USA finance and payments news summary | 24 May 2022
The US could experience a recession but may not hit until 2023
CNBC spoke with former vice chairman of the Federal Reserve, Alan Blinder, on forecasts which currently show that the US economy is headed for a recession. While Binder agrees he does not see any signs that it will hit this year, but believes that there is a 50 to 60 percnet chance that a mild recession could be felt next year.
The American Rescue Plan helped power a historic recovery which led to the largest job growth ever in a calendar year, saw unemployment claims decline from nearly 20 million when President Biden took office to close to 1 million – and unemployment reach 3.6% – a level the Congressional Budget Office did not predict our nation would reach during the entire decade.
Gas prices have exceeded four dollars a gallon in many states around the country for the first time in history. As a major supplier of natural gas and petroleum, Russia’s invasion of Ukraine has negatively impacted energy markets. After many European nations stopped oil imports from Russia, the global fuel pool has shrunk, pushing rpices up fruther.
How long will it take to change?
Cost of fuel set to keep increasing
The price of gasoline has been a major concern in recent months as multiple factors have pushed the price of fuel soaring in the United States.
On Monday, 3 January 2022 AAA reported that the average cost of a gallon of gas was $3.28 after steady growth since hitting a pandemic low of $1.94 in May 2020. The growth over the intervening 19 months was attributed to a gradual reopening on the economy.
In recent months the cost of gas has continued to grow, soaring up to $4.33 in March 2022. After some dip, the AAA reports the price today as $4.598. Further increases are expected in the coming months.
We hear it’s really a Schumer conversation and there’s progress but until we actually see there’s been an agreement and an initial on the agreement and we’re going to put it on the floor, I’m going to be skeptical.
There’s a responsibility and opportunity we can do something.
You’re not going to hear anything, I don’t think, out of anyone but Schumer and Manchin, just the two of them. I’ve been involved in previous discussions but at this point we’ve really delegated everything to Sen. Schumer in his conversation with Sen. Manchin... it needs to be done soon.
Will the budget reconciliation bill ever get passed?
A deadline for finally passing the budget reconciliation bill looks like it will be passed with nothing agreed. Democrat negotiators are trying to woo Sen. Joe Manchin to vote for their budget plans, though Senate Democratic sources told The Hill there’s no chance of getting a deal this week.
Some hope remains that something can be agreed before the August recess.
With the bill languishing for months, there is still a liklihood that nothing will be completed, especially with the election coming up in November.
The US is in the grips of a serious inflationary problem that has quickly become the battleground for the upcoming midterm elections. From the recession of the pandemic, the boom has quickly turned to bust has sky-high prices could force the country into recession.
Economists had believed that the pandemic-era inflation would have already begun to subside by May 2022. However, it has only gotten worse. This cannot be blamed on the Biden administration nor the economists who misread the situation. In fact, no correct reading could have been made; Russia’s invasion of Ukraine upended the thinking on the pandemic recovery.
Problems approaching for Biden with inflation
Joe Biden has conceded that he believes the fight against inflation will be a slog rather than a quick fix, but gave no indication on how long this could be.
In a bad CBS poll released Monday, 69 percent of the country thinks the economy is bad, and 77 percent saying they’re “pessimistic” about the cost of goods and services in the coming months. With elections coming up in near months, Biden will need a new strategy to win voters.
Bank of American to raise company's minimum wage to triple the national level
Bank of American announced on Monday that at the end of June, its lowest paid workers will get a boost to their hourly wage. A process that began in 2017, when the North Carolina-based company hiked its minimum wage to $15, will accelerate it US hourly minimum wage to $22, over three times the national minimum wage of $7.25 an hour.
The pay increase is equivalent to over $45,000 per year for a full-time worker. Bank of America plans to continue raise the minmum it pays employees to $25 an hour by 2025
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.
EV share of new car sales in March 2022 almost double from last year
Electric vehicles made up nearly seven percent of new car sales in March 2022, almost double its share last year. Interest in EVs has been growing slowly over the past five years, but spiked in March, just when the price of gas did too.
Although on average more expensive than combustion engine cars, the basic model of the new Ford F-150 Lightining is less than $46,000, the average price of a new car in 2022.
Minneapolis rolls out guaranteed basic income pilot program
Like many other cities and non-profits around the nation, Minneapolis will study the effects of boosting household incomes with monthly no-strings-attached cash payments. Over the next two years, 200 participants will receive $500 per month.
The eligibility requirements included living in one of nine Zip codes, having an annual income at or below 50% of the area median income for Minneapolis and experiencing a covid-related impact on their lives.
Welcome and good morning to AS USA's live blog on financial news for Tuesday May 24.
New reports show how important the Child Tax Credit was for low income families who are struggling to provide enough food as inflation cuts into the purchasing power of many households.
Millions have still to receive their tax refund from the IRS. We will be bringing you important information on how to check the status of your refund.
As gas prices begin to increase again various proposals are circulating on Capitol Hill. Some involve the sending of direct payments to residents living in areas where gas is over $4 a gallon. Slowly, this is starting to represent a greater share of the population than ever before. Republicans oppose this move over fears that it will contribute to the current inflationary trends in the market.
Headlines: 24 May 2022
- After posting gains on Monday, all three main indexes are down compared to this time last week.
- Crude oil prices closed Monday just over $110, up sixty-six percent from this time last year.
- Target and Walmart profits drop and stocks plunge after posting financial reports
- Gas prices tick up as the war in Ukraine leads to further supply chain disruptions.
- Markets continue to wobble last week as gas prices continued to increase the cryptocurrency market continued its decline.
- Quit rates increased in eight states in April, as The Great Resignation continues in hot labor market.
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