before. When Ronald Reagan left office at the tail end of the 1980s, most Americans had little direct connection to Wall Street. In 1989, only about one-third of U.S. households owned stocks either directly or through retirement accounts. Today, however, roughly six in ten Americans have money invested in the market. Much of that shift is attributable to the rise of the 401(k), which transformed millions of workers from wage earners into investors and tied household finances more closely than ever to the fortunes of Wall Street.

But there are two main reasons why the four-year stock market surge we have seen in recent years is not leading people to feel better about their finances or the economy. First, retirement savings are meant to be just that: money for retirement. A 20% jump in a Fidelity 401(k) is certainly better than a 20% drop, but to a 30-year-old young professional trying to buy their first home, to a 40-year-old single parent struggling with grocery prices, or to a 50-year-old office worker wondering what AI might mean for their career, the health of a retirement account is not necessarily among their top financial concerns. That money feels distant. It is real, but it is also largely inaccessible. It sits behind age requirements and early-withdrawal tax penalties, while today’s bills arrive with remarkable punctuality. A rising retirement account may provide comfort, but it does not help much when housing costs, healthcare expenses, childcare bills, and everyday necessities are consuming a growing share of a family’s monthly income.

Second, although more Americans are invested in the stock market than ever before, stock ownership remains highly concentrated. By some estimates, the top 10% of households own roughly 90% of all stocks. That means that while millions of Americans participate in the market, the overwhelming majority of gains accrue to a relatively small group of investors. This mathematical reality has contributed to an increasingly wide asset gap.

Consider two hypothetical investors. One has a portfolio worth $5 million. The other has a retirement account worth $30,000. If the market rises 10%, the first investor gains $500,000 while the second gains $3,000. Both investors earned the same return. Both benefited from the same market. Yet one gained more wealth in a single year than most Americans earn from working full-time for that same 12-month period.

Through the miracle of compounding, the gap widens even further over time. The investor who now has $5.5 million in this hypothetical example enters the following year with a much larger base from which to grow. The investor with $33,000 benefits from compounding as well, but on a dramatically smaller scale. The result is that a rising stock market can simultaneously improve financial outcomes for millions of Americans while dramatically increasing the wealth of those who already possess substantial assets.

What Does It All Mean?

I hope long-time readers will appreciate that I am not prone to hyperbole and generally try to keep a balanced perspective on things. That said, this level of economic inequality is the stuff of revolutions. The French Revolution is perhaps the most famous example. By the late eighteenth century, France’s aristocracy enjoyed enormous privileges while many ordinary citizens struggled with rising food prices, stagnant wages, and financial hardship. The revolution that followed was driven by many factors, but economic inequality and a growing perception that the system was fundamentally unfair were central themes (sound familiar?).

The Russian Revolution emerged under different circumstances but followed a somewhat similar pattern. Vast disparities between elites and ordinary workers and peasants created fertile ground for political upheaval. More recently, elements of the Arab Spring were fueled by economic frustration, particularly among younger generations who increasingly felt shut out of opportunity while politically connected insiders prospered.

History never repeats itself exactly, but it often rhymes, as the saying goes. When large numbers of people conclude that the economic system no longer works for them, political movements emerge that promise dramatic change. Sometimes those movements are constructive. Sometimes they are destructive. Almost always, however, they are disruptive.

Am I suggesting that the United States is on the precipice of an eighteenth-century-style revolt complete with guillotines in the town square? Not really. But it should not surprise anyone that populism is gaining strength across much of the developed world, and its growing from both the traditional political left and the political right.

On the political right, movements have emerged that rail against elites, institutions, globalism, and entrenched power structures. On the political left, many leaders have increasingly focused their attention on billionaires, corporations, concentrated wealth, and economic inequality. The details differ, but the underlying frustration often comes from the same place: a growing belief that the people making the rules are benefiting from a system that is leaving everyone else behind.

And perhaps that brings us back to the remarkable milestone that occurred this week. The stock market is reflecting the reality of a highly profitable, technologically advanced, globally connected economy that continues to generate enormous wealth. Consumer sentiment is reflecting the reality of millions of Americans who feel squeezed by housing costs, healthcare costs, childcare costs, grocery bills, and uncertainty about the future.

The danger now is that more and more Americans may come to believe these stock market records have little to do with their own lives. If that perception continues to grow, the real story of 2026 may not be the remarkable strength of the markets, it may be the widening gap between those who own a meaningful share of America’s assets and those who simply work in its economy. And that gap, far more than any market correction or recession, may prove to be the defining political and economic challenge of the next generation.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Author’s Note: Greetings from the hotel lobby of the Residence Inn in Nashua, New Hampshire, where for the fourth straight Saturday night of Memorial Day Weekend I sit in the aftermath of a full day of soccer with my over-sugared kids sleeping upstairs (hopefully) while I finish off this week’s Sunday Morning Post article downstairs. I have literally sat at the same corner table in this exact hotel lobby with NBA playoff basketball on the TV near me each of the past four years. Strange as it may sound, the continuity of this unique Memorial Day Weekend tradition brings me a strange sense of peace.

I’m happy to have these moments with my son and our somewhat reluctant daughter and younger son. I read an article recently that kids remember family vacations vividly well from age 6-12, and trips and family vacations are like emotional anchors for them as they get older. This weekend isn’t exactly a vacation per se, but it makes for some nice family time in what has become an annual tradition.

I’m still working on Part II of my AI series, so stay tuned for that hopefully next week. There was some rare housing news from the nation’s capital this week, so that’s the topic for today. I hope everyone has a nice Memorial Day Weekend and a good start to the summer. Thank you for being here and thank you for reading The Sunday Morning Post.

A Housing Bill Surprisingly Works Its Way Through Congress

One of my first political science courses in college took as its semester-long theme the concept that all politicians are basically motivated by one thing: their own political survival. Every vote they take, every statement they make, even the very things they believe are all shaped around the goal of winning elections and staying in power.

The survival instinct for some, perhaps, is that you need to win elections in order to exert influence. I guess the charitable interpretation of that is that if you have values that you believe will be good for others and for the world in general, you need to win elections in order to advance them. But for others, it is the perks and prestige of their positions for reasons of ego and perhaps some degree of sociopathic need that motivates this political survival instinct. The latter perspective is a cynical take, for sure, but perhaps not without truth.

Election years can make for strange political bedfellows, as typically obstinate combatants will sometimes unite around their shared need for survival. Such is the case now, where perhaps the most significant housing bill in a generation has unexpectedly garnered wide bipartisan support in the House of Representatives. The bill is the 21st Century ROAD to Housing Act (H.R. 6644). Congress loves an acronym; this one is Reform, Opportunity, Affordability, and Development. Surprisingly, the ROAD Act has traction, and it looks like some version of it may make it into law.

So we’ll look at what’s in the ROAD Act because the ideas and proposals therein are significant, but first, why has housing reached the floors of Congress as a top policy priority? It is exactly because the topic has such broad bipartisan support. Per recent polling from the Bipartisan Policy Center, 79% of Americans identify housing affordability as a top issue, and 63% of voters say they would be more likely to vote for someone if they helped pass legislation to make housing more affordable. A recent Ipsos poll found the top concern for American voters this year continues to be rising costs, with healthcare as the top concern, followed by housing as #2, and then food #3. The high hurdles for first-time homebuyers to get into the market, still-high and rising construction costs, long-term frustrations with rising rents and lack of options, rising interest rates, and even the complex questions of homelessness are all housing-related frustrations shared by wide swaths of American voters and among those at all points of the political spectrum.

I started out this week’s article with a cynical perspective on electoral and legislative processes, but let me flip this question on its head: isn’t this how Congress is meant to actually work? Americans have identified housing as a top concern, and now their representatives in Washington are working on it. It almost feels quaint and old-fashion that, maybe, just maybe, this is how it is supposed to go!

So What’s In it?

There is still a long way to go for the ROAD Act to become law. A similar bill is being debated in the Senate, so most likely the two bills will be reconciled so that one shared bill will move forward. That process sometimes waters down key provisions to make them palatable to members of both bodies, which can take the teeth out of the original intent. Whatever bill does emerge from Congress then needs to go to the White House for President Trump’s signature. It’s anyone’s best guess as to what happens there, although to be fair Trump has made a series of key statements on housing this spring including expressing a desire to limit Wall Street purchase of single-family homes. It’s funny how certain far left progressive priorities often end up finding support on the right; in a populist sense, the far left ends up connecting with the far right in some unexpected ways, making the political spectrum look more like a circle, or at least a horseshoe.

Anyway, one of the other surprising things about the ROAD Act is that there are some pretty serious, thoughtful, and impactful pieces to it. It actually might change things! Here are the key parts:

1. Restrictions on Large Institutional Investors Buying Single-Family Homes
This is the provision grabbing the most headlines. The Senate version of the ROAD Act would place major restrictions on large institutional investors purchasing additional single-family homes. The bill targets massive firms that own hundreds of homes, not mom and pops or individual real estate investors with a few rental properties. The underlying political argument here is simple and broadly popular: homes should primarily be for people to live in, not financial assets for Wall Street portfolios. Whether this provision would meaningfully lower prices is heavily debated, but politically it is easy to understand why it resonates with voters on both sides of the aisle frustrated by bidding wars, anonymous corporate buyers, and cash offers from giant investment groups.

2. Zoning and Land-Use Reform Incentives
The ROAD Act also attempts to tackle one of the core drivers of America’s housing shortage: local zoning restrictions. Rather than directly overruling cities and towns by mandating what guidelines local communities must enact, Congress is trying to encourage reform through incentives. The bill promotes ideas like reducing minimum lot sizes, loosening parking requirements, allowing duplexes and accessory dwelling units, and encouraging higher-density housing near transit corridors. If cities and towns comply, they could receive priority treatment for certain federal grants and planning funds.

3. Streamlining Environmental and Permitting Reviews
One of the least glamorous but perhaps most consequential sections of the bill deals with permitting reform. Housing projects in many parts of the country can spend years tangled in environmental reviews, bureaucratic processes, lawsuits, and local hearings before construction even begins. The ROAD Act attempts to speed this up by modernizing and streamlining review processes connected to HUD-funded housing activity. Supporters argue that excessive delays add enormous costs to housing construction (and I would say it blocks some projects from even getting launched because developers just don’t want to deal with the bureaucratic frustrations). On the other side of the coin, critics here do worry about weakening environmental oversight and limiting opportunities for public input. But regardless, Congress is clearly signaling that current processes are too slow and too expensive, a perspective I am sure most developers (certainly the ones I have dealt with over the years in my banking career of financing these types of projects) will agree with.

