USA finance and economy news summary | 16 July 2022
Headlines | 16 July 2022
- Crude oil bounces back above $100 a barrel after plunging on Tuesday
- Average US gas prices continues to fall to $4.548
- Goldman Sachs euro economist predicts "eurozone on the edge of recession" this year
- White House faces backlash over CPI inflation reportshowing inflation at 9.1% in June
- Initial unemployment claims hit 244,000 last week, an increase of 9,000 from the previous week's level
- Euro loses against the dollar, with the two currencies reaching parity this week
- Inflation rose 1.3 percent in June, leading to a year over year increase of 9.1 percent
- Fears over looming recession lead crude oil prices to continue their slump
- Those on Social Security await news of historic COLA increase in 2023
Helpful links and Information
- How much has the CPI increased over the last year?
- Which States receive the most Social Security?
This week the value of the Euro dropped below that of the dollar for the first time since the early 2000s as a combination of economic pressures and investing trends combined to strengthen the dollar. It was a landmark moment and one which may foreshadow economic hardship, and maybe even recession, in a number of major European nations.
For the past two decades the Euro has traded above the dollar, allowing firms using the European currency to purchase more goods at a cheaper rate. For European businesses and consumers heading to the states, the decrease in the value of the Euro is bad news. We explain why...
Gasoline is now below $4 per gallon for many Americans
After reaching all-time highs in June, the average price of gasoline in the United States has fallen for 22 consecutive days to bring relief for motorists. The price at the pump varies greatly across the country due to the very different levels of taxation levied on the product in different states.
However consumer advice group GasBuddy has reported that there are now more than 20,000 gas stations acros the nation where you can currently get gas for less than $4 per gallon. It seems that a drop in demand has helped to bring down prices for consumers.
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Last month the United States recorded an inflation rate of 9.1%, the fastest rate of price increase since 1981. One of the sectors most affected by the rise was groceries, a significant factor in the household budget for every American family.
However there may be little respite on the horizon, as explained by PepsiCo chief financial officer, Hugh Johnston.
In a recent interview, he admitted: “In a world where we’re seeing things like vegetable oil, grains and packaging prices rising dramatically, I’d be surprised if there weren’t more [price increases] over the course of the next year."
How does the dollar-euro conversion affect me?
The price of the dollar has been in the news in recent days after it made huge ground against the euro, the currency employed by most nations in the European Union. Economic factors have made the dollar a more attractive prospect for investors in recent weeks, strengthening the value at a time when major European nations are expected to enter into a recession later this year. This could have significant consequences for consumers on both sides of the Atlantic and could make trips to Europe that little bit more appealing this summe.r
Benefits overseen by the Social Security Administration provide a vital form of support for elderly and vulnerable people in the United States and for many it is their only source of income. Once retirees begin to claim benefits, they will not be able to work at the same levels they had as they risk jeopardizing a proportion their benefit amount.
The amount of Social Security support that you receive will be used to decide whether or not you should be subject to taxes on these payments, and how much of it you are forced to pay taxes on.
Biden pledges progress on clean energy industry
"So let me be clear: if the Senate will not move to tackle the climate crisis and strengthen our domestic clean energy industry, I will take strong executive action to meet this moment. My actions will create jobs, improve our energy security, bolster domestic manufacturing and supply chains, protect us from oil and gas price hikes in the future, and address climate change. I will not back down: the opportunity to create jobs and build a clean energy future is too important to relent."
Economic pressures are causing major headaches for President Biden with the sky-high rate of inflation announced this week, but things appear even more fraught on the other side of the Atlantic where the fallout of Russia’s invasion of Ukraine has decimated continental supply chains.
Nations like Germany, which boasts Europe’s largest economy, are particularly reliant on Russian-produced oil and gas and are suffering from the sanctions imposed on the Kremlin. The fate of the Eurozone currency and the economies of the Euro-bloc are intrinsically linked and experts are warning that things could get worse before they get better.
Inflation predictions are actually dipping
On Wednesday the CPI report for June showed that inflation was running at an annual rate of 9.1% last month. However while this made very bleak reading for the White House, President Biden was at great pains to point out that this data was already out of date and the rate of price rises was beginning to fall.
As such Aneta Markowska, chief financial economist at Jefferies, explains why the Fed may be able to adjust its inflation predictions. In particular the price of motor fuel, a factor that affects the transportation costs associated with most other products, has fallen drastically since its June peak.
