USA finance and payments news summary: Wednesday 1 June 2022

US NEWS

US Treasury Secretary Janet Yellen admits inflation forecast errors

Inflation has been a problem for the US economy for nearly a whole year. The inflation rate in February of 2021 was 1.7 percent, just under the Federal Reserve's 2 percent target. However, from April 2021 inflation began to take a sharp rise to 4.2 percent, so far at 8.5 percent in June 2022.

The Biden adminsitration has been criticised for the problem, which threatens to derail recovery from the pandemic. Furthermore, him and his team have drawn criticism for comments they made last year about inflation. One of these people is Treasury Secretary Janet Yellen. Last year she described inflation as “transitory,” but in a recent CNN interview she changed her opinion on the matter.

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US NEWS

How much money can you save with the New York gas tax suspension?

Gas prices continue their upward march around the US crossing the $5 mark in parts of New York. Starting 1 June Empire State residents will get some relief.

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Survey paints a bleak picture for gig work conditions

The Economic Policy Institute released findings from a recent survey on the working conditions for gig workers. The research carried out in the spring of 2020 paints a poor picture of their earnings even relative to other service workers who typically receive low pay.

Nearly 30 percent earned less than the minimum wage in their state. Around 14 percent received less than the federal minimum wage which has been $7.25 per hour since 2009. This has resulted in almost a fifth going hungry and 30 percent having to rely on government aid to put food on the table. Over 30 percent said that they weren't able to pay the full amount of their utility bills.

Almost two thirds reported losing income due to technical difficulties with the platforms system for clocking in and out. That's a rate over three times reported by regular wage employees.

Large and SUV electric vehicles reach price parity in the US

One of the factors that has deterred American consumers from purchasing electric vehicles has been the cost. However, as more manufacturers roll out their own EVs the price has been coming down reaching price parity with efficient internal combustion engine vehicles in Europe, Australia and the US for large cars. All electric SUVs have done the same in the last two markets.

It's expected that EVs will reach price parity in all major markets by 2024 at which point "everything in the city will change," according to Alvaro Rodriguez, Spain public affairs director of electric scooters manufacturer VOI. By 2040 he believes the number of EVs on the road will rise from 7 million currently to around 550 million globally.

The rising number of EVs will have a knock-on effect with battery scrap industry in 10 years' time, the typical lifespan. One factor that will need to be overcome though is the current lack of harmonization between different parts of the EVs and batteries industry to reclaim the  cobalt, graphite, lithium, manganese and nickel that EV batteries may contain.

SOCIAL SECURITY

Can I sign up for Medicare if I already get Social Security benefits?

If you are receiving benefits, the Social Security Administration will automatically sign you up at age 65 for parts A and B of Medicare. At the beginning of your initial enrollment period (IEP), three months before your 65th birthday, Social Security will send you instructions in the post.

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EU moves forward with ban on Russian oil imports after compromise is reached

The European Union leaders reached a deal that will see imports of crude oil from Russia into the trading bloc cut by 90 percent by the end of the year. The ban gives carveout to the Czech Republic, Hungary and Slovakia, three nations that are landlocked and heavily dependent on energy imports from Russia. The move comes as the EU tries to reduce income to the belligerent nation after it invaded Ukraine in February.

The move has caused price of crude oil to rise yet again.

US NEWS

US President Joe Biden’s latest plan to cancel $10,000 in student debt per borrower.

The Washington Post published an article on May 27 detailing the Biden administration’s plan regarding student debt. According to three people familiar with the situation, there will be an upcoming announcement that the president will forgive $10,000 in debt for graduates earning under a certain limit.

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Millions of borrowers at risk of student loan default when federal moratorium ends

Student loans payments and interest have been frozen since March 2020 giving breathing room to millions of borrowers. The lastest extension of the moratorium will end 1 September when roughly 40 million borrowers will need to restart payments.

Roughly twenty-five percent of those borrowers were in deliquency or default when the pause was put into place. Rohit Chopra, head of the Consumer Financial Protection Bureau is worried that even more may be at risk come September. Currently, his agency is awaiting a decision on student debt cancelation that has been parsed by the Biden administration.

Biden's three-part plan to tackle inflation

Americans perception of President Biden's job performance has been taking a beating as household finances struggle to make ends meet due to inflation not seen in four decades. To show that he hears their concerns, Biden laid out a three-part plan to tackle inflation.

First of all, he's acknowledging that it's the Fed's job to bring down inflation and that he doesn't plan to get in the way of the central bank's policymakers.

Secondly, he will continue to work to make goods more affordable, focusing on high gas prices which hit $4.62 on average across the US on Tuesday.

Thirdly, he plans to reduce the federal budget through common-sense reforms to the tax code. “With the right policies, the US can transition from recovery to stable, steady growth and bring down inflation without giving up all these historic gains,” Biden wrote.

US NEWS

US Economy: Experts fear United States could enter a recession if spending continues to slow

Despite positive unemployment figures and the end of nearly every pandemic restriction, the US economy is headed for the rocks. Inflation, currently standing at 8.3 percent year-on-year, is threatening to pull the plug on economic progress. Prices for some of the most neccessary commodities are at record levels, such as fuel and grain, without a clear end date for when things may get better.

Many experts are predicting a recession.

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What did Janet Yellen say about inflation?

I think I was wrong then about the path that inflation would take. As I mentioned, there have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that I didn't at the time fully understand... So really, the shocks to the economy have continued, but inflation is the number one concern for President Biden

Officials admit wrong prediction for inflation

(Reuters) - US Treasury Secretary Janet Yellen said on Tuesday that she was wrong in the past about the path inflation would take, but said taming price hikes is President Joe Biden's top priority and he supports the Federal Reserve's actions to achieve that.

Asked in a CNN interview whether she was wrong to downplay the threat that inflation posed in public statements over the past year, Yellen said she was wrong.

How to make the most of the high gas prices

With little sign of an end to the high gasoline prices in sight, motorists are being advised to think carefully when they top up. As is the case across the board in the United States, prices are on the rise and the national rate of inflation remains painfully high. An AAA spokesperson has recommended using the comapny's price tracker app to locate the cheapest fuel near you. 

US finance news, live updates: welcome

Good morning and welcome to AS USA's daily live blog for Wednesday 1 June 2022, bringing you the latest financial news in the United States.