4. Manufactured and Modular Housing Expansion
Another major theme of the legislation is reducing barriers to manufactured and modular housing construction. For decades, manufactured housing has carried an unfortunate stigma despite offering one of the cheapest ways to add housing supply quickly. As I wrote about a few years ago, the Sears Catalogue homes aren’t coming back, and the closest modern alternative may be mobile homes. The ROAD Act attempts to modernize outdated rules that make factory-built housing harder and more expensive to deploy. The White House itself specifically highlighted this portion of the bill as one of its priorities, arguing that removing unnecessary restrictions could dramatically lower building costs. Again, it is fascinating that Trump is zeroing in on manufactured homes, when tenant ownership of mobile home parks and more flexibility for permitting and construction are simultaneously growing as key issues on the political left.

5. Incentives for Office-to-Housing Conversions
The pandemic permanently altered downtown America. Many cities are still struggling with half-empty office towers and declining demand for commercial real estate. The ROAD Act includes provisions encouraging the conversion of vacant commercial buildings into residential housing. This is one of those rare policy ideas that seems to satisfy almost everyone ideologically: urban planners like it, housing advocates like it, downtown business groups like it, and environmentalists often prefer redevelopment over endless suburban sprawl. Although from many of the developers I have spoken with over the years, it’s much harder than one might think to convert an office building into an apartment building (perhaps a topic for a future article), so we’ll have to see what kinds of incentives the ROAD Act provides to make these types of projects more feasible and therefore more common.

6. Transit-Oriented Development
The legislation also tries to better connect transportation and housing policy. The basic argument is that if taxpayers are spending billions on rail stations, highways, and transit systems, it makes little sense to prohibit housing construction near those investments. The ROAD Act encourages higher-density housing near transit infrastructure while discouraging some of the parking mandates that often make projects more expensive and less feasible.

7. Pre-Approved and Standardized Housing Designs
This is one of the provisions that most interests me, and it is an idea I honestly have never thought of before. One underappreciated contributor to housing costs is the sheer complexity of local approvals and building design requirements. The ROAD Act includes support for pre-approved housing plans and standardized designs that could significantly reduce permitting timelines and architectural costs for smaller developments, duplexes, ADUs, and starter homes. It is not a flashy provision, but it reflects a broader philosophy running throughout the bill: America does not just have a housing shortage problem; it has process problems running through city and town halls and state legislative bodies in all fifty states. Although people like their local control, this idea seems like a good one to help streamline some of these frustrating processes, which can also be very expensive, which then, in turn, raises costs for both builders and end-users (i.e. homebuyers) alike.

What It All Means

Taken together, the ROAD Act is notable because, first and foremost, it is an example of good policy actually working its way through the halls of Congress. Congress doesn’t actually pass that many bills, and the ones they do are often baked into massive omnibus bills with many different parts. So, again, it would be a great success if this bill actually reaches the finish line (even if parts do get watered down by a reconciliation with the similar bill running through the Senate).

Secondly, the ideas at play here do not come entirely from the political left or the political right. Parts of it sound traditionally conservative: deregulation, streamlining, cutting red tape, and loosening zoning restrictions. Other parts sound more populist or progressive: limiting Wall Street ownership of homes and expanding affordable housing initiatives. Undoubtedly that ideological blending is precisely why the bill has momentum. Indeed, two of the Senate’s strongest proponents of their proposed housing bill are Senator Tim Scott, who is a Republican from South Carolina, and Senator Elizabeth Warren, who is a Democrat from Massachusetts.

Housing has become one of the few issues painful enough, visible enough, and universal enough to force politicians from both parties into the same room. Even if the policies are overdue and the bills may be watered down before they make it into law, there are still reasons to feel good about the ROAD Act and the changes the provisions could make to U.S. housing policy.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Here is a quick video of my son scoring a goal in one of his games yesterday, complete with a bow and arrow celebration. I’m not sure exactly where he pulled that from. Unfortunately the game result was a loss, but there were some good moments, and we love coming down for this tournament each year.

Have a great week, everybody!

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Author’s note: for those who have come to The Sunday Morning Post today looking for Part II of my AI miniseries after last week’s Part I: The Dove Case on AI, it’s not ready yet. It’s a complex topic and I want to give it a comprehensive effort prior to publishing. So instead, I’m calling this article up from Triple-A to get a spot start in the rotation. Thanks for being here and thanks for reading The Sunday Morning Post.

Why and How Some States Don’t Have an Income Tax

It’s political season here in Maine and, indeed, around the country. One candidate in the Maine Republican primary for governor, Bobby Charles, has called for eliminating the state income tax over the course of four years. This idea has come up in the past here in the Pine Tree State, most notably from previous governor Paul LePage, who did not succeed despite multiple calls and attempts to eliminate Maine’s income tax. The only meaningful income tax adjustment during his eight years as governor was a reduction in the top marginal income tax bracket here in Maine from 8.50% to 7.15%.

Campaigning on eliminating the income tax is one thing. Actually doing it is entirely another. Maine’s income tax, for example, provides about 50% of the revenue the state government needs to operate. The loss of such a significant source of revenue would require a combination of two things that happen to be quite unpopular if not completely impracticable: major cuts to services or significant expansion of other taxes, including the sales tax, property taxes, and the meals and lodging tax. Many people like the idea of not having a state income tax, but they don’t end up liking the tradeoffs that would be necessary to make it happen, which is why it is nearly impossible for states with an existing income tax to eliminate it altogether.

How Some States Do It

And yet, despite the seemingly impossible tradeoffs, some states have achieved an elimination of their state income taxes altogether. Several states have never had an income tax. How have they done it?

The nine U.S. states that do not currently tax wages and income are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. No two states here are exactly the same in terms of how they tax and spend; there are unique attributes to each. Yet there are some themes in common, including higher taxes on consumption instead of earnings, and unique taxes based on the individual economic attributes of each state.

Two or three of these states are truly unique, and are able to avoid an income tax for reasons that are completely non-replicable for other states. Take Alaska, for example. First and foremost, Alaska has a population of about 740,000 people, which makes it the 48th most populous U.S. state, ahead of only Wyoming and Vermont. Even in a remote state where a vast geography creates some complexities in terms of providing services, state government there is not particularly expensive given the low population.

But the real thing that makes Alaska different is how they tax oil and gas extraction. Oil companies that drill in Alaska must pay a combination of lease payments for drilling, “severance taxes” on the oil being removed, and royalties based on the value of what is produced. Because the Alaska state government owns large amounts of mineral-rich land and has a relatively small population, these oil revenues have historically generated enormous amounts of money for the state treasury, which are used to pay for state government in lieu of income taxes.

Even on top of that, in 1976, Alaska voters created the Alaska Permanent Fund to preserve a portion of the state’s oil wealth for the future. A share of oil-related revenues is deposited into the fund each year, which is then invested, essentially functioning like an endowment. The state uses investment earnings from the fund to support government spending and to provide annual dividend payments to all Alaskan residents. So not only does Alaska not have a state income tax, they have this fund that actually pays out dividend checks to residents annually. Pretty cool. Today, because of such strong investment growth in this endowment-style fund, more of state government is funded by the investment earnings than from actual new oil and gas tax revenue.

In case you’re wondering, the Alaska dividend to residents is usually about $1,000 per year, and to be eligible you must have lived in Alaska as a resident for the entire 12-month period prior to the calendar year for which you would get the dividend. So if you move to Alaska later this month, dear reader, which sometimes doesn’t feel like such a bad idea with the state of the world right now, you wouldn’t be eligible for the 2026 dividend; you would have to stay and live there through all of 2027 and then you would be eligible for the 2027 dividend, payable in early 2028.

What About the Other Eight States?

Texas and Wyoming both have something similar to Alaska, although neither is as extensive or comprehensive a funding source for those state governments as the array of Alaska gas extraction taxes and royalties. But in Texas, similar to Alaska, they impose extraction taxes on oil and gas companies to the tune of 4-8% of the market value. When drilling takes place on state-owned lands, the amounts can go up to 20-25%. These funds help to fund state government, with a significant portion going into a Permanent School Fund, which has become one of the largest educational endowments in the country and helps to fund Texas state public schools. Wyoming has something similar, albeit on an even more limited basis.

But oil and gas revenues only fund a portion of what is needed to fund government. The state sales tax in Texas is 6.25%, and cities and counties can impose an additional tax up to 2.00% with revenues kept local. Take Austin, Texas, for example. The state sales tax throughout all of Texas is 6.25%, and Austin has an additional 2% local tax, making the total sales tax burden in Austin 8.25%.

Property taxes are also quite high in Texas, relatively speaking. According to the Tax Foundation, the effective property tax rate in Texas on average is about 1.40%, which makes it the 7th highest property tax rate in the country (the average Maine rate is about 1.00% by the way, which puts us 19th on the list). Hawaii is the lowest property tax state at just an estimated 0.3% rate; Hawaii state government is largely funded by a combination of sales, hotel, airport, and excise taxes, although it should also be noted that Hawaii real estate values are higher than almost anywhere else in the country, so a 0.3% rate on a high-priced home can still be a meaningful dollar amount.

New Hampshire, which is one of the nine states without an income tax, is also among the highest property tax states, ranking 5th overall according to the Tax Foundation. New Hampshire has a political ethos similar to that of Texas (and maybe Alaska, too) of being willing to forgo some services in the name of personal autonomy and more limited government oversight (i.e. “Live Free Or Die,” “Don’t Mess With Texas.”). But, indeed, a lot of the burdens of paying for government are pushed to the local level through property taxes in New Hampshire.

New Hampshire is particularly unique in that not only is there no income tax, there is also no sales tax. That said, New Hampshire does arguably “hide” what might fairly be considered a partial sales tax by taxing certain activities and services even if they don’t technically call it a “sales tax.” New Hampshire taxes meals and lodging, gas, tobacco and alcohol, and vehicle rentals more significantly than many other states, for example.

The Rest of Them

Of the remaining states with no income tax (Florida, Nevada, South Dakota, and Washington), there is a broad theme of taxing consumption rather than wages. Florida, for example, has a high sales tax and especially notable taxes on tourism (e.g. meals and lodging and rental car fees, etc.). Nevada also has high sales and tourism taxes, plus gambling and casino revenues. Washington State has one of the highest sales taxes in the country, topping out around 10%. There are a lot of high earning workers in the Seattle tech industry who are probably especially happy to not have an income tax there. For many, working in Seattle as opposed to, say, California, might represent a 7-10% advantage on pay. In California, the state income tax starts at 1-2% for low-wage earners, but quickly hits 9.3% for income over $70,600 (for single filers), and goes all the way up to 10-12% for those making $360,000 and above. Not having an income tax in Seattle is a real comparative advantage for tech companies trying to attract workers.

Tennessee also has a high sales tax, which can run around 9-10% based on additional local sales taxes.

South Dakota is probably the most benign state of the group. There is no income tax in South Dakota, property taxes are ranked around the middle of the pack for the country, and sales taxes run from 4.2-6.2% depending on local options, which is hardly exorbitant, especially compared to the 10%+ in Washington and Tennessee. South Dakota is probably the one example of where the tax burden from having no income taxes isn’t completely shifted to other taxes, it is just that the state government in this conservative and sparsely populated state is just not as expensive as it is elsewhere.

