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USA finance and payments: summary news | 7 June

Update:
US President Joe Biden walks on the South Lawn of the White House in Washington.

US finance: live updates

Headlines: 7 June 2022

- Secretary Yellen urges Congress to approve $80bn for IRS to chase tax cheats, reduce backlog

- Select Massachusetts residents to receive $500 direct payment

- Tesla boss Elon Musk backtracks on job cuts after saying that 10% of workers would be laid off

-  Federal Reserve expected to address 40-year-highs in inflation with interest rate hikes 

North Carolina lawmakers propose a $200 tax refund for drivers

- US gas price jumped six cents on Tuesday, now just shy of $4.92 per gallon on average

- Unemployment falls to lowest rate since 1969, May jobs report shows

- Treasury Secretary Yellen says she was "wrong" about the path of inflation

Helpful info & links

- A few helpful tips for saving money

- California State Disability Insurance scheme: the lowdown

- Why are mortgage rates beginning to decrease in the US?

- Pennsylvania governor wants to send residents $2,000 stimulus check

- North Carolina Democrats propose $200 gas tax rebate

More AS USA related articles:

How does an adjustable-rate mortgage work?

Latest News

How does an adjustable-rate mortgage work?

An adjustable-rate mortgage (AJM) has a variable interest rate, meaning that rate shift over the life of the loan. Those who take out a traditional or thirty-year mortgage lock the interest rate that will be applied to their principal balance when they sign the agreement. Refinancing is an option but the borrower would need to apply to their servicer to see a decrease in their interest rate. ARMs, by comparison, will offer one interest rate for the first few years of the loan, and then the bank will adjust the rate applied to the principal balance. Read more. 

Job growth in US slows but still strong

Part of President Biden’s stated three-part plan to tackle inflation is to “transition from an historic jobs recovery to steady, stable economic growth.” He was pleased with the May jobs report released last week showing 390,000 new jobs created, well above the increase of 325,000 predicted, but under 400,000, the first time in 12 months.

Last week the Labor Department reported that initial unemployment claims were also down more than expected dropping 11,000 to 200,000 for the week ending 28 May. Across the US, the number of Americans collecting jobless benefits after an initial week of aid ticked down by 34,000 for the week ending 21 May. At 1.309 million that was the lowest level since December 1969 for continuing claims.

How to convince your company to implement a 4-day work week

The largest pilot program of a 4-day work week is set to begin on Monday in the United Kingdom. Workers will reduce the timetable by 20 percent but still take home 100 percent of their pay pre-trial.

The pilot program will involve 70 businesses with a combined total of 3,300 workers and will run for six months. Another program is underway in the US and Canada, with another scheduled for later this year.

Until now, Iceland had conducted the biggest pilot of this kind between 2015 and 2019. The results were positive with a dramatic increase in employee well-being and no corresponding drop in productivity.

How much will healthcare cost once I’m retired?

US NEWS

How much will healthcare cost once I’m retired?

While some costs reduce for people when they retire, old age can also bring more ailments necessitating trips to the doctor. For most Americans, one of the largest expenses in retirement is expected to be healthcare.

Healthcare costs have been rising dramatically over several decades and are expected to keep rising. Based on the current trends, Fidelity has calculated that the average 65-year-old couple that retires in 2022 could now need around $315,000 to cover future healthcare expenses including Medicare premiums and out-of-pocket expenses.

Full details

IRS

Yellen urges Congress to approve $80 billion for IRS "under seige"

Reuters - US Treasury Secretary Janet Yellen told a hearing of the Senate Finance Committee that the IRS is desparate need of $80 billion boost to budget. "The IRS is under siege. It is suffering from huge underinvestment," she said. The money would help the tax collecting agency recover $600 billion in unpaid tax bills and clean up a huge backlog of tax returns.

Yellen told the committee that the IRS lacked the personnel needed to carry out complicated audits of higher-earning taxpayers. "The resources of the IRS have been cut to the point where they've largely cut back on the complicated audits, the ones that are harder, of high income taxpayers."

When asked about lower-income taxpayers that claim the EITC being five times more likely to be audited, "The fact that such a large share goes to audit the EITC is very unfair," the Secretary said.

JetBlue sweetens offer to lure Spirit Airlines shareholders away from Frontier

JetBlue upped the ante in its bid to buy Spirit Airlines offering an increased reverse break-up fee should the deal fall afoul of antitrust regulators. Spirit shareholders would now receive $350 million in cash, $150 million more than previously offered.

The sweetened deal comes as Spirit shareholders are set to vote on an acquisition offer from Frontier which is offering $250 million should regulators oppose the merger. Shareholders are scheduled to vote on Frontier's offer on Friday and have been asked not to take any action at this stage while the board examines the new bid from JetBlue.

The combination of Spirit with either Frontier of JetBlue would create the fifth biggest airline in the US and a powerful rival to American Airlines, Delta Air Lines, United Airlines and Southwest Airlines. Travelers could benefit with cheaper fares and increased service to smaller cities.

What is causing Bitcoin and other cryptocurrencies to crash?

US NEWS

What is causing Bitcoin and other cryptocurrencies to crash?

Bitcoin, the biggest cryptocurrency in the world, has had a difficult ride since it reached its peak value at the back end of last year. From a high of $1 trillion then, the currency now has a value of $562 billion. And it isn’t the only cryptocurrency in trouble.

The most recent selloff has been influenced by the fall of various stablecoins. These are cryptocurrencies that support their crypto assets by controlling the equivalent in real world assets, meaning they should never really trade for under $1. However, tether, the largest of these coins, tanked in May leaving thosuands of investors in deep trouble.

