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USA finance and payments news summary | 13 June 2022

Update:
FILE PHOTO: A Wall Street sign outside the New York Stock Exchange in New York City, New York, U.S., October 2, 2020. REUTERS/Carlo Allegri//File Photo

US finance news: latest updates

Headlines: 13 June 2022

- Inflation increases one percent in May, with fuel oils alone seeing a 106 percent bump in price. 

- Inflation has led to soaring global food prices, leading to an uptick in food insecurity and creating a high risk of famine for millions around the world. 

- Gas prices hit record highs: Regular ($5.01), Mid-Grade ($5.38), Premium ($5.676), Diesel ($5.77), and E85 ($4.333). 

- S&P 500 fell more than five percent last week. 

- The price of a barrel of crude oil sits at $120.67, up 16% compared to this time last month. 

Helpful links and information 

Gas prices: Are gas prices more expensive in other countries?

Do I have to pay taxes on Social Security benefits? How much?

- Student loan borrowers patiently await President Biden's decision on debt forgiveness. 

Cryptocurrencies: when was the last time the Bitcoin price dropped below $24k? What are the reasons?

CRYPTOCURRENCY

Cryptocurrencies: when was the last time the Bitcoin price dropped below $24k? What are the reasons?

Less than a week ago, we were writing about a sudden rise in the value of Bitcoin. It had risen to $30,000 from around $27,000 in May. However, the fickle nature of cryptocurrency markets has been once again proven. The value has sunk to under $24,000, its lowest value in two years, including a staggering 14 percent drop in the last 24 hours.

Read more

How to access your Social Security benefit verification letter

The Social Security Administration (SSA) oversees a broad range of financial support programs and keeping tabs on your benefits can seem a little overwhelming sometimes. However the SSA's My Social Security online portal allows recipients to keep track of their benefits payments and view their own earnings history. If you need to find your benefits verification letter you will be able to access a copy on you online account. 

"While it is good to see critical “core” inflation moderating, it is not coming down as sharply and as quickly as we must see. Putin’s Price Hike hit hard in May here and around the world: high gas prices at the pump, energy, and food prices accounted for around half of the monthly price increases, and gas pump prices are up by $2 a gallon in many places since Russian troops began to threaten Ukraine."

Joe Biden, POTUS

"My Administration will continue to do everything we can to lower prices for the American people. Congress must act urgently as well. I call on Congress to pass a bill to cut shipping costs this month, and get it to my desk, so we can lower the price of goods."

Joe Biden, POTUS
What does ‘shrinkflation’ mean? Are product packages getting smaller due to inflation?

US NEWS

What does ‘shrinkflation’ mean? Are product packages getting smaller due to inflation?

One consequence of sustained price rises is ‘shrinkflation’, a related term which describes the trend of products becoming smaller in response to rising production costs. In short, rather than increase the price some manufacturers are simply reducing the size of their products instead.

The consumer price index (CPI), a measure of price increases in the United States, found that the annualised inflation rate for April 2022 was a whopping 8.3%. With inflation so high consumers are noticing significant changes in their purchasing habits.

Read more

White House pressed on inflation response

The White House has responded to suggestions that the Biden administration should step in and prevent the Federal Reserve from raising the interest rate too high. The Fed is thought to be considering a major interest rate hike in order to rein in the high inflation which has seized the economy. However a high interest rate could cool the economy too much and risk slipping into a reccession, a nightmare for the fragile post-pandemic economy. 

Prolonged high demand for oil is causing gasoline price rises

There have been a number of factors limiting the availability of oil in recent months. Sanctions on Russia-produced fuels and continued supply chain issues have made it more difficult to import crude oil to the US, pushing up the price charged to consumers. 

As S&P Global Inc. Vice Chairman Daniel Yergin told Bloomberg TV: “The supply situation is so razor thin."

Wall St slumps amid economic concerns

As the United States looks to rein in inflationary pressures, the Federal Reserve is preparing to raise interest rates in a bid to slow the economic growth. Since the economy's post-pandemic recovery in earnest in 2021 the high rate of inflation has become a growing problem. 