The Implications

Most of the states without any income tax have been that way for quite some time, and in some cases, forever. It may sound obvious, but it is easier for a state to not have ever had an income tax than to try to convert itself into one now. The reasons for that are political and logistical. As I mentioned at the outset, the income tax in Maine represents about half of state revenues. It is easy in a political stump speech to decry wasteful spending and to advocate for shrinking the size of government. Lots of people are amenable to that. After all, no one is in favor of wasteful spending.

But the practical realities of cutting half of state spending are harsh. You would quickly have to eliminate services that many people rely on, which would put a real hardship on many of the same constituents who would be voting for you (or not) as their candidate for governor or a member of the state legislature.

Unpopular, too, would be raising taxes or creating new fees on other things. Very few people want to pay more in sales taxes, for example, and the tourism and hospitality industries come out in full force against any proposed increases in the meals and lodging tax. I suspect very few people have ever decided not to visit a place due to an add-on to their bill for a local or state lodging tax (we have all seen them on our hotel bills when we visit other places), annoying as they might be. But nonetheless, there is a constituency and a lobby group ready to pounce on any new fee or tax that could be detrimental to their industry whether that’s hotels, restaurants, ski lodges, race tracks, or whatever other industry you could name.

The other implication here is that among the fifty states, there are some wild inconsistencies in how residents, visitors, and businesses are taxed. This is a reflection in the federal nature of our government, which has always granted significant decision-making to the states. This system of state and local control within a national framework results in a patchwork system of taxation that varies from state to state.

Many of these tax structures are highly regressive, by which I mean that for those with less resources, a greater portion of their assets is taxed through a sales tax than an income tax. True, most states absolve many of the fundamental needs of living from taxation, including groceries, utilities, and rents, but if you are a low or moderate income mom or dad in Washington State and your kid needs new shoes, the 10% sales tax is hitting your resources disproportionately harder than it is hitting a Seattle tech worker mom or dad who is making $500,000/year. As the low-income parent, you’d generally be better off with a more progressive income tax where your low wages are taxed at, say, 0-2%, while the tech worker is getting taxed at an average state income tax rate of, say, 8%, which is about what it would be two states to the south in California, and you both paid a lower sales tax.

But again, states get to decide on these questions, and elected officials in every state are going to do what they think is best, but also what their constituents (and their campaign donors and lobbyist influencers) want.

So does the income tax matter on where people choose to live? I can tell you anecdotally in my work as a banker that I have several high earning people who ostensibly are based in Maine, but have either Florida or New Hampshire residency for six months plus a day each year so they avoid Maine income taxes. It may sound crazy to go through all that just to save on taxes, but for someone making $500,000 in wages in Maine, they pay around $34,000/year in state income taxes. The incentive to claim residency elsewhere is high.

According to the U.S. Census Bureau, the top two states for in-migration in 2024 and 2025 were Texas and Florida, which are among the nine no-income tax states. For sure, there are plenty of other reasons why people would choose to move to these states besides the tax structure (the weather, chief among them), but I think there is certainly evidence that people are fleeing high tax states like California and New York for these comparatively lower tax rate states. Austin, Texas, has become a major tech hub and has absorbed a lot of people exiting the higher tax and higher regulatory atmosphere in California, specifically. Washington and Tennessee are also in the top ten states for in-migration, and, as noted above, are both no income tax states, as well. The third best state for in-migration is North Carolina, which has a flat tax of 3.99% on all incomes, and the rate is scheduled to drop to 3.49% in 2027.

The decisions that millions of Americans make each year on whether to move and where to move to are fascinating from a sociological perspective, and worth diving into more deeply at some point. For now, my main conclusion today is that there are a number of reasons why some states do not have an income tax, and it is rarely as simple as just saying those states are either much better at limiting wasteful spending or that they have some type of creative accounting that lessens the tax burden overall. The reasons, in reality, are a combination of unique revenues that can be generated from taxing natural resource extraction, and in other cases, heavy taxation on consumption, particularly in tourism-rich areas of the country like Florida, and to a lesser degree Nevada, Texas, and Tennessee.

Here in Maine, calling for the elimination of the state income tax may help Bobby Charles ride to victory in the June Republican primary for governor, where he is facing several other candidates who have called him out on what they view as unrealistic claims to be able to do so. My prediction is that he will, indeed, win the primary, but will not likely win the general election in what is shaping up to be a blue wave year nationwide. He will be even less likely to actually succeed in eliminating the income tax if he does find himself in office.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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What if everyone in the world could get access to the best doctors? That was the question posed by a speaker at an AI conference I recently attended. What if someone could be met with, diagnosed, treated, and tracked after the fact by an AI physician who possessed the sum total of human knowledge inside of its processing unit. The AI doctor could synthesize millions of pages of medical research, quickly weigh all possible causes and implications of an illness or disease, and develop a tailored treatment plan based on the entire health history of that patient. Since software is replicable, AI doctors could be deployed into rural and underserved areas not only here in the United States but around the world that might have limited or non-existent medical services otherwise.

There is already evidence that AI scanners can detect cancer in patients much earlier and with far greater accuracy than can the human eye. AI tools are being used to reduce administrative burdens (and costs) in hospitals and other healthcare settings, again, often with greater accuracy than humans. AI is being used in medical research to pursue cures for cancer and the development of new medications. Scientists armed with AI can quickly identify the most promising chemical reactions much earlier in the research cycle and at much greater volume and breadth.

Healthcare is just one setting where the promises of AI are truly astounding, with all sorts of positive implications for humanity’s future. Many other industries hold similar opportunities. There are reasons to be really excited about this new world we are entering.

Today’s article is Part I of a three-part series. I have written several times over the past year about AI, and my tone has been generally cautious if not worrisome. The impacts to the labor market, not to mention the effect that all of this technology has on our brains, are impossible to ignore. But I’m not an AI doomer, by any means, which is the term for people who expect catastrophic implications for humanity due to AI, including the possibility of actual human extinction.

Part I today takes an optimistic look at AI. Part II will take the bear case for AI. I’m putting a pin in this aspect of the conversation for this week, but what happens to all the billing specialists, for example, in hospitals when their human work becomes obsolete? What happens when entry-level data analyst positions are eliminated in research labs and other scientific facilities? How do you get a PhD-level biomedical researcher if the gateways into those careers are eliminated for lack of need of human beings to do those jobs particularly at the outset? How do people provide for themselves in a world where human labor is not required, even as so many traditional industries continue on, just without the need for their human workers? These are not small questions or ones with clear and easy solutions.

But we’ll come back to those. Part III will discuss the policy implications of all of this, and why we need to be way further ahead in our discussions as a society (and, actually, as a species) about what this is all going to mean for us. And to be clear, I don’t have all the answers, and part of my writing in these three articles is just to get my own thoughts organized and onto the page. This will need to be a collaborative and thoughtful discussion over the next several years by policymakers and ordinary people alike at all levels of government and society and in all corners of the world — if we even have a few years to debate and plan.

The Glass Half-Full Future

More comprehensive medical care and accelerated research for cures on some of our most intractable diseases and afflictions are high-profile causes for optimism about the AI future. But there is plenty more to discuss here.

One of the most upbeat assessments I have seen about AI’s impact on the labor market is that these tools will close the gap between lower and upper skilled workers. Consider the organization and synthesis of data. What might have taken an experienced analyst several days to pore through and address can often be done in just a few minutes by knowing the right phrasing to submit into the AI prompt. That still requires some baseline knowledge of what questions to ask and then how to interpret the results, but the skillset needed to quantitatively digest the data is much different. And, actually, what that means is that more people, not fewer, will be able to do it.

What could be one of the most consequential results of the ubiquitous rise of AI in our lives is the democratization of expertise. I mentioned in a previous article how I heard a presenter at a conference say, “The economic value of intellectual expertise will soon be $0.” This was not just any random speaker, either; it was Dr. Anton Korinek of the University of Virginia, who is quickly becoming one of the foremost national experts on the intellectual and economic implications of the AI boom.

For most of human history, access to high-level expertise has been limited by geography, cost, and social capital. The best doctors went to elite universities and then ended up in big cities. The best attorneys and consultants charged rates inaccessible to ordinary people. Entire categories of knowledge and assistance existed behind velvet ropes that most of humanity simply could not access.

AI has the potential to radically flatten that reality. A person in rural Maine or rural Kenya may soon have access to educational support, legal guidance, medical triage, financial planning, translation services, and technical assistance at a level that previously would have been practically impossible for many to obtain.

I’ll give you a much more tangible and simple example on this. I will always believe strongly that writing, original thought, and authentic human perspective will remain enormously valuable (I hope so, anyway). In fact, they may become even more valuable in a world flooded with AI-generated slop content. But AI also lowers the floor for ease of communication. Someone who struggles to organize their thoughts into a coherent email or policy proposal can now communicate more clearly and professionally with the help of AI. This matters for people’s careers, and therefore their livelihoods.

Communication has always functioned as a form of economic leverage. AI may narrow some of those gaps by helping ordinary people express themselves more effectively. Let me give you an example: I have a colleague who is not necessarily the best writer. But part of her job responsibilities include communicating reports to upper management on all manner of key topics. So what this colleague now does is run every email and report through ChatGPT prior to sending and asks it to correct typos, improve grammar, and adjust it for a more professional tone. I doubt management knows she does this, but even if they did, they probably would not care, as her communications are unquestionably better than they were previously. She uses a completely free program (ChatGPT) that virtually anyone with access to the internet can employ, and it’s probably taken her writing level from that of a high school student equivalency to a that of a mid-career professional. AI is not threatening her job (at least not at the moment); she is using it to enhance it.

The Frustrations of Modern Life

A more subtle way that I think we will all benefit from AI is by streamlining the ordinary tasks of everyday life, or eliminating many of the frustrations associated with these responsibilities almost altogether. The most profound effects of AI may not come from robots or futuristic laboratories, but from thousands of tiny frictions disappearing from everyday life.

I think an interesting exercise would be to keep a running log of every task over the course of a week that, if it were eliminated, would make one’s life notably better. Writing routine emails. Navigating billing systems. Translating jargon into plain English. Filling out government paperwork. Waiting on hold. Will improved technology including through the use of AI agents not markedly improve the human experience when engaging with these tasks? I suspect yes. I get that we all tend to prefer human interactions in many contexts. But the ideal-case scenario with AI is that perhaps humans will still be involved, but with improved systems in place through the use of high-level technology to reduce the friction in all of these types of everyday interactions.

It’s natural to be worried about AI, particularly as the strongest proponents of this technology right now also have a specific and significant financial interest in having fairly permissive and wide-sweeping uses with limited government oversight (more on that in Part II). But the most optimistic AI case is not merely about profits or even human productivity, it’s about expanded human capacity for performance and, yes, for human thriving. It’s about reducing wasted time, widening access to knowledge and expertise, and accelerating discoveries.

