USA finance and economy news summary | 18 July 2022
US Finance news: latest updates
Headlines | 17 July 2022
- President Biden discusses oil production with Saudi Arabia's Crown Prince in Jeddah
- Key Democrat Sen. Manchin refuses to back any legislation that includes climate or tax provisions
- Crude oil bounces back above $100 a barrel after plunging on Tuesday
- Average US gas prices continues to fall to $4.532
- 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
- Those on Social Security hope for historic COLA increase in 2023 after 9.1% inflation figure
Helpful links and Information
- How much has the CPI increased over the last year?
- Which States receive the most Social Security?
For the first time in two decades, the Euro and the US Dollar have reached parity, meaning that they are exchanging at the same rate. Between the two currencies, around six trillion dollars/euros are traded on the international market each day. The last time the two currencies reached parity was in 2002, when the paper and coin forms of the Euro were released. Since then, the Euro has maintained its position as the second most sought-after currency in the world.
The economies of the United States and the European Union are deeply intertwined and when trouble begins to bring in one, it is likely to appear in the other.
US financial tide could turn on Trump part II
President Biden sees himself as the Democrat with the best chance of beating former President Trump. He's suffering from anemic approval ratings, with a recent poll showing a majority of Democrats don’t want him to be the party’s nominee in 2024.
He’s facing record high inflation, a turbulent political and media environment, and deep frustration within his party over its inability to protect abortion rights and take action on climate change.
It’s no wonder many are beginning to look for alternatives in two years as Democrats face the prospect of a tough midterm election in which they could lose the House and Senate majorities.
Yet the same New York Times-Siena College poll that had terrible news for Biden also showed he would still beat Trump in a head-to-head match-up 44 percent to 40 percent if the next presidential election were held today.
“It’s pretty clear that the strongest argument for Biden 2024 is a Biden vs. Trump rematch,” said Democratic strategist Joel Payne.
Dems push regulators over Bitcoin data
A group of Congress members including US Sen. Elizabeth Warren and US Rep. Jared Huffman sent a letter to the Department of Energy (DOE) and Environmental Protection Agency (EPA) Friday asking regulators to require crypto miners to report information about emissions and energy use.
The legislators also published written responses from seven miners that they had reached out to requesting information about their energy use.
"None of the companies provided full and complete information in response to our questions," the letter to regulators said. In it, legislators asked the EPA and the DOE to "work together to require emissions and energy use reporting by cryptominers."
Catarina Moura takes a look for The Block.
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During tax season those who receive Social Security will have to calculate their combined income. This figure income includes the adjusted gross income (i.e. wages, salary, investments) and Social Security benefits as well as some types of non-taxable interest. After determining this amount, a beneficiary will know whether they need to pay taxes or not.
But the proportion of an individual's Social Security payment that is taxed varies greatly, depending on their total income. For some recipients, Social Security payments will never be taxed.
Biden makes tackling inflation his top priority
"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.
"Tackling inflation is my top priority – we need to make more progress, more quickly, in getting price increases under control."
High gas prices have tempered the normal summer rush
The Fourth of July weekend normally marks the start of a period of high-than-usual gasoline demand in the United States, as millions of Americans make long distance journeys for vacations. However this year things have been a bit different. There was a surge in demand around Independence Day, but since then the amount of gasoline being sold has reduced considerably. Some experts suspect that the high price of fuel, although it has declined in recent weeks, has dampened the enthusiasm for those long summer road trips.
June was another tough month for Americans, building upon May’s 8.6 percent price increase with a staggering 9.1 percent inflation rise. This is the fastest increase in 41 years and one which is causing major concern for Americans.
While the raw data looks bad, the price increases are nearly all driven by aspects outside of governemnt control: oil, fuel, and gas. While the government could expand US production, this is not a quick fix and would take many months before the feelings were felt.
Where has seen the biggest falls in gasoline prices?
Nationally the average price of a gallon of gasoline has dropped by around 50cents in the past month, falling well below the $5 per gallon record heights reached in June. However the actual price consumers pay at the pump is, a large extent, dependent on the level of taxes levied on the fuel by state regulators. As such, there is huge disparity in the amounts motorists pay across the country.
Consumer advice group Gas Buddy outlines some of the cities who have enjoyed the largest gasoline price decline in recent weeks.
The post-pandemic economic recovery has caused huge fluctuations in the price of commodities and currencies around the world, as economies struggle to contend with growing pains. After years of lockdowns and restrictions, most countries have fully reopened in 2022 and the consequences have been mixed.
For the fist time since the early 2000s, the dollar reached parity with the euro this week after a period of sustained gains on the Eurozone currency. The slump was brought about by a combination of factors that have strengthened the dollar internationally and caused concern about Europe’s economic stability.
Inflation continues to hit Americans hard
This report from ABC News outlines the extent to which inflationary pressures are hiking household expenses for Americans, forcing many to cut back or look to more creative ways to save on essentials. Earlier this week the CPI report for June showed that inflation was running at a 41-year high of 9.1% last month, although the White House has claimed that these figures are now out of date.
Regardless, there is still real pain for Americans and Biden is under pressure to bring inflation unde control or face a major backlash in the midterms.
The environmental 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.
Which nations have the highest rate of inflation?
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.
Experts lower inflation projections
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.
Biden outlines clean energy agenda
"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."
What does a strong dollar mean for euro travellers?
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 year.
How many gas stations are selling gasoline below $4 per gallon?
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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Good morning and welcome to our dedicated financial news live feed. We'll have all the latest information on the dollar-euro exchange rate, inflationary pressures and Social Security updates from the United States.