USA finance and payments news summary | 26 May 2022
US Finance News: Live Updates
Headlines: 27 May 2022
- Bitcoin drops back below $29,000, roughly 47% down over the past six months
- US Energy Secretary Jennifer Granholm accuses Russia of "weaponizing energy" with high gas prices
- Online searches for baby formula soar as shortages continue
- Pennsylvania proposes $2,000 stimulus check for residents.
- Concern over high energy prices and insufficient power grid ahead of the summer months
- Target and Walmart profits drop and stocks plunge after posting financial reports
- Crude oil prices closed above $110 on Thursday, representing a 66% year-on-year increase
Helpful info & links
- What is the California State Disability Insurance (SDI) program?
- Which states spend the most money on Medicaid?
- New York Unemployment Benefits: what is the maximum?
Will the housing boom go bust?
Worries have been growing that the red-hot growth in housing prices may be entering bubble territory. The Dallas Fed has said that should prices go down that the fallout would not resemble the 2008 crash. However, a correction maybe in order for some markets.
Mark Zandi, the chief economist at Moody’s Analytics, told NPR that he expects prices to come down in some of the “most juiced-up markets.” And, if “prices are 5, 10, 15% below where they are today where they’re peaking,” in two years’ time “I’d say that sounds about right to me,” he said.
He doesn’t see a housing collapse though, because home prices will be bolstered by a couple fundamentals, supply and improved lending practices. So what markets will be safe?
Low-cost internet initiative to boost connectivity
President Biden earier this month announced that 20 internet providers, including AT&T, Comcast and Verizon, have committed to the Affordable Connectivity Program (ACP). The program is designed to ensure access to high-speed internet service for no more than $30 per month, for eligible households. Roughly 80 percent of Americans live in communities where these providers operate.
The program also provides eligible households $30 per month off their internet bills, so families can receive high-speed internet at no cost when paired together. To check your eligibility, head over to the Affordable Connectivity Program website, or call (877) 384-2575.
Apple to keep iPhone production flat in 2022 as demand slows and covid disrupts
Bloomberg reports that Apple plans to keep production of its iPhone around 220 million units for 2022. Slowing demand and covid lockdowns in China along with continuing supply chain problems are behind the move.
Shanghai is in it seventh week of a city-wide lockdown that has paralyzed the financial capital of China. Meanwhile, Beijing is ramping up its efforts to squash an outbreak in the capital city with a potential lockdown looming.
Head of FDA speaks about inspection of Abbott baby formula facility
"You probably wouldn't want your infant eating in that kitchen," Dr. Robert Califf, the commissioner of the US Food and Drug Administration said of Abbott Nutritions facility that was closed when a number of children became ill after consuming baby formula produced there.
While he says even though they can't prove a connection between the bacteria found at the plant and the children that got sick, "doesn't mean there was no connection. We can't rule it in, nor can we rule it out."
Abbott baby formula products have around 42 percent of the market share, and along with Reckitt, Nestle and Perrigo have a combined total of 90 percent. The closure of the plant exacerbated a growing shortage of baby formula across the US which has crossed the 50 percent out-of-stock level in at least four states.
The first shipment of 132 pallets of baby formula from Europe via military cargo plane arrived on Sunday as part of "Operation Fly Formula" ordered by President Biden to alleviate the current shortage. He is also using the Defense Production Act to speed up production in the US.
Fed meeting notes show policymakers open to aggressive rate hikes
When central bank policymakers met for the Federal Open Market Committee, all the participants were in agreement to hike interest rates by half a point. The majority also concurred that similar hikes of that magnitude would "likely be appropriate" when they meet again in June and July, then followed by quarter-point hikes.
There was general concensus that moving aggressively now "would leave the Committee well positioned later this year to assess the effects of policy firming." The policymakers see the US economy is strong but inflation is running high, three times the Fed's target rate. The agreed that there is still the risk of faster inflation due to the war in Ukriane, ongoing covid lockdowns in China both of which will add to lingering supply chain problems.
Fed is behind the curve with interest rate hikes
The Federal Reserve has begun to raise interest rates to tamp down inflation which has hit forty-year highs. The latest rate hike was 50-basis-points, the sharpest hike since 2000. The Fed has embraced half-percentage point hikes for June and July to combat inflation which policymakers agree has become a key threat to the economy's performance.
However, Michael Contopoulos, Fixed Income Director at Richard Bernstein Advisors says the central bank is behind the curve. From what he saw on Wednesday, the Fed still sees inflation as transitory and that supply chain bottlenecks will just solve themselves, but is there a secular shift going on?
Governor Tom Wolf proposed “$1.7 billion plan to help Pennsylvania fully recover from the pandemic and pave the way for a successful future” in February. Part of his proposal included $500 million for the PA Opportunity Program which would send households in the Keystone State with an income of $80,000 or less a direct payment for up to $2,000.
Legislation has been introduced in both the Senate and House by Democratic lawmakers but the “Republican-led General Assembly has been slow to act,” on his plan or provide one of their own to use federal stimulus funding from the American Rescue Plan Act (ARPA). The state is sitting on $2 billion in federal ARPA funds that must be used by 31 December 2024 or it gets sent back.
The governor also renewed his push to raise the minimum wage before the 4th of July this year.
This year the Child Tax Credit will revert back to the program offered by the IRS before the American Rescue Plan expanded it in 2021. For 2022 the credit will be worth up to $2,000 per child, with the money to be distributed in the form of a single end of year tax credit. This will either reduce the size of the recipient’s tax bill or increase their tax refund.
Children must be aged 16 or younger to be eligible for the support, and the household income cannot exceed $112,500 (single filer) or $150,000 (couple filing jointly) to receive the full amount.
This year the credit is partially refundable, meaning that the full $2,000 per child is only available for households who contribute at least that amount in IRS income tax.
CBO, federal budget deficit will drop to $1 trillion
The White House is touting the latest report out of the Congressional Budget Office showing that the US budget shortfall will will dramatically decline from $2.7 trillion. This comes on the back of pandemic era financial stimulus and aid programs ending and a booming economy.
Gas prices have exceeded four dollars a gallon in every state around the country for the first time in history. Prices have not reached the levels they are currently holding at since the 2008 when the financial crisis was reeking havoc on economies all over the world.
EV car sales doubled in 2021 worldwide, US ended two-year slump
In March electric vehicles (EVs) made up nearly seven percent of new car sales in the US, nearly double their share in 2021. Last year saw the US break a two-year slump in sales, doubling to 630,000.
The growth in sales trend was not limited stateside, worldwide 6.6 million EVs were purchased, twice as many as the year before.
Why are gas prices so high?
Answering a question on whether the high price of gasoline was in part a calculated decision to push consumers towards electric cars, Energy Secretary Jennifer Granholm said that the rise was a result of global pressures. As she pointed out, the cost of crude oil has soared globally and that cost has been passed on to consumers.
Welcome to AS USA
Good morning and welcome to AS USA's dedicated financial news live feed, bringing you all the latest from the energy price crisis to cryptocurrency collapse, along with other news that could affect your pocket book.