Every transformative technology arrives with disruption attached to it. People have predicted humanity’s doom at the outset of electricity, of bicycles, of radios, of television, of video games, of the internet. It is at least possible that future generations will look back on this era the same way we look back on the arrival of those other new things: messy, destabilizing, frightening at times, but ultimately civilization-altering in ways that dramatically expanded human potential. And that is, indeed, a reason for hope.

Addendum - An Updated Overview of How I Use AI

As mentioned above, I have written about AI several times over the past year in The Sunday Morning Post, including in July 2025 when I wrote about how I use ChatGPT. I would characterize my own tone and temperature on AI as being at times curious, sometimes amazed, at times cautious, but generally sort of sour on our human prospects in the age of AI. I’m going to put a pin in most of that until next week, because there are a lot of reasons to be pessimistic, not least around the labor market impacts and a potential jobs wipeout. But let’s come back to that.

Even on the jobs front there are reasons for optimism, however. Industries adapt. Try explaining to someone in 1926 what the job of a computer programmer would be. It would have been impossible because the very understanding and vocabulary for what a computer was let alone the nature of software and coding were completely non-existent. Are we so arrogant in our current generation to assume that all the jobs that will ever be done by human beings have already been created? What jobs in the year 2126 will exist that we have no vocabulary for today?

I use AI almost every day, although I am still what the AI industry would categorize as a “casual user.” I am not using it to write code, or to design websites or apps. I’m not employing what most experts believe is the next and most significant phase of AI to date, which is “agentic AI.” By that, I mean that AI bots are not proactively and with discretion doing tasks on my behalf the way a true assistant or representative of me or my company would do. That is coming, though, in all types of industries and careers (and maybe even my own).

The most common (and, indeed, daily) utilization of AI for me is to have ChatGPT up on a tab on my browser virtually all day long that I use as a research assistant and sounding board, and for perhaps the beginning of some agentic roles. Just this past week, for example, I used ChatGPT for the following tasks:

How to remove duplicate rows in Microsoft Excel. I had a large spreadsheet of all of my borrower names at the bank, with each row representing a different loan. But what I actually needed was just the borrower names, and if a borrower had more than one loan with us, each loan had its own row, which led to a lot of duplication in the report. This ended up being a very easy fix, I just didn’t know where to find the correct tool to do it in the busy and jargony Excel ribbon at the top of the page. The instructions from ChatGPT were clear, however, and it took me about 30 seconds to figure out from here. Below is a screenshot of exactly what it showed me:

• What the calculations were to convert Canadian dollars into U.S. dollars. And then, how to move money from a Canadian bank account into a U.S. bank account, but also how to move money from a U.S. bank account into a Canadian one.

• What the NAICS code might be for a particularly complicated business (each industry has a distinct six-digit code that banks report as part of their lending data. It helps the banks, and their regulators, to have a sense for how heavy they are in certain categories of lending). Most of the NAICS codes are pretty easy to identify: full-service restaurants, 722511. Rental properties, 531110. Hotels, other than casinos, 721110. But what about a physician in a very unique medical care area? I literally loaded this doctor’s website URL into ChatGPT, asked what the NAICS code was, and got the answer.

• Making a small change on a graphic I was using. Interestingly, ChatGPT asked me if I had the trademark rights to the graphic before making the change for me, and when I confirmed that I did, the program made the change almost instantaneously.

The other thing I generally use ChatGPT for is casual answers and discussion around questions that I might have taken to a CPA or attorney in times’ past, but that don’t quite rise to the level of needing true professional help (at least not yet). I suspect my CPA and attorney wouldn’t have even wanted to get bogged down in these relatively minor questions, so while they may have lost some billable hours (or billable increments of 15 minutes of time, anyway, in responding to me), I suspect they also will not miss this type of work if customers are able to handle a lot more of their housekeeping inquiries and low-level tasks themselves with the support of AI.

But my point is this: using AI to help with every one of the tasks above saved me time, money, and just as importantly, frustrations. I hate trying to figure things out in Excel, for example. I probably could have searched the taskbar in Excel and figured it out eventually, or Googled it and then interpreted the steps from some Microsoft-sourced website it pointed me to, but neither of those options were as simple as typing into ChatGPT, “How do I remove duplicate rows in Excel,” getting a clear answer with visuals instantaneously, and then executing it myself. It was 45 easy seconds versus 5 frustrating minutes, and if you’re a busy person with a lengthy to do list like I generally have, saving the net amount of time in that exchange and keeping your brain fresh for other tasks is actually worth quite a lot. And with apologies to the graphic design workers out there, being able to edit a logo myself in two minutes for free saved me perhaps several days of waiting and back-and-forth with a graphics person and perhaps several hundred dollars of expense (that being said, quite charmingly, citizens of Newburgh, Maine this past week did reject a logo change for the town because it was generated by AI, and they wanted something done by an actual human who lived in the community). Plus the AI logo also had mistakes in it. Per the Bangor Daily News:

The proposed Newburgh logo shows a pine tree, barn, cropfield and the date the town was incorporated. The AI-generated logo seems to be based on the town’s current logo, which also has a field, barn and Newburgh’s incorporation date. But the proposed branding has mistakes in it. The “I” in incorporated is written with the number 1, while the 1s in 1819 are upside down.

Oops.

If the rosy tone and warm temperature in this week’s article about our AI prospects as a species felt jarring to read, please do stick around for Part II, as there is another side of the coin to the optimistic outlook. In Part II, we will look more at the labor market, more at our brain chemistries, and peer down the road this all intuitively feels like it could go down, which is one with seismic tectonic shifts in our economic and social orders, and the possibility of true instability leading to nothing short of revolution. So stick around, we’ll be right back.

Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Because I research and write about housing and the economy pretty regularly, the algorithms constantly feed me content about these topics, and a meme I chuckle at every single time it hits my feed is a video of a group of 70-year-olds dancing on a cruise ship with the caption, “How Boomers feel selling their homes for $2 million after buying them in 1969 for 11 raspberries.” I can just hear my favorite Boomer readers harrumphing in response, “Well, maybe if young people today didn’t stop at Dunkin Donuts every day on their way to work, it wouldn’t be so hard to pay a mortgage.

As an Elder Millennial myself, I hope my Boomer friends and family will appreciate that my generation is fast becoming the target of the younger generations’ meme game. I was described recently as being “from the 1900s,” which is an equally sharp and amusing jab as the “Okay Boomer” meme that was popular a few years ago, or the 11 raspberries joke from today.

But I digress. The question of how hard it is to buy a home is one of the most common sources of intergenerational friction. Several years ago, I wrote an article comparing what it was like to buy a home in 2023 as compared to 1983. This was in response to people pushing back on the complaints of the younger generation by pointing out that when they themselves got started a generation or two ago, interest rates were much higher than they are today. So while today’s problems in the housing market are significant, they look different, and people buying homes in the 1970s and 80s had their share of challenges, too.

What I concluded in the 2023 article was that the two time periods actually have a lot of comparisons:

The average monthly mortgage payment today is only slightly higher than the average monthly mortgage payment in 1983, adjusted for inflation, even though home prices are a lot higher. And mortgage payments today as a percentage of individual income are exactly the same…

But the question of prices is a major one: remember, home prices are almost double today what they were in 1983, adjusted for inflation. This presents a high hurdle for younger homebuyers, those who are just getting started out, or traditionally underrepresented demographics in the home buying market, all of whom may not have had the time and opportunity to build up a nest-egg for a 10-20% down payment or to cover the ongoing costs associated with owning a home.

The general takeaway from the above (from the vantage point of 2023), is that in terms of Americans’ monthly cash flow, a mortgage payment in 2023 had a very similar impact to individual and family budgets as it did in 1983, but the hurdle for those just getting started out was greater in 2023 than it was forty years earlier.

I thought it would be worth a look at the analysis to see what, if anything, has changed since 2023.

The Key Variables

To get a clear look at this question, you have to look at three distinct variables. The price of homes (adjusted for inflation) is just one of them. The others are interest rates and incomes. Let’s start with prices.

Prices

The median home price today per the National Association of Realtors is about $408,800. In 2023, it was actually $416,100, so there has already been a move to the good for buyers in the past three years. When you consider that most goods and services have increased in price over the past three years, the fact that home prices have not is actually quite notable.

What about the early 1980s? I’m going to stick with looking at 1983 as it’s a fair anchor for defining “the early 1980s.” If I was picking the absolute peak moment of interest rates, it would skew the analysis (it would be October 1981, by the way). I’m going to stick with 1983 as a kind of an average, typical year in this time period we are looking at.

In 1983, the median home price was $74,900. Using the Bureau of Labor Statistics calculator to compare dollar amounts from different time periods, $408,800 today would be the equivalent of about $122,000 in 1983. Looking at the reverse calculation, the median home price of $74,900 in 1983 would be equivalent to about $253,000 today. It’s therefore about 60% more expensive to buy the median home today than it was in 1983, and this is adjusted for inflation. Score one for the would-be homebuyers of today in their case that things are more challenging here in 2026.

Interest Rates

On interest rates, I always enjoy sharing the following chart, which shows the history of the 30-year fixed rate mortgage going back over 50 years:

What a story that chart tells, from the huge surge in rates (peaking above 18% in 1981!) to the steady decline in rates over the course of the nearly 40 years that followed. If you want a fun trivia question to impress your nerdy friends who are into real estate, you can ask the question of what month represented the historical low for the 30-year fixed rate mortgage. The answer: January 2021, when the average 30-year rate hit 2.65%. I thank my blessed stars regularly that my wife and I closed on the home we live in now in July 2020, when rates were pretty close to the bottom, a lucky break of timing I wrote about a few years ago in a piece entitled, Dumb Luck and Golden Handcuffs.

Today the average 30-year fixed rate is 6.30%. So if you’re looking just at rates, things are far better today than they were in the early 1980s. In fact, here’s another trivia question that only a Sunday Morning Post reader might enjoy: following the early-1980s interest rate peak of rates being close to 19%, when did rates actually get as low as 6.30% again? Answer: not until the summer of 2002! People think rates are high today, and they are high relative to the recent 2020-2022 trough, but rates were higher than they are today for the entirety of the 1980s and 1990s.

Combining Prices and Incomes

If we combine the median home prices and the average interest rates in each time period, we can calculate the average monthly payment on a 30-year mortgage for each era and then adjust them for inflation, ending up with two figures that can stand up against one another.

First, using the 1983 numbers, the median home price of $74,900 with a 10% down payment results in a loan amount of $67,410. Using a loan calculator, the monthly payment on that amount on a 30-year fixed mortgage with a rate of 13.8% (the mid-year average rate in 1983), would have been $788/month.

Now, looking at today: the April 2026 median home price of $408,800 with a 10% down payment results in a loan amount of $367,920. Applying the current average interest rate of 6.30% generates a monthly payment on a 30-year mortgage of $2,277/month.

