We have a new Fed governor! President Trump will nominate his chair of the Council of Economic Advisors, Stephen Miran, to the Federal Reserve board of governors on a short-term basis. Interest-rate doves texted me to celebrate.

• Today: Private credit is coming for your retirement plan. Should you invest?
• Plus: Wealthy consumers are holding up the economy, while other income groups are starting to spend less. That in turn could hurt the labor market.

Let's get into it. All in 1,200 words and 4 minutes.

President Trump signed an executive order instructing the Department of Labor to reevaluate guidance for employers on incorporating assets like private credit, real estate and crypto into retirement plans.

Why it matters: Private credit is golden child of Wall Street, promising diversification and potentially enormous returns compared to the stock market. But the catch is in the name: private.

• These opaque, illiquid investments could pose risks for everyday investors, especially those betting their retirement savings.

Catch up quick: Private credit lets investors gain exposure to private companies by lending them money instead of buying their stock.

• If you're a company that needs cash, you might turn to nonbank lenders. That's what private credit is. It's high risk, high reward, and often moves independently from the stock market.

Driving the news: Ahead of the executive order, retirement service providers have increasingly been jumping into the private credit pool, with Empower and Wellington pursuing expansion plans.

• And giants in private credit like Apollo, BlackRock and KKR have been clamoring to tap into the over $12 trillion in U.S. defined contribution retirement plans.

What they're saying: "Don't get distracted by shiny objects…there's a reason why this is only for the affluent," Victoria Ferguson, certified financial planner and wealth advisor at Mercer Advisors, tells Axios. She cautions investors to not get caught up in the idea that this is a secret tool of the wealthy.

• There are higher minimum requirements because it's an expensive strategy.
• There's also less regulation and higher associated fees, meaning the people pitching private credit tools are making more money off investor interest.

Yes, but: Around 87% of US companies that have over $100 million in revenue were privately owned as of 2023, according to a Partners Group report.

• This shift makes it "no longer socially viable to limit options for retirement savers to just public equity and debt," John Bowman, CEO of the Chartered Alternative Investment Analyst Association, writes in an email to Axios.

Zoom out: OpenAI just had a $500 billion valuation tied to its employee stock sale this week. This is an example of why more novice investors want access to private companies: Companies are staying private for longer, and active retail investors want a chance to get in on the action.

By the numbers: According to data from Empower, one of the firms that provides access to private credit assets, consumers are eager to invest.

• 59% of people say including private investments in retirement plans can help workers build wealth in ways previously limited to the ultra-rich.
• 73% of retirement plan participants say having professionally managed private investments helps level the playing field for novice investors.

The bottom line: If you want riskier investment strategies with potentially juicier returns, "your 401(k) is probably not the best place for that," Ferguson says. "You don't want to put your biggest financial goal you will ever achieve at risk."

Spending is being held up by the wealthy, while consumption from middle and lower-income groups continues to fade.

Why it matters: The tale of two economies, called a K-shaped recovery, is taking shape before tariffs have even taken effect, which could further pressure lower-income spenders and potentially the labor market.

Catch up quick: The top 20% of earners now make up more than half of consumer spending, according to data from Moody's.

• Meantime, spending from middle and lower-income consumers has flatlined to kick off 2025, roughly in line with inflation.
• Consumer spending makes up two-thirds of GDP, meaning it largely determines whether our economy is growing or slowing.
• But the rich are doing most of the spending, making overall consumption look resilient when in reality just a small group props up the data.

What they're saying: "The lower-income households are struggling, and you also see that on the corporate side, so those who serve that segment don't have pricing power," Mohamed El-Erian, former PIMCO CEO and current president of Queen's College at Cambridge University, tells Axios.

Be smart: It's not just wealthy consumers faring better. Bigger businesses are also outperforming.

• But small businesses are the largest employers, so if they struggle, that could lead to bigger cracks in an already stumbling labor market.
• Meantime, the largest corporations that drive the stock market are expected to be resilient, but they're not the ones that generate the most jobs.
• That could be good if you're among the 60% of the U.S. population that invests in stocks. It's not so good if you're a small business owner.

Zoom in: Lower-income households are more exposed to tariffs not just from an employment perspective. They also spend more on affected goods.

The intrigue: Americans with less money are also less likely to benefit from the wealth effect, which is the rally in stock prices that fuels spending among those who own stocks (people who tend to already be wealthy).

• That wealth effect also poses a risk, according to Ryan Sweet, chief U.S. economist at Oxford, since the rich could slow down on spending if stock prices falter, which may be coming this fall.

The bottom line: A handful of wealthy Americans and large corporations are seemingly keeping the economy afloat while the majority of the population is struggling to keep pace with inflation, all before tariffs are fully baked in.

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Amid calls of a bubble, Vanguard is increasing allocation to a safer corner of the market for one of its portfolios: bonds, with fixed income accounting for 70% of its holdings.

Why it matters: The increase in bond allocation comes with a warning: Stocks aren't getting enough reward for the risk of holding stocks.

Situational awareness: Vanguard's time-varying asset allocation portfolio (TVAA) is now skewed more conservative than its benchmark portfolio.

• The benchmark has a traditional allocation of 60% stocks and 40% bonds.
• The outsized allocation to bonds in TVAA reflects a greater risk-off stance.

Be smart: TVAA is readjusted frequently, optimized for "higher expected risk-adjusted returns over the next decade," according to a note from Vanguard.

Zoom in: Within the 30% allocation to stocks, the portfolio also leans risk-off.

• 5% of the portfolio is allocated to U.S. growth, 11% to U.S. value, and 8% to developed markets outside the U.S.
• Within its 70% bond allocation, 37% is allocated to U.S. aggregate bonds and 8% to long-term Treasury bonds.

The bottom line: This portfolio from Vanguard sends a clear message: The juice within stocks may not be worth the squeeze as a record rally has made this equity market expensive.

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