However raising interest rates has a multitude of consequences and could serve to destabilise confidence in the economy at a crucial time. Wall St has entered into a bear market, meaning that investors are unsure if growth is likely and they begin to sell off their positions. 

“The best thing people can do is to not panic and don’t sell at the bottom,” said Randy Frederick, managing director at the Schwab Center for Financial Research, “and we’re probably not at the bottom.”

Do I have to pay taxes on Social Security benefits? How much?

SOCIAL SECURITY

Do I have to pay taxes on Social Security benefits? How much?

Some people will need to pay federal income tax on Social Security benefits. Individuals and married couples earning above a certain threshold will likely have taxes levied on their benefits. 

For those with a combined income between $25,000 and $34,000 ($32,000 to $44,000 for married couples) a year, the Social Security Administration may be able to levy tax upon fifty percent of your benefits. Finally, with an income over $34,000 ($44,000 for married couples), one can be taxed up to eighty-five percent of their Social Security benefits.

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Biden praises US jobs market

The United States has recorded record-breaking job market growth but high inflation is threatening to devalue the wages of those who are in work. President Biden has said that tackling the high inflation rate is now his number one economic priority, but reiterates his belief that the job market growth is reason to celebrate. 

Speaking at Rehoboth Beach Convention Center, Delaware, Biden said: "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."

US oil production grows under Biden

Since the price of gasoline and other crude oil-based products have increased in the past few months, many people have pointed the blame at President Biden for allegedly not doing enough to fulfil the nation's demand for oil. Sanctions imposed on Russia have cut off a major producer from the market and sent costs spiralling. 

However this graph shared by the President's former Chief of Staff Ron Klain shows that oil production per day has actually increased during Biden's presidency. 

What is the highest price gasoline has reached in US history?

LATEST NEWS

What is the highest price gasoline has reached in US history?

As of Monday, 13 June, the national average cost of a gallon of gasoline in the US is at $5.014, according to the AAA. A month ago customers were shelling out $4.373 and this time last year a gallon was being sold for $3.073.

With little end in sight to the ongoing energy crisis, it seems to be only a matter of time before the historical record for a gallon in the US is beaten: in July 2008 the price of gas hit $4.14 per gallon, which when adjusted for inflation would be around $5.37 in today’s dollars.

Read more

Inflation explainer

If you're wondering why inflation is such an issue, and what impact it has on US households, Bloomberg has provided an explainer. Inflation in the US increased by one percentage point in May and tackling the problem has become the main priority of the Biden administration in domestic fiscal policy.

Gas prices in US: Are gas prices more expensive in other countries?

US NEWS

Gas prices in US: Are gas prices more expensive in other countries?

While rising before the war in Ukraine, the Russian invasion has turned commodity prices upside down, especially for those nations that are sanctioning them. On Friday, the Department of Labor published its latest inflation figures for the month of May, with the Consumer Price Index (CPI) rising by a whole percent in a single month.

At the forefront of this inflation is the price of energy, which has surged nearly 35 percent since May 2021. Inflationary pressures and supply chain issues have seen the cost of many essential products rise considerably in the past six months, but the recent ban on Russian oil and gas has seen the price of gasoline rise even higher.

Read more

American Rescue Plan debate

Politics does politics. We all know that the GOP are rarely going to say anything positive about their opponents' policies and this is no less stark that when it comes to President Biden's American Rescue Plan, despite the positive effect it has proven on alleviating poverty of those too young to vote, or often understand, about the issues in hand.

Student loan forgiveness: nine million qualify

Over nine million Americans may qualify for federal student loan forgiveness under a program that’s already in place, according to a new estimate. 

The Student Borrower Protection Center released a new report that reviewed governmental data and found millions of public service workers likely qualify for debt cancellation through the Public Service Loan Forgiveness program, but have yet to file the paperwork to start the process. 

The Public Service Loan Forgiveness program, or PSLF, was created in 2007 with the intention of helping employees with nonprofit and government agencies have their student loans forgiven after ten years of payments (120 total payments). The overall approval rate among applicants has been low – just 1 in 5 of the 1.3 million borrowers pursuing debt discharge through PSLF were on track to see relief by 2026, according to a September 2021 report from The Washington Post.