Comparing the two figures using an inflation calculator, $788 in August 1983 would be equivalent to $2,597 today. Looking at the reverse calculation, $2,277 in today’s dollars would be equivalent to $691 in 1983. It might take staring at these two numbers for a minute to figure out how they compare, but the conclusion here is that things were actually harder in the mid-1980s than they are today, with a larger average monthly payment for a typical mortgage in 1983 as compared to today.

But there is still one key variable to look at.

Incomes

The third variable that is necessary to include, and the one that is often missed when comparing prices across time periods, is incomes. According to the Bureau of Labor Statistics, the median weekly earnings nationwide in the first quarter of 2026 was $1,235/week. That works out to a median yearly income of $64,220, sweeping away regional differences and discrepancies between male and female and different rates and educational backgrounds (more on that below, though). The average mortgage payment for a median home today at an average interest rate of 6.3% is $2,277, or $27,324/year, which represents 42.5% of the average income.

Now, looking at 1983: the average weekly earnings in 1983 was $309/week, which totals to $16,068 for the year. The average monthly mortgage payment of $788 in 1983 represents $9,456/year, which is 58.9% of the average annual income in that time. Comparing the 42.5% of today’s income for the average mortgage payment with the 58.9% of average income from 1983 suggests that the more challenging period of time to buy a house and carry a mortgage was, indeed, the early 1980s, when a greater share of one’s personal income was going towards mortgage payments than it does today.

Considerations and Caveats

I chose to compare against the early 1980s because it is the time period people most commonly think of as being especially challenging for the homebuyer market. Other time periods would undoubtedly illustrate different conclusions. For example, let’s look at the math for twenty years ago, in 1996. The median home price in the second quarter of 1996 was $139,900, and the average 30-year rate was right around 8.00%. Using a loan calculator for 90% of the purchase price ($125,910) at an 8.00% interest rate generates a monthly payment of $924/month. This would be equivalent to $1,948/month today, so over $300/month lower in today’s dollars than it would be now.

That particular snapshot suggests that it is notably more challenging today than it was in 1996. Except on the income front, the average weekly wage in 1996 was about $486/week, or $25,272/year. A $924/month mortgage payment would have been $11,088/year in 1996, or 43.8% of average income. That is very comparable with today’s figure of average mortgage payments representing 42.5% of median income.

It is important to keep in mind that statistics reporting median metrics are just that: medians. If my math is correct, there are approximately 50% of working Americans making less than the median, and 50% making more than the median (that’s a little math humor for you). And things are, needless to say, considerably harder for those who make less.

And this is where the stress is most felt. For starters, saving 10-20% for a down payment is particularly challenging for those just getting started out. This is definitely an aspect of the current housing market that is significantly more burdensome than it was in 1983. Keep in mind the analysis above was mostly about cash flow and what portion of income goes towards a mortgage. But the barrier to entry is much more challenging today because home prices are so much higher, even when adjusted for inflation. The median home price in 1983 of $74,900 would be equal to $253,000 today. But the average median home price today is actually much more than that: $408,800. That means would-be homebuyers need to be able to bring more to the table today than they did in the early 1980s, even adjusted for inflation, and for many people, that is just an impossibility.

Consider, too, that income statistics are much more complicated than just reporting the median. That same BLS report referenced above showing today’s median weekly wage of $1,235/week is the number for all working Americans. For women, however, the median wage is $1,098/week. For Hispanic workers (male and female combined), it is $984/week. For Black men, it is $1,016/week, and for Black women, it is $956/week. If you were to do the full analysis above with a Black women’s median wage of $956/week, it represents an annual income of $49,712. The median monthly mortgage payment over a year of $27,324 would represent 55.0% of income. However, a caveat upon a caveat to consider is that female and minority wages were undoubtedly also lower than the overall median income in 1983, and probably even more so, so even though things are harder for those groups today, they were also harder back then.

It’s also worth taking a look at young people. The average median wage for young men and women age 16-24 is $812/week and $723/week, respectively. I’ll spare you the math, but the portion of a median home purchase at those income levels represents 65-70% of young people’s paychecks, which makes homeownership very difficult to say the least. (I know very few 16- and 17-year-olds are buying homes, but that’s the lowest age bracket of weekly wages the BLS reports; I’d rather see the numbers for those age 21-30, but that data doesn’t really exist in the same format. So it’s not exactly a fair statistic, but I still felt it was worth noting).

Final Thoughts

Barrier of entry concerns aside, that it was, perhaps, more challenging to pay a monthly mortgage in 1983 as compared to 2026 may feel disheartening to the modern generation, who generally feel like they have it pretty tough. One silver lining is that my previous 1983 vs. 2023 analysis, which I wrote in August 2023 and which you can read here, showed that average mortgage payments as a percentage of incomes were almost exactly the same in 2023 as they were in 1983. This means that things were harder for homebuyers just three short years ago than they are today. Things have gotten better! That should be a sign of hope for beleaguered buyers.

Things might get even better for buyers if interest rates continue to come down and if home prices continue to ease. The 2023 analysis showed challenges for buyers relative to today because the average interest rate in August 2023 and the one I used in that previous analysis was 7.2%, and the median home price was $416,100. Both of those numbers have moved to the good (6.3% and $408,800 today, as noted above), which has resulted in a more positive homebuying market. Incomes have also improved, albeit modestly, from 2023 to today.

Another reason to believe things are actually better today relative to 1983 is that, generally speaking, homes are nicer today. They are larger, more energy efficient, and typically have more amenities. This is part of the problem, some might fairly say, as not everyone wants a larger home with greater amenities. Countless buyers would much prefer a smaller home for $253,000 (the equivalent dollar amount today to the 1983 median home price), but that type of home simply doesn’t commonly exist on the market these days, particularly in higher-priced areas of the country. That is a policy problem as much as it is a financial one, as it is just too hard (and not profitable enough) for builders to construct starter homes that can be sold in the $200,000-$300,000 range. There are not enough homes being built to accommodate buyer demand in this price band, particularly from young people and others who have been historically underrepresented in the homebuying pool.

The other big consideration that is worth its own article at some point is to compare the carrying costs of home ownership today versus other time periods. I suspect property taxes and insurance have gone up considerably relative to inflation (especially insurance). However, there are likely some other areas of homeownership that cost less, like the cost of appliances and other fixtures, which have generally come down in price over time, adjusted for inflation. A final consideration is that the general “cost of life” is higher now, as there wasn’t anybody paying a monthly internet bill in 1983, for example, but today having internet (and having to pay for it) is essentially a requirement for life.

Lastly, another difficult thing to quantify is how tastes have changed over time. I would like to research this topic further, as it comes up from time to time from readers. Do homebuyers today have more demands, even if said demands are beyond what their budget should reasonably entail? It’s possible, although I still think the primary problem is a lack of inventory at all price points, and that buyers are generally pretty rational, even if expectations have crept up over time even if incomes and budgets, adjusted for inflation, have not.

To close, however, and to reiterate a point above, the real stress in the housing market is in the low and middle tiers of the spectrum. The main challenge is this barrier of entry issue, where home prices have risen in value so far beyond what the typical person who makes less than the median income can afford. To improve that reality for millions of Americans, home prices have to fall or incomes have to rise more substantially than they have over the course of time, and lower interest rates certainly wouldn’t hurt either, even if they are relatively low at the moment, historically speaking.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Greetings from Newburyport, Massachusetts, where our family is spending the tail end of school vacation week. The big highlight was a Saturday down-and-back to the Franklin Park Zoo.

I have drafts of several deeper-dive pieces in the works, but for today, I wanted to draw out some data I was working with this past week that I think shows just how sensitive the buyer pool is to the current economic winds, which in the case of the past 10-14 days, have been generally favorable to the homebuyer market. This may feel surprising with such gloom and anxiety out there in the headlines, but there have actually been some signs that the spring buying season may be salvaged after things were looking pretty dismal in the late winter and early spring.

We’ll see what happens over the next 30 days, though. At the very least, moves in the data over the past three weeks underscore just how sensitive people are to seemingly small moves, but ones that actually represent some pretty big levers in the economy. It’s always worth remembering that every piece of data represents real people making real-life decisions. It’s easy to get bogged down in the quantitative metrics of it all, but you can see how significant the human impact is when you consider the actions and behaviors taking place (or not taking place) as the numbers move. Consider the following:

• For all the inflationary pressures from the rising price of gas, interest rates have actually come down over the past two weeks. The average 30-year fixed rate mortgage hit its recent peak of 6.64% on March 27th, but has since settled at 6.32% to end this past week, per Mortgage News Daily. This key rate has been quite stable over the last week, fluctuating only slightly within a narrow range of 6.29%-6.33%. On a $400,000 mortgage, this seemingly small interest rate change represents a difference of about $80/month, or about $1,000/year, which is real money, especially to those just getting started out.

• In response to falling rates, after four straight weeks of declines in March, mortgage applications have increased each of the last three weeks: +1.8%, +7.9%, and about +10.0% (with data for the most recent week estimated, but still being finalized). The fact that mortgage applications have so closely correlated with interest rates (i.e. as rates went up in March, applications dropped significantly; as rates have fallen over the past three weeks, applications have gone back up), shows just how closely would-be buyers monitor rates, and how sensitive buyer behavior is to changes in rates.

• After some notable declines in January and February, pending home sales actually increased in the month of March, per data released this past week from the National Association of Realtors. This provides some momentum to the market as we enter the peak buying months of May through August. The home market was completely dismal in the first two months of the year, so the March number provides a little bit of optimism including to sellers looking for buyers, and for real estate agents and others in the real estate world looking to facilitate sales.

I think what has happened this winter and spring has almost been a mini-cycle within the cycle. Buyers froze up with spiking rates, yet inventory among sellers continued to increase as more homes got listed for sale. This resulted in an equilibrium shift in the market whereby a small glut of supply relative to demand combined with a pressure valve release on interest rates (i.e. the drop from 6.64% to 6.32%), plus just the normal seasonality of the housing market brought buyers back from the sidelines. It’s interesting to watch this dance between buyers and sellers, and fortunately for sellers, buyers seem to be reengaging after sitting out for a while.

It’s worth pondering why interest rates have come down. The inflationary pressure from rising gas prices has ripple effects through so many different areas of the economy, so you would think interest rates would be rising. The counter to this, however, is that in a risky economic world, there is often a flight to quality, and investors out there still see U.S. Treasury bonds as the safest and most secure investment around, so they have been pouring money into U.S. bonds in recent weeks. This has had a muting effect on key indicators like the U.S. 10-Year Treasury note, which has subsequently had a corresponding dampening effect on mortgage rates as banks and mortgage companies often price mortgages as a cushion above the 10-Year Treasury.

What Happens Next

What happens from here depends a lot on the status of a fragile ceasefire in Iran and the potential re-opening of the Strait of Hormuz.