The cost-of-living adjustment (COLA) is the annual boost for Social Security payments which is designed to represent the rate of price rises over the past year. Last year, the Social Security Administration announced a historic COLA for 2022 of 5.9 percent. Unless the rate of inflation drastically decreases, the increase for next year could be much bigger.
The Senior Citizens League, the largest advocacy group for the elderly, now forecasts a 2023 COLA of 10.5 percent after the June consumer price index report. That would be the largest since 1981 when the US was in the throes of another period of high inflation.
Read more
How do US gas prices compare to other nations?
The sky-high rate of inflation outlined in the recent CPI report has cranked up the pressure on President Biden, who was already suffering in the polls as a result of the high price of gasoline. However as gasoline prices have begun to fall in the United States some experts are pointing to similar trends in developed nations across the world, a consequence of economies getting back up to speed after two years of pandemic-induced disruption.
In a White House press release earlier this week, Biden described the 9.1% figure outlined in Wednesday's report as out of date and made explicit comparison to European nations suffering from similar trends.
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Counting the cost of BItcoin
The current carbon footprint from mining Bitcoin alone is massive and until the recent crash of Cryptocurrencies had been growing. According an online calculator that tracks energy consumption created by the University of Cambridge, Bitcoin mining uses as much electricity as Sweden. A campaign called Change the Code Not the Climate cites a report in the journal Nature Climate Change that if it doesn’t change how it verifies its blockchain that Bitcoin alone could raise global temperature by 2 degrees Celsius if it became widely adopted.
An investigation by congressional Democrats released Friday found that seven of the largest Bitcoin mining companies in the US can consume as much electricity as homes in Houston. This drain on the electric grid has caused the price of electricity to rise for local residents and small businesses and stressed infrastructure for delivering energy.
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GM pledges to introduce EV charger across the country
General Motors is teaming up with PiltoCo and EVgo to set up a network of EV fast chargers at intervals of 50 miles along US highways. The project will involve 500 Pilot and Flying J highway travel centers where a total of 2000 fast EV chargers will be installed in conjunction with the EVgo network.
They plan to have the majority up and running by 2023.
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Biden calls inflation figures "outdated"
While today’s headline inflation reading is unacceptably high, it is also out-of-date. Energy alone comprised nearly half of the monthly increase in inflation.
Today’s data does not reflect the full impact of nearly 30 days of decreases in gas prices, that have reduced the price at the pump by about 40 cents since mid-June. Those savings are providing important breathing room for American families. And, other commodities like wheat have fallen sharply since this report.
Inflation is our most pressing economic challenge. It is hitting almost every country in the world. It is little comfort to Americans to know that inflation is also high in Europe, and higher in many countries there than in America. But it is a reminder that all major economies are battling this COVID-related challenge, made worse by Putin’s unconscionable aggression.
Another cryptocurrency lender seeks financial assistance
The value of crypto currencies plunged after peaking late last year, Bitcoin worth less than 30 percent of its peak value. The drop in values and collapse of stablecoin TerraUSD in May has wiped out small investors and is now taking a toll on crypto firms.
Less than two weeks after crypto lender Voyager suspended withdrawals and deposits then filed for bankruptcy, another has begun the process. New Jersey-based Celsius filed Chapter 11 on Wednesday. Its 1.7 million customers have been unable to redeem their assets after the crypto lender froze withdrawals and transfers last month citing "extreme" market conditions.
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Can Twitter force Elon Musk to buy the platform?
Elon Musk offered to buy Twitter lock, stock and barrel for $44 billion this spring. But while the summer heats up the CEO of Tesla has gotten cold feet and said he's backing out of the agreement, putting him on the hook for a $1 billion break-up penalty.
Twitter, which originally tried to block Musk from taking over the social media platform, has now taken him to court to follow through with the deal. So how will the legal battle play out? It could take months or even years for there to be a resolution but Brian Stelter says that Twitter will want to get this over with as soon as possible.
Adding that they'll be looking perhaps not to have the world's richest man take over the company for the agreed price but get more than just the $1 billion penalty.
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Welcome to AS USA
Good morning and welcome to our financial news live feed, bringing you all the latest information on Saturday 16 July. We have the latest on President Biden's attempts to bring inflation under control and the price of gasoline and crude oil in the US.