Read more

Digital assets, blockchain technology and cryptocurrencies have experienced tremendous growth in the past few years and offer substantial potential benefits if harnessed correctly. It is critical that the United States play a leading role in developing policy to regulate new financial products, while also encouraging innovation and protecting consumers.

Kirsten Gillibrand, US Senator

As this industry continues to grow, it is critical that Congress carefully crafts legislation that promotes innovation while protecting the consumer against bad actors.

Cynthia Lummis, US Senator

What could be included in new cryptocurrency bill?

Crossbench Senators Kirsten Gillibrand and Cynthia Lummis have brought forward legislation  that will create a regulatory framework for digital assets.

With terrible fortunes for the cryptocurrency market since the turn of the year, calls have grown for further regulation to protect investors. The proposed legislation will give regulatory authority over digital asset spot markets to the ​​Commodity Futures Trading Commission (CFTC), which regulates commodities markets. 

At the moment, the market is a wild est.

$500 stimulus checks sent to low-income workers in Massachusetts

US NEWS

$500 stimulus checks sent to low-income workers in Massachusetts

Select residents in Massachusetts are going to start receiving $500 direct payments from the state, part of the Commonwealth’s Essential Employee Premium Pay Program.

This round of payments will be sent out on Tuesday, 7 June with more than 300,000 residents expected to be eligible for the financial support. In the first year of the pandemic the federal government issued three rounds of stimulus checks but that well has dried up, with President Biden now turning his attention to the high rate of inflation.

Read more

Drops on Wall Street this morning

The S&P 500 index has dropped by 0.6%, or 25 points, to 4,096 in early trading, with the Nasdaq Composite down 0.9%.

Target is down 6% after it annoucned it would be slashing prices to shift surplus stock.

World economy under threat says World Bank

The World Bank has slashed its global growth forecast, warning that Russia’s invasion of Ukraine has compounded the damage from the covid-19 pandemic and could push many countries into recession.

In its Global Economic Prospects report, the World Bank cut its forecast for world GDP growth this year to 2.9%, from 4.1% previously, and warned there is a considerable danger of stagflation.

US Unemployment drops to lowest level since 1969

US NEWS

US Unemployment drops to lowest level since 1969

The Labor Department released data on weekly unemployment claims, the most timely data on the economy’s health, which showed new claims unexpectedly fell last week. The following day a report from the US Bureau of Labor Statistics showed strong job growth continued in May.

Read more

Today, thanks to the economic plan and the vaccination plan that my administration put into action, America has achieved the most robust recovery in modern history just two years removed from the worst economic crisis since the Great Depression. 

The job market is the strongest it’s been since just after World War Two.  We’ve got more evidence of that today.  We learned that in May the economy added another 390,000 new jobs, bringing the total since I took office to 8.7 million new jobs — an all-time record.

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

US NEWS

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

The Washington Post has 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.

Read more

Biden's decision on student loan debt forgiveness not expected until summer

Student loan borrowers have been anxiously awaiting news on a mooted plan by the Biden administration to forgive some amount of debt. After he met with the Congressional Hispanic Caucus in April it was revealed that told members that he was looking at options to cancel an unspecified but significant amount of federal student loan debt.

While lawmakers in his party have called for up to $50,000, Biden has repeated said he would consider up to $10,000 of forgiveness. At the time Biden told reporters that he would make an announcement in about two weeks' time, it's been six weeks now.

The Wall Street Journal is reporting that officials say no decision will be made until at the earliest July. The student loan forebearance that has been in place since March 2020 is set to expire 1 September.

American households are struggling without Child Tax Credit boost to incomes

Inflation around the world has been skyrocketing, in the US it has hit highs not seen in four decades. This has pushed up the price on just about everything and families are noticing, forcing them to adjust what they buy even skip meals so that thir kids can eat.

A recent survey from Parents Together Action, a nonprofit, of 500 parents found that almost half of those who received the 2021 Child Tax Credit advance payments said they now can’t afford enough food to feed their families

Over 90 percent of respondents are finding it hard to make ends meet, not only having to cut back on what they purchase, but also dip into emergency funds to keep their heads above water.

How does $12,500 EV tax credit work?

US NEWS

How does $12,500 EV tax credit work?

The Senate Finance Committee forwarded new legislation that would provide a significant increase to the amount offered in electric vehicle (EV) tax credits. The new system is designed to encourage consumers to buy electric cars and incentivise companies to utilise union workers in the United States.

The new EV tax credit would be worth up to $12,500 for motorists, a sizeable increase on the $7,500 currently on offer. However while the existing programme is available to cars of any value the new programme would only apply to vehicles with a retail price of less than $80,000.

Read more

Ford announces $2.3 billion investment to ramp up electric vehicle production

As part of the auto maker's plan to dedicate $50 billion to electric vehicle production by 2026, Ford laid out an initial $2.3 billion investment on Thursday. The company plans to increase global EV output to 2 million annually over the next four years, representing over a third of the cars it will build.

The Michigan-based automaker plans to add a new electric commercial vehicle to its lineup and expand production of the new F-150 Lightning pickup truck to 150,000.

Assembly plants in Michigan, Missouri and Ohio will receive in total $3.7 billion to boost production of both electric and gasoline-powered vehicles. Ford Motor Company said it will add more than 6,200 hourly jobs and convert 3,000 temporary workers into full-time employees who will receive healthcare benefits and higher pay.

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