People should be aware of that chart below, and of its far-reaching implications. The chart shows the daily number of ships passing through the Strait of Hormuz. The obvious drop-off at the outset of the Iran War is clear, with an average of 90-ish ships per day crossing through in normal times and often as many as 120 or more. The number of ships passing through dropped immediately when the war began, and has been mired in a daily average of 5-7 ships for the past eight weeks with sometimes barely any ships making it through what is now a double blockade of both Iranian and U.S. ships limiting traffic.

As we saw during COVID, when global supply chains are impacted so significantly, the availability of goods and therefore their prices are altered all over the world. No doubt we will be seeing similar impacts in the weeks to come, and indeed we already are. Gas prices are the obvious one that impacts virtually everyone, but the impacts carry into other areas, too. Fertilizer prices, for example, have skyrocketed 30-50% since the end of February; about one third of all fertilizer passes through the Strait of Hormuz annually. Prices have also risen on certain agricultural goods that pass through the Strait, including corn, soy, wheat, and dairy products.

I don’t have any greater conclusions this week other than noting that the whole butterfly-flapping-its-wings analogy is real, but at this moment in time, there is more than just a butterfly flapping its wings, but a full-on conflagration in the Middle East. These things are hard to predict, to say the least. But as we’ve seen just recently, even modest moves back in the direction of stability like an extended, albeit fragile, ceasefire, help move things in a more positive direction, as with the move to the good on interest rates just recently. We’ll see what the next week has in store, however.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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As we look ahead to the summer tourism season throughout the United States (and especially in particularly high-tourism areas like from where I write here in Maine), the variables at play represent a real microcosm of the larger economic forces we are dealing with right now. Bifurcated consumer confidence reflective of the K-shaped economy, consumer anxiety in the face of high costs including gas prices, political tension and international friction: it’s all there, and it could combine together for a fairly tepid tourism season.

Even if you are not directly involved in travel and hospitality yourself, the state of the tourism landscape impacts us all because of the multiplier effects, or lack thereof, based on how much spending, or not, there is in this space. The travel and tourism sector in the United States supports 15 million jobs annually and generates $3 trillion in spending.

So what’s in store for the season ahead? On paper, the travel industry still looks resilient. Key data aggregators like Deloitte and McKinsey report consumers are still spending and, somewhat surprisingly, younger generations are increasingly likely to see travel as a “non-negotiable” expense. Experiences carry a premium in the post-pandemic psyche, particularly to younger people (my own theory on this is that young people sense their lives have become overly algorithm-ized, and spending on travel is a way to break free from digital malaise).

But the composition of travel spending illustrates a more complicated story. Deloitte’s most recent travel outlook points to a clear bifurcation: higher-income households continue to anchor demand, filling planes and booking resorts. Meanwhile, middle- and lower-income consumers are behaving much more tactically, including shortening trips, choosing drive-to destinations, or selecting down to lower-priced options. A family that still travels, but spends 20% less once they arrive, has a very different economic impact on the local economy of that area than one that comes without feeling as bound by spending restrictions.

This is the K-shaped economy at play. Premium and “ultra-luxury” travel continue to be extremely strong, whereas there is pressure in the middle of the market. Mid-tier spending, vacation add-ons, and ancillary spending on restaurants, extra excursions, etc., are all setting up to be softer in 2026 than they were in 2025.

One area that could show stability as consumers select down from mid-tier price options to lower tiers is in budget hotels, campgrounds, and the like. If you combine the millennial sensibility that travel is non-negotiable with the mathematical challenge of traveling in a high-cost landscape, and you will get travelers self-selecting down a tier or two in terms of accommodations and experiences.

However, this is where a more recent headwind provides a potential wet blanket on the travel sector, and that is the high price of gas. I’ve written a lot about gas prices over the past few weeks, in part because it is one of the most important topics on everyone’s minds, so I won’t dwell on it too much here, other than to state the obvious: when the price at the pump is so high, people pull back on driving, especially on long trips. Plane travel is typically more expensive, too, as airlines pass along as much of the cost as they can to consumers without breaking the demand. The average price of a gallon of gas nationwide closed this past week around $4.06/gallon, up close to 40% since the start of the Iran War.

The International Component

A recent BBC report predicts that 2026 will be a record year for the global tourism market. Destinations are changing, however. Europe has long been the most popular travel destination, but less sought-after locations have been surging of late. Per the report:

The destinations recording the fastest growth were not the usual headliners. Brazil saw arrivals surge by 37%, Egypt by 20%, Ethiopia by 15% and Bhutan by 30%. Even the Seychelles, a tiny archipelago off East Africa, recorded a 13% increase.

“More travelers are now drawn to distinctive culture, landscapes and the possibilities of discovery, so countries with a strong identity and decent access are clear winners,” according to Steven Vigor, CEO of travel advisory firm Revigorate.

One place that is not seeing a surge of inbound tourism is the United States. According to the World Travel & Tourism Council, although global travel was up in 2025 and boosted economies throughout the world, the slowest-growing region in the world was North America, with the United States itself growing its travel and tourism market by just 0.9%. The number of visitors to the United States was down by 5.5% in 2025 as compared to 2024. The big winners in 2025? China and the rest of the Asia-Pacific market. Tourism was up 9.9% in China in 2025. Malaysia and the Philippines were also up by double digits, with India and Indonesia both up just over 7.0%.

It’s not just leisure travelers and vacationers who are skipping the United States either. Business travelers and worker visas are also down, declining steadily for the past year, per the National Travel & Tourism Office.

Why? It’s not that travel overall is falling; in fact, as the statistics earlier on point out, global travel is actually up. Per Business Insider, just looking at travel by Australians, for example, global travel is back to pre-pandemic levels:

Australians travelling to Canada rose 4% in the last year, 10% more visited India, and visits by Australians to China and Japan rose 20% and 21%, respectively, but 3.2% fewer booked a trip to the US.

So we have to address the question head-on of why fewer people are choosing to travel to the United States right now, and it comes down to negative views of American politics, resentment of economic policies like tariffs, and just a general sense of unease if not outright fear that some people have about traveling to the United States right now, especially those of different racial backgrounds who feel hostility when they look towards our country right now.

Overall, many people are simply choosing to boycott travel to the United States due to the general sense of hostility and resentment that is out there. Amid bitter trade disputes, the former Prime Minister of Canada, Justin Trudeau, called on Canadians to stay home this year rather than come to the States. Indeed, travel by Canadians by car into the United States is down by 35% over the past two years. There have been impacts here in Maine, for sure, with a general sense that the hotel, restaurant, and hospitality sector in general was softer last summer and likely will be again this summer.

For sure, there are other factors at play right now, too, including a stronger U.S. dollar and a more fragmented global environment. Even modest percentage declines in international visitors can translate into meaningful revenue losses because those travelers tend to stay longer and spend more per trip. That is why the season ahead may feel, in many places, like a season that is not quite flourishing.

There may be a glimmer of hope over the past week as gas prices did slightly ease down with news that the Strait of Hormuz may be opened back up, but it may also take some time for meaningful price declines to hit the pumps. The broader question of international perception towards the U.S. will undoubtedly take more time to reset.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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I’ve never wanted The Sunday Morning Post to be a current events newsletter. There are plenty of places you can go to get the economic facts of the week (actually, I’ll share links to some of the resources I use as an addendum at the end of this week’s article). I think I also went about two years in the early days of The Sunday Morning Post barely ever writing the names “Donald Trump” or “Joe Biden” because I didn’t want this to be a series of political articles, and quite honestly it gets exhausting to include the political overlay even though I know it’s often relevant. There are plenty of places you can go to find that type of analysis, though.

But nonetheless, current events have far-reaching impacts, as do the rantings, ravings, and ramblings of whoever is in the White House. Sometimes I think it would all be a lot more interesting if it wasn’t real life. It’s hard to write about interest rates and gas prices when it feels like the world is on fire. This is also the third time I’ve written about Iran lately (here and here), so I wouldn’t blame you for getting tired of the topic, although it really is the thing that touches on all other topics right now.

So we press on. Because actually, interest rates do impact people in significant ways, as does the price of gas, for that matter. I saw and heard anecdotal evidence from some of my business owner bank customers that March was a tough month. People just were not going out and spending money, no doubt burdened by high prices on all manner of goods and services and, in particular, the cost of filling up the tank. When people can’t afford the normal things of life, it doesn’t just have real-world implications — it’s actually the real world.

A Brief History on Oil Shocks

Things are structurally different today than they were in the 1970s, but it’s still worth a quick comparison. In 1973, there was a coordinated cutoff of oil supply by the OPEC nations, which resulted in dramatically higher prices. Prices quadrupled, in fact. A similar supply shock occurred in 1979. The jumps in oil prices sparked economic recessions here in the United States in both 1973-1975 and in the early 1980s. Both recessions were marked by steep increases in inflation and muted economic growth.

The 1970s was not the only period of disruption in the oil market. The price of oil peaked at $147/barrel in June 2008, for example. We all know what happened next: a massive financial crisis more significant than anything since the Great Depression. Oil prices also peaked because of the supply chain crisis during the pandemic. That rise, too, was part of a massive inflationary upswing.

If you look at the chart for the price of oil, you can see just how notable these upswings have been (data is only available from this source going back to 1986, so the oil shocks of the 1970s are not shown):

The rapid rise in oil prices over the past 45 days is clearly evident on the far right side of the chart. Almost every other time prices have spiked like that, it has preceded an economic recession, which are all the vertical grey areas of the chart.

Does that mean we are marching towards a recession? It depends on a lot of things, including how quickly, or not, things are resolved in Iran. Certain key data points are flashing red warning signs, though:

• The average price for a standard gallon of gas at the pump has increased from $2.93 on February 27th to $4.12, an increase of 41%.

• The average 30-year mortgage rate was 5.99% on February 27th, and closed this past week at 6.39%.

• The monthly CPI reading jumped from 2.4% in February to 3.3% in March, which is a pretty big move in the wrong direction, and creates some serious headwinds against further interest rate cuts in the months ahead by the Federal Reserve. Early readings on April inflation have it tracking towards 3.6%.

• Consumer sentiment has declined in both March and April. Per the University of Michigan report:

  Consumer sentiment sank about 11% this month, extending a decline that began with the start of the Iran conflict, and is currently about 9% below a year ago. Demographic groups across age, income, and political party all posted setbacks in sentiment, as did every component of the index, reflecting the widespread nature of this month’s fall.

In fact, Friday’s consumer sentiment report recorded the lowest reading… ever. “Open-ended comments show that many consumers blame the Iran conflict for unfavorable changes to the economy,” said Joanne Hsu, the survey’s director, as part of the data release.

What Happens Next?

I’m not a Trump whisperer by any means, and needless to say it is hard to predict what he is going to do or say. But I know he must care about the political realities of the current moment. We are headed for crucial mid-term elections this fall, and Democrats are poised to make big gains regardless of what happens with the crisis in Iran. But the situation has made Republican prospects even bleaker, and for better or worse, the president’s future is tied to the Republican Party’s success or lack thereof in the upcoming election. If Democrats retake control of the House and the Senate, they will not only be able to effectively block the president’s agenda for the next two years, but they will probably be able to launch all manner of investigations into what Trump and others have been doing or not doing over the past two years.

