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This edition was written by Sarah Ahmad, Chase Parry, Jack Spira, and Louise Sheiner
Jing Li of the University of Washington and co-authors compare household finances of individuals who later develop dementia with those who don’t. With longitudinal data from the Health and Retirement Survey, they find households affected by dementia experience substantial wealth declines of up to $100,000 (or roughly 50% of median baseline wealth) beginning up to six years before clinically recognized symptoms emerge. Ruling out a variety of explanations including reduced earnings, higher health care spending, and intentional spend-down of assets to qualify for Medicaid, the authors conclude that the differences reflect impaired financial decision-making in the years before a diagnosis. Parallel analyses of different diseases like cancer, heart disease, lung disease, and arthritis show no similar evidence of pre-diagnosis wealth declines like those found in individuals with dementia.
Models of firm behavior typically categorize price-setting as either state-dependent, occurring in response to events, or time-dependent, occurring at fixed intervals, with different implications for the pass-through of costs to prices. Philip Bunn of the Bank of England and co-authors, using monthly survey data on the decisions and forecasts of 4,200 UK firms, find that the share of firms using state-dependent pricing increased from 44% in 2019 to a peak of 60% in 2023 and fell to 54% by October 2025. Firms in the goods sector, smaller firms, and firms with a larger share of non-labor costs were more likely to use state-dependent pricing. Looking at responses to questions about hypothetical scenarios and at actual behavior following forecast errors or energy price shocks, the authors find that state-dependent firms increase the frequency of price changes when input costs move sharply, leading to faster pass-through of costs to prices than among firms that reset prices on fixed schedules, and that these differences are small for modest cost changes but become more pronounced for large shocks. They estimate that state-dependent price-setting accounted for as much as one percentage point of headline inflation at the end of 2021.
GLP-1 medications like Ozempic have proven highly effective for treating diabetes and obesity, but are among the most expensive drugs in widespread use. Using insurance claims data on approximately 500,000 patients who initiated GLP-1 therapy between 2017 and 2022, Coady Wing of Indiana University and co-authors find that starting GLP-1 treatment increases total healthcare spending by 9% in the first year. Although GLP-1 patients reduce spending on other diabetes medications, those savings are more than offset by higher outpatient spending, likely reflecting monitoring and follow-up visits to manage side effects and dosing. Even five years after initiation, non-GLP-1 spending is 30% higher, with $22,500 in GLP-1 spending per patient and an additional $6,800 in non-GLP-1 medical costs. The authors note that savings could potentially emerge over a longer time horizon.
"As trade policy has evolved and details have become clearer in recent months, estimates of effective tariff rates today are considerably lower than they were last spring. At the same time, the data are providing a clearer picture of the likely effects of tariffs on inflation," says John Williams, President of the Federal Reserve Bank of New York.
"Based on granular analysis of the data in hand, we can draw a few conclusions. First, the tariffs have been overwhelmingly borne by domestic businesses and consumers, rather than by foreign producers. Second, the tariffs have already meaningfully increased U.S. prices of imported goods, although the full effects have likely not yet been felt. My current estimate is that the increase in tariffs to date has contributed around one half of a percentage point to the current inflation rate of about 2-3/4%.
"Tariffs aside, underlying inflation trends have been pretty favorable, and we're seeing no signs of broader inflationary pressures. In particular, shelter inflation has continued to decline steadily, no significant supply chain bottlenecks have emerged, and measures of wage growth have moved to levels consistent with low inflation.
"In addition, tariff expectations have remained well anchored."
Call for papers
We are seeking proposals for papers on the municipal bond market and state and local fiscal policy to be considered for the Municipal Finance Conference to be held in-person Tuesday, July 21, 2026 and Wednesday, July 22, 2026 in Washington, D.C.
About the Hutchins Center on Fiscal and Monetary Policy at Brookings
