USA finance and payments | $400 check for car owners, Child Tax Credit, S.S. disability... | 4 June
Headlines: 4 June 2022
- May unemployment holds at 3.6%, 390,000 new jobs added
- New York State gas tax holiday went into effect Wednesday and will end in December 2022
- President Biden laid out three part plan to tackle inflation
- US gas price jumps to record high on Saturday just shy of $4.82 per gallon on average
- OPEC announces production increases for July and August
- No announcement yet amid speculation Biden could announce large-scale student debt forgiveness
- Personal consumption price index shows inflation slowed slightly in April
- Online searches for baby formula soar as shortages continue, average out-of-stock rate nationwide over 73%
Helpful info & links
- California State Disability Insurance scheme: the lowdown
- Governor Newsom proposing $400 rebate for California car owners
- Pennsylvania governor wants to send residents $2,000 stimulus check
- Which states in the US spend the the most on Medicaid?
- New York unemployment benefits: what is the maximum?
- Things to consider before retiring
More AS USA related articles:
Three federal stimulus checks have been paid out to qualifying Americans during the coronavirus pandemic: two under the Trump administration, and one since President Biden entered the White House.
Despite positive unemployment figures and the end of nearly every pandemic restriction, the US economy could be 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.
What do the reports say?
Social Security and Medicare both face long-term financing shortfalls under currently scheduled benefits and financing. Costs of both programs will grow faster than gross domestic product (GDP) through the mid-2030s primarily due to the rapid aging of the US population. Medicare costs will continue to grow faster than GDP through the late 2070s due to projected increases in the volume and intensity of services provided.
How could benefits be affected by a recession?
Reports from the Social Security and Medicare organisations have sounded alarm bells that people's benefits oucld be at risk unless there is further funding and that Congress needs to do more to protect the two.
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New price records have been set across the US for fuel since the outbreak of the war in Ukraine. Most recently a new barrier has been smashed - the price of a gallon gasoline is at least $4 in every state in the US.
Prices have been rising since the turn of the year. According to the AAA, the average price for a gallon of fuel was $3.28 in January. While it had been rising after the lows of the pandemic, the Russian war in Ukraine has caused a huge surge in prices.
What is New York doing to its fuel tax?
Like many states in the US, New York is to cut its fuel tax in a bid to reduce the burden on drivers paying at the pump.
Governor Kathy Hochul announced in April that the state would cut its tax on regular gas and diesel as part of the state budget. The measure will go from 1 June through to the end of the year with separate tax relief being implemented in some local jurisdictions.
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Tesla CEO Elon Musk is reportedly considering cutting around 10% of salaried staff from the electric automotive company, according to a report published by Reuters.
In emails sent to employees on Friday, Musk reportedly said that Tesla had become “overstaffed in many areas.” A separate message sent to executive on Thursday told recipients to “pause all hiring worldwide” due to a “super bad feeling” that Musk had about the economy.
Is Biden losing key support?
According to a recent Washington Post-Ipsos poll, President Biden is losing support amongst black voters, a key voting bloc which propelled him to the presidency.
The Post poll found that only 60 percent of respondents said they feel Biden is keeping most of his major campaign promises. Depsite backing pieces of legislation related to issues that impact many Black voters, an evenly-divided Senate has allowed Republicans to stop the president from passing any meaningful legislation.
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Abbott Nutrition restarting production of baby formula, product release 20 June
The US is experiencing a major shortage of baby formula with 10 states out-of-stock level at 90 percent. News that Abbott Nutrition will restart production will come as good news to many parents struggling to find baby formula for their children. Unfortunately, it will still be more than two weeks before the first supplies will be available to customers.
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The price of gasoline continues to climb across the United States causing ever more pain at the pump. Proposals to give drivers some relief have been put forth around the nation from a gas tax holiday, like New York that just went into effect, to direct payments as was approved in Maine.
Democratic lawmakers in the North Carolina are trying to convince their GOP colleagues to do the latter. “We want to put more money in their pockets now,” Senate Democratic Leader Dan Blue said. However, Republicans, who control the legislature, would prefer to put in place longer term tax cuts instead of a one-off measure.
The past couple years have seen a great upheaval for many Americans from the near collapse of the US economy to the fastest recovery from a recession in history. The rapid rebound though has brought with it inflation not seen in four decades putting new strain on household finances.
With prices rising on just about everything it can seem impossible to set aside money to save for the future especially considering a new report that found 61 percent of respondents said they had little to nothing left over at the end of the month in April 2022.
Here’s a look at what you can do to start saving today.