So far this year, Democrats in special elections have been vastly outperforming expected results, and Democrats lead in a generic ballot against Republicans by 5.5%, per Nate Silver. Local issues and the candidates themselves matter, but Democrats are feeling optimistic, and Trump and his people have to be seeing this in the numbers themselves. The rules of political survival suggest that this alone may be enough motivation to find an off-ramp in Iran. In other words, the political realities of the Iran War and specifically its impact on gas prices and interest rates will force President Trump and his team to find an off-ramp. In fact, you could see the beginnings of this over the past week, with a two-week ceasefire being declared on Tuesday. The ceasefire is fragile at best, but you can already see the results in the data just since Tuesday:

• Per GasBuddy, prices have come down about 10 cents a gallon since Tuesday.

• Per Mortgage News Daily, the average 30-year mortgage rate eased down about 5 basis points (0.05%) this past week.

• The stock market surged this past week, recovering a portion of the recent losses.

• Even the Michigan Consumer Sentiment survey that showed all-time low feelings noted in its narrative, “Economic expectations will likely improve after consumers gain confidence that the supply disruptions stemming from the Iran conflict have ended and gas prices have moderated.”

The movement in the data over just the past few days shows just how significant market reactions can be to shifts in tone, rhetoric, and policies even if, as noted previously, the current ceasefire does feel a bit tenuous.

What Comes Next

Historically speaking, after a sharp rise in gas prices, one thing that often does happen is that they, well, drop back down. In July 2007, for example, the average price of a gallon of gas at the pump was about $4.12 (almost exactly what it is today). By December 2008, it was down to $1.61. Gas peaked at just over $5.00/gallon during the pandemic in June 2022, but in only six months’ time it had dropped to just over $3.00/gallon. Sometimes that price drop is due to a falling off of demand, which is a reflection of a poor economy that finds itself in recession, and that is problematic itself, and other times it is just a case of supply catching back up. But the point is, things do normalize after a while, which I suspect is what will happen here. As for the election, as James Carville said in 1992, "It’s the economy, stupid,” and you can bet whichever party Americans are feeling will better care for their wallets this November will carry the day (and the next two years).

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Addendum

Here are a few research tools I have in a folder on my Favorites bar. Just passing them along in case you want some things to follow.

Gas prices: GasBuddy and AAA have live trackers of gas prices around the country. GasBuddy updates in real-time all day long, while AAA updates its average each morning.

Interest rates: Mortgage News Daily is a site I frequently reference, and it has a good aggregation of mortgage rates from multiple sources. I also have a link to the U.S. 10-Year Treasury Live Rate and U.S. Treasury Daily Rates.

University of Michigan Consumer Sentiment Survey, referenced frequently in The Sunday Morning Post for a read on how people are feeling out there.

The Cleveland Fed has a Nowcast Inflation tracker, which updates the CPI statistic throughout the month and tracks pretty closely to what the official CPI Report will show, which is only released monthly.

Just this week, I started following two tracking sites for traffic through the Strait of Hormuz. Over the past few days, there have been 7-10 ships making it through. Usually, the average is 120-140 ships per day. You can find these trackers here and here.

Have a great week, everybody!

Nearly five years ago, I wrote an article entitled, “2021 is Different than 2027.” I was writing in response to concerns that the housing market was getting overheated. There is sometimes a “what goes up, must come down” mindset to things in the economy, and people were starting to get worried that the run-up in prices at the time would precipitate a corresponding drop, if not an outright crash. As I predicted in that August 2021 article, a housing crash did not happen, and, in fact, home prices have continued to rise.

But half a decade later, the housing market is different. The average 30-year fixed mortgage rate in August 2021 was about 2.9%. This was actually almost the exact all-time low. Today, the average rate is around 6.50%, down from its 2023-2024 highs, but up about a half a percentage point since the start of the Iran War five weeks ago.

The Chief Economist for the National Association of Realtors (NAR) said in February (even before the recent run-up in mortgage rates) that we were entering a “new housing crisis.” The 2008 housing crisis is still fresh in many people’s minds, so when someone credible throws around language like that, it’s worth a closer look. Are we headed for a housing crisis? Are we already in one? If yes, what does that mean? If not, what would a true crisis look like? Let’s dig in.

The Roots of the Perceived Crisis

I sometimes think of writing a book to try to explain the many layers and variables at play in the 2010-2025 housing market, but then again, who would read it? I can assure you that I’m not going to write a full book in the paragraphs below, otherwise who would make it to the end of this article? Low interest rates, an undersupply of new housing due to low rates of construction, sociological changes related to the pandemic, a changing economy: there is a lot to this story.

But here we are at the outset of Q2 of 2026. Let’s look at the stats today. In January, the number of existing homes sold was 4.02 million on a seasonally-adjusted, annualized basis. This was about a 6% drop-off from December and a tick down from the 4.08 million homes sold one year prior in 2025.

New home sales (as opposed to the statistic above, which is already-owned/existing homes) are also down this year. In January, the rate of new homes sold was 587,000, a sharp 17% drop from December, and about 13% below the rate one year prior in January 2025. The data for new home sales for February is now delayed (I’m guessing due to everything that is going on within the federal government); we won’t get fresh data on this statistic until May.

But put the existing and new home sales data together, and you get a housing market that has many fewer transactions happening today than it should in a normal, healthy market. In January 2020, which was the last comparable pre-pandemic (just barely) January, there were 5.46 million existing home sales and 764,000 new home sales for a total of about 6.224 million. January 2026’s combined total of 4.607 million, by comparison, is about 26% lower, which shows just how much the market for home sales has slowed.

Keep in mind, too, that the NAR crisis quote was given in early February, and conditions for homebuyers have only deteriorated since then with a recent rise in interest rates. The chart below shows weekly changes in mortgage applications via the Mortgage Bankers Association (courtesy of Trading Economics). Mortgage applications were up four weeks in a row in February, but have subsequently declined by 10.9%, 10.5%, and 10.4% over each of the past three weeks (the three downward yellow bars on the far right of the chart):

The State of the U.S. Homeowner

What the data above suggests, for sure, is that the number of home transactions is going to continue to be tepid if not drop in the weeks ahead. Fewer applicants for home loans in March means fewer transactions in April, May, and June. I can understand from the perspective of a realtor how this could, indeed, feel like a crisis. It is entirely a different question, however, as to whether the housing market is actually in crisis territory.

The big problem in the 2008 housing crisis was that financial peril among U.S. homeowners triggered not only their own serious financial issues, but also systemic stress. Massive banking losses, which threatened to (and, indeed, did in many ways) rip through the economy with contagion speed led to an outright financial collapse second only to the Great Depression in magnitude in recent history. When people’s variable interest rates increased and their property values declined, many homeowners suddenly found themselves upside down on mortgages they could not afford. Defaults spread through complex collateralized debt securities, and, essentially, all hell broke loose.

Today, however, the situation is much different. True, turn on the TV or scroll your phone and there are a million reasons to be fearful in the current economy and with the state of the world right now, but any sort of systematic problems or perils in the housing market are just not showing up in the data, at least not yet.

Delinquency rates

Existing U.S. homeowners are remarkably stable, at least as far as their homes are concerned (lots of people are struggling in other areas with rising costs, particularly with gas prices in recent weeks). The delinquency rate on single-family home mortgages in Q4 of 2025 was 1.78%, a historically healthy number, and essentially where it has been for the past three years. Delinquency rates peaked recently at 2.83% in Q3 of 2020 (the heart of the pandemic), but even that was nothing compared to the 10%+ delinquency rates we saw from the end of 2009 to the middle part of 2012. I didn’t work in banking at the time, and I’m glad I didn’t. If you were to extrapolate a 10% delinquency rate onto any bank’s current loan portfolio, needless to say it would be pretty devastating after operating in the 1.0-2.0% range for the past several years.

This data shows that homeowners are generally able to keep up with their payments. However, there are also some causes for concern deep in the data. Delinquency rates are higher, for example, for less well-qualified borrowers. This is to be expected, but the numbers are fairly stark. For Non-QM/Non-Prime 2.0 loans, which is a jargony way of saying mortgages to borrowers who may not typically fit a bank’s traditional underwriting model including those who are self-employed, high-net worth borrowers with irregular cash flow, or those with irregular credit issues like a recent divorce, the 30-day delinquency rate is all the way up to 7.26%, per Fitch Ratings. That is pretty high. Delinquency rates are also higher on mortgages booked from 2023-2025, which were generally done at higher price points and with higher interest rates. There is an important story here about the K-shaped economy, and how much harder the housing market is for people who have just been getting into it as compared to those who have been there for awhile.

One reason why American homeowners are, generally speaking, not in any type of peril comparable to 2008 is that homeowners today have stronger equity in their homes, again, generally speaking. Only about 3% of homeowners are seriously underwater (i.e. they owe more than their houses are worth), per the researchers at ATTOM. By comparison, 44.6% of homeowners are what ATTOM calls “equity-rich,” which means their loan balances are half or less than half of their estimated home market values. Home prices would have to drop pretty substantially for most homeowners to be upside down, and, indeed, about 40% of all homes are paid off, which makes those homeowners particularly stable, needless to say. It’s harder to have contagion peril spread through the banking system as mortgages blow up when 40% of homeowners don’t even have a mortgage to begin with. In 2008, on the other hand, 68.4% of homeowners had a mortgage, oftentimes with variable rates which were moving in the wrong direction on them.

Is There an Actual Crisis?

I do not think the sentiment behind the “new housing crisis” quote is accurate. I wrote five years ago that 2021 was not 2007, and neither is 2026. But that doesn’t mean there aren’t some major issues out there that represent some real risks to the broader U.S. economy as a result of what is happening in the housing market.

The portion of GDP that is attributable to the core housing market (e.g. new home construction, renovations, brokers’ commissions, etc.) is about 4%. But the impact to GDP gets bigger when you factor in banking, furniture, utilities, and housing-related services; it’s in the 15-18% range. When things slow down in an area of the economy that touches nearly 20% of things, it’s going to be felt more broadly.

The threat to the economy in the current housing market is not a massive drop in prices and the contagion effect of busting mortgages, but rather that a damp blanket is put over everything as housing slows down. When fewer transactions take place, there is less money flowing and multiplying through the economy. And that is probably what the National Association of Realtors is reacting to, and why their Chief Economist is warning of a crisis. Again, I think crisis is probably a hyperbolic term to use at the current time and the NAR certainly has a vested interest on behalf of its members of juicing the wheels of things, but it’s also fair to wonder how the economy is going to look if the sluggish housing market doesn’t pick back up.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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In Memoriam

Sadly, a regular reader and subscriber to The Sunday Morning Post, Andy Molloy, passed away last week after a battle with cancer. Regrettably, I only got to know Andy in recent years. I wish I had met him sooner. We would get together every few months for breakfast or lunch at the A1 Diner in Gardiner, Maine and he’d tell me everything that was going on in the Maine media scene, state government, and more. He would pick my brain about banking, and wanted to know what every community bank in Maine was up to. I will miss our conversations greatly, and always appreciated how much he supported me and my own experiment here in journalism. Rest in peace and thank you, Andy Molloy. Read more about Andy here and here.

From 2006-2010, I lived within a stone’s throw of Fenway Park, first off of Beacon Street just a short walk across a large parking lot to Yawkey Way (since reverted to its original name of Jersey Street), and then down the road in Brookline for two years. I worked for the Boston Red Sox for those years, and my job, my apartment, my grocery store, my gym, and my other favorite spots were all within about a half-mile radius of one another. I counted once in the summer of 2006 that I worked at Fenway Park 42 days in a row, which was not a bad way to spend a summer at all. It’s hard to say this to people who think of working for the Red Sox as a dream job (it was!), but eventually you do get the challenges and frustrations of any job the way you would working that much, and once the 2006 regular season ended (unceremoniously, that particular year), I forced myself to start at least taking Sundays off. I did love working for the Red Sox, but I always knew I wanted to move back to Maine, which is what came to pass, so my Red Sox career ended in 2010.

Now back in Bangor, Maine, I might make it to Fenway Park once a year, give or take. The truth is, I barely recognize the area that surrounds the ballpark. I’m sure the apartment I paid $800/month for in 2006 on Aberdeen Street across that big parking lot is three to four times more today. Most, if not all, of my favorite spots from those few years are gone: Boston Billiards, Baseball Tavern, Il’s Deli, Boston Beerworks, the Chicken Bone — none of them exist today.

I don’t mean to claim there was some massive gentrification process around Fenway Park only after I left. Gentrification is a loaded word, most relevant in the context of people getting priced out of their homes in longtime neighborhoods due to economic development and the general evolution of things. Losing my gym that happened to be right on the other side of the Green Monster is cause for nostalgic pause, but it’s not lifechanging. Even when I was living there, the area from Kenmore Square to the Longwood Medical Area had already been pretty well-gentrified as compared to its earlier grittier days before my time.

By the way, one of today’s primary topics is about the real estate around professional sports venues, but the advancement of the Longwood Medical Area, which includes Harvard Medical School, Dana-Farber, Brigham and Women’s, Boston Children’s Hospital, Beth Israel, and others, is just as much a reason for the massive development in this area over the past two decades as anything — it’s one of the largest concentrations of top tier medical institutions in the country if not the world.

But regarding the topic at hand today, real estate development is big business. So, too, are professional sports. And increasingly, the two are intertwined. Real estate development is being done by sports franchises themselves (or at least their ownership groups), who recognize that their own investments in professional sports team can amplify the value of all of the surrounding real estate, so why not own that real estate themselves?

Professional Sports as an Investment

Few people will ever be in the echelon of investors who can afford to acquire a professional sports team or to be a part of an ownership group that does so. In 2002, the Boston Red Sox were purchased for roughly $380 million. Today, people who track these sorts of things estimate the value of the franchise at nearly $5 billion, which puts them third in Major League Baseball behind only the Yankees and the Dodgers in terms of value. I’m biased, but in my opinion these are clearly the three most beloved brands in Major League Baseball (you might also throw in the Chicago Cubs), so it’s no surprise they are the most valuable. But even the Tier 2 teams are now generally all worth over $1 billion. The Baltimore Orioles, for example, were the most recent MLB team to be sold. The value? Nearly $2 billion.

In the NFL, valuations are even higher. The Denver Broncos sold for nearly $5.0 billion in 2022, and the Washington Commanders sold for just over $6.0 billion one year later. The Dallas Cowboys, a team that is often cited as the most valuable franchise in all of sports, is purportedly worth approximately $13 billion. Even a less iconic team (despite winning this past year’s Super Bowl) like the Seattle Seahawks will likely sell for $7.0-$10 billion. In fact, the Seahawks are actively for sale right now.

I know $10-$13 billion for a sports team might seem obscene to some people, but you have to remember these are actually businesses. A $13 billion valuation would put the Dallas Cowboys roughly equivalent to the Hasbro company. The DocuSign company, for example, is worth about $9 billion, as is Zillow. Which would you rather own? The Seattle Seahawks? Or DocuSign. I’d take the Super Bowl champs.

The main reason why professional sports teams sell for so much is that, simply put, Americans have a deep and abiding love for professional sports, and these teams generate a ton of revenue. The Cowboys comfortably gross nearly $2.0 billion per year. In an attention-driven economy where our focuses are split in so many different directions, sports still draw people (and their dollars in).

There is, of course, the prestige factor. Who wouldn’t want to be an owner of a professional sports team? The number of opportunities is scarce (30 MLB teams, 32 NFL teams, and about the same in the NBA and NHL), so when a team does become available, the pool of qualified and interested buyers becomes more like a feeding frenzy. Even in the comparatively upstart WNBA, news broke just this past week about the owner of the Houston Rockets NBA team, Tilman Fertitta, purportedly trying to acquire the Connecticut Sun team for $300 million. He would then move the Sun to Houston.

In any of these leagues, if you want to own a franchise, you can’t just start one up; you have to acquire one from an existing owner (or be approved through a complicated, lengthy, and expensive league expansion process). But once you are in, you get to participate in media rights profits. Because we love sports so much and because of the unique nature of sports as live action activities (i.e. you basically have to watch it in real time), the media rights, which are shared between the leagues and their owners, are incredibly valuable.

Each team in the NFL, for example, receives a roughly equal share of the league’s national media rights revenue. People who watch professional sports are incredibly valuable to advertisers because they are often in key demographics and they are willing to actually sit down and watch a screen for 3-4 hours without interruption. They will then watch highlights later, sometimes over and over again through multiple screens (i.e. TV, phone, computer, etc.). Advertisers will pay big bucks to reach these audiences.

Just look at football, for example. The current set of television and streaming contracts covering CBS, FOX, NBC, ESPN/ABC, and Amazon totals about $110 billion for the NFL over 11 years, or roughly $10 billion per year for the league as a whole. When divided among 32 teams, that works out to approximately $310–$320 million per team annually from national media rights alone. And this is just the national media share; teams also earn additional income from local TV contracts, not to mention ticket sales, sponsorships, merchandise, and stadium revenue, which pushes total annual revenue for most franchises well above $500 million.

The Real Estate Angle

Factor in media revenue, other sources of team-related income, and the prestige factor of owning a team (plus, I would imagine/hope for most team owners, the fun of it all!), and you get a very rewarding and profitable enterprise. But there is another way professional sports franchises (or their ownership groups, at least) are maximizing their returns on investments, and that’s through real estate — specifically, owning and developing as much of the real estate around their stadiums, arenas, and facilities as they can.

Consider the Atlanta Braves, for example. In 2017, they moved into Truist Park, but the stadium was only part of the vision. Surrounding the ballpark is The Battery Atlanta, a mixed-use development of restaurants, offices, apartments, and retail that operates year-round, not just on game days. Who is the owner of The Battery? Atlanta Braves Holdings, Inc. Essentially, the Braves don’t just sell tickets anymore; they participate in rents, leases, and an entire ecosystem of economic activity at The Battery, making them one of the largest real estate developers in Cobb County, Georgia and a vertically integrated conglomerate.

NFL teams are doing the same. The Los Angeles Rams took the concept to another level with Hollywood Park, the sprawling development surrounding their recently constructed SoFi Stadium. Far beyond simply a sports venue and stadium, it’s a master-planned mini-city with residential units, office space, entertainment venues, and public parks. The stadium may be the centerpiece, but it’s one of countless revenue streams within the development. The New England Patriots have done the same, massively developing the area in Foxborough around Gillette Stadium into Patriot Place. Rather than partner with a developer on this project, the whole thing is owned by the Kraft Group, which also owns the team.

One advantage many of these teams have had, particularly the Patriots, is in building their stadiums and adjacent developments in less dense areas. The Patriots are not in Boston or Hartford, for example; they are in Foxborough, population 18,400. It is common now when a new stadium is built that it is done out in the suburbs somewhere, and the reason is that ownership groups do not want to be constrained in their real estate development opportunities. The Chicago Bears would like to launch a massive mixed-used development along the lines of what the Braves, Rams, and Patriots, have done, and so are looking to Arlington Heights, an easier area to build in 25 miles out of Chicago than where they are now (there are also rumors they could be lured across state lines to Indiana; no word on whether they would become “The Indiana Bears,” a moniker enough to make even the most casual Bears fan sick).

But long-time franchises in iconic locations have been figuring out this real estate thing, too. Take the Red Sox, for example. Part of the joy of being a Red Sox fan is Fenway Park itself. The oldest ballpark in Major League Baseball, Fenway is one of the top tourist attractions in Boston (and, indeed, all of New England), and many people will go to games just as much for the ballpark as the team itself. Years ago, there were rumors the Red Sox might try to move from the historic site, motivated largely by wanting to have a new stadium with development opportunities around it (plus increased modern, premium/luxury seating, which is also a big revenue driver for a team). The fans revolted. Instead, the current ownership group, which bought the team in 2023, has invested heavily in the ballpark itself to keep its historic charm, while modernizing many of its amenities (and revenue lines).

The Red Sox (through Fenway Sports Group) have also invested heavily in the periphery around the stadium by acquiring and redeveloping numerous properties. They have also reimagined the former Yawkey Way and Lansdowne Street as more pedestrian-friendly, year-round destinations. Fenway Park was built in 1912, but over 110 years later, it’s part of a broader, modern commercial strategy.

Lessons for the Rest of Us

The large numbers associated with professional sports ownership economics can boggle the mind. 99.99% of us will never be in that echelon. If the Red Sox do eventually sell for $5+ billion, if you could somehow negotiate a 1% stake as part of a broader ownership group, you’d still need to pony up $50 million.

But there are lessons here for anyone doing real estate development in their own way. Location matters, first and foremost. I mentioned above about all the development in the Longwood Medical Area of Boston with hospitals, laboratories, and scientific research centers. Residential rental and retail properties alike within several miles of a hospital setting like that, for example, will never lack for tenants. And vice versa, if you are investing in a rural area of the country, for example, where the hospital is experiencing intense financial stress and at risk of closure or at least a significant reduction in capacity, your real estate is at real risk of losing value if that hospital were to actually go down because many of the would-be tenants for the rental properties and other commercial spaces don’t necessarily stick around once the hospital closes.

But the opposite is true, too. Many successful real estate developers have made a career out of investing in properties, including land, in areas that are ripe for development. Location matters, but also in the greater context of what complementary development might take root in the future. Maybe if you get lucky, you’ll own some land in a suburb that catches the eyes of a team owner looking to build the next sports, retail, and entertainment campus.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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