Consumers consider trust important when making purchases but have little for brands they use
Consumers are becoming increasing skeptical of institutions as they find dependable information harder to find. A 2021 survey found that trust is a deciding factor when making purchases for 80 percent of respondents. However, of the 1,000 consumers who participated only 34 percent actually trust the brands that they use.
According to the 2021 Edelman Trust Barometer, slightly less than half of Americans have trust in US CEOs. The situation is much worse for business leaders in Japan and France where respectively 18 and 22 percent of consumers feel they have any credibility.
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Three out of five Americans living paycheck to paycheck
The US, like the rest of the world, has been experiencing high rates of inflation as the economy rapidly rebounded from the pandemic-induced financial crisis. Although wages have been rising, for many workers rising prices have outpaced those gains making it hard to make ends meet.
The New Reality Check: Paycheck to Paycheck Report by Pymnts and the LendingClub Corporation found that 61 percent of respondents said they had little to nothing left over at the end of the month in April 2022. That is a nine percent increase from the year before.
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Baby formula shortage worsens across the United States
The nationwide average out-of-stock level reached 73.6 percent at the end of May with ten states crossing the 90 percent threshold. Inventory levels began to decline last summer but the shortage was exacerbated when a production facility run by Abbott Nutrition, the company with the largest share of the baby formula market, was closed due to bacterial contamination.
That factory will resume production in the coming days but it will still take six to eight weeks from that moment for new formula to hit the shelves. In the meantime, President Biden launched "Operation Fly Formula" to speed up delivery of stock from overseas. The next shipments are scheduled for 9 and 11 June.
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Government effort secures greater supply of baby formula
A number of major retailers in the United States have imposed new purchasing restrictions on infant formula in response to a worrying supply shortage. CVS said it was limiting both in-store and online purchases of baby formula to three per order, following a similar cap introduced by Walgreens in March. Kroger has opted for a four-item limit per customer while Target has also placed restrictions on order size.
However there is hope that these desperate measures may no longer be needed after the White House was able to secure extra supplies of infant formula. An estimated 127 million extra bottles are expected to reach consumers in the coming weeks.
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Biden celebrates job report progress
"With today’s excellent jobs report and unemployment remaining at a near-historic low of 3.6 percent, I want to speak very briefly today about our economy and what we’re doing to lower the costs for American families."
"Because of the enormous progress we’ve made on the economy, the Americans can tackle inflation from a position of strength. Still a problem, but we can tackle it from a position of strength."
Biden enjoys positive May jobs report
The hotly anticiapted Labor Department jobs report for May found that the United States was still making good progress in job creation, while managing to address the high rate of inflation which has caused major concern. CNN's White House correspondent John Harwood describes it as a "Goldilocks report", meaning that the balance between growth and inflation has been found. Too much growth would push inflation rates higher, but too little would suggest that the economic recovery is stagnating.
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Earlier today the Labor Department released the May jobs report, finding that the United States economy had added 390,000 new jobs over the course of the month. However Tesla CEO Elon Musk has a much less positive outlook and warned employees that the company is likely to have to cut around 10% of staff.
In messages to staff and executives reported by Reuters, Musk paints a very different picture of the state of Tesla's finances, warning that they are "overstaffed."
Nationally the average price of gasoline is over fifty percent higher than it was a year ago. New Yorkers are seeing prices well above the national average with $5-plus the average in five counties. Diesel is even more dear in the Empire State with a gallon costing on average $6.45, nine cents less that its peak in late May, but twice what it is was last year.
New York is joining a growing list of states that have decided to give motorists some relief by dropping the state’s levy on motor fuels. Governor Kathy Hochul announced in April that the state would cut its tax on regular gas and diesel as part of the state budget.
When will the high gas and food prices end?
The May jobs report brought positive news for the Biden adminstration and suggested that the sky-high rates of inflation may be coming down, but that does not mean that there will be any immediate relief for consumers feeling the pain. Speaking to reporters at the White House earlier this week, President Joe Biden said that there is no quick fix for the high gas and food prices.
"The idea we're going to be able to, you know, click a switch and bring down the cost of gasoline is not likely in the near-term, nor is it with regard to food," he said.
Who's to blame for the high rate of inflation?
There are numerous factors contributing to the high rate of inflation in the United States, meaning that there is no one person to blame for the price rises that have hurt consumers in recent months. The outlook remains mixed for the markets, as Former Dallas Fed President Richard Fisher, senior advisor to Barclays, explains to CNBC here.
US finance news, live updates: welcome
Good morning and welcome to AS USA's daily live blog for Saturday 4 June 2022, bringing you the latest financial news in the United States.