Jobs front of mind as Fed tightens monetary policy

The healthy finances of U.S. banks, companies and households, trumpeted during the pandemic by Federal Reserve officials as a source of resilience, may be an obstacle to battling inflation as central bankers raise interest rates in an economy able so far to pay the price.

In outlining their aggressive turn to tighter monetary policy, Fed officials say they hope to clamp down on the economy without destroying jobs, with higher interest rates slowing things enough that companies scale back the current high number of job vacancies while avoiding layoffs or a hit to household income.

But that means the pain of inflation control would have to fall mostly on owners of capital via a slowed housing market, higher corporate bond rates, lower equity values, and a rising dollar to make imports cheaper and induce domestic producers to hold down prices.

Economists including current and former Fed officials note that unlike prior Fed rate hike cycles, there's no obvious weakness to exploit or asset bubble to burst to quickly make a dent in inflation - nothing akin to the highly overvalued housing markets of 2007 or the hypervalued internet stocks of the late 1990s to provide the Fed more bang for its expected rate hikes.

The adjustment to tighter Fed policy has been swift by some measures. But it has been spread moderately across a range of markets, none catastrophically, with little impact yet on inflation or consumer spending.

Deadline looming for overseas tax payers

The Internal Revenue Service remind taxpayers who live and work abroad have until June 15, 2022, to file their 2021 federal income tax return and pay any tax due.

Coupon use on the rise as inflation bites

CNN is tracking an emerging story on consumer habits as inflation takes hold in the United States. Couponing is on the rise as the BLS reports that food prices have increased ten percent in the last year.

With inflation impacting the disposable incomes of families across the country, and their ability to save, many are turning to coupons to keep costs down as much as possible.

Food insecurity and hunger have doubled since 2019, according to experts

Latest News

Food insecurity and hunger have doubled since 2019, according to experts

Although much of our focus here is on the US economy and households, its worth us keeping an eye on effects around the world. And on this, food security experts have warned of food shortages after the invasion of Ukraine by Russia sent energy-and-food-commodity markets soaring.

Russia and Ukraine supply a good portion of global wheat and other food staples, the cultivation and harvest are being disrupted. The Food and Agriculture Organization estimate that around twenty percent of the Ukraine’s typical winter wheat production will be cut due to the war with Russia. The consequences of this supply shortfall “will further reduce the global food supply, with serious implications for Europe, Central Asia and beyond.”

Prices at the pump are a major part of inflation, and the war in Ukraine is a major cause of that. The United States is on track to produce a record amount of oil next year, and I am working with the industry to accelerate this output. But it is also important that the oil and gas and refining industries in this country not use the challenge created by the war in Ukraine as a reason to make things worse for families with excessive profit taking or price hikes.

We all have work to do to get inflation down. What will not help is the plan by some Republicans in Congress to raise taxes on the middle class and working families. That would be a step in the wrong direction, and I strongly oppose it.

Joseph Biden, POTUS

Inflation a top priority for the Biden adminstration

The White House has responded to the inflation increases, doubling down on their commitment to get prices under control. Compared to this time last year, food prices are up around 10 percent while those for energy are up more than 35 percent. The price for a dozen eggs is up on average $1.20 over prices last year. 

The Russian invasion of Ukraine, as well as the continued impact of the covid-19 pandemic on global supply chains, continue to fuel inflation. The Federal Reserve has begun a series of interest rate increases to decrease the circulation of money and credit within the economy in hopes that it will cool things down a bit.

CPI inflation rate: What products are making inflation grow so much? Gas, food...

US NEWS

CPI inflation rate: What products are making inflation grow so much? Gas, food...

The Labor Department has published the consumer price index for May 2022, which showed that the annualised rate of inflation in the United States had risen to 8.6% year-on-year.

The consumer price index (CPI) is a measures of goods and services prices and is used to calculate rising costs. The core CPI, which excludes volatile factors like food and energy, was also a very high 6%.

The Labor Department report came as the average price of gasoline, as calculated by AAA, topped $5 per gallon for the first time in US history. The price of gasoline is up by 48.7% on average, while fuel oil has experienced a 106.7% increase in the past 12 months.

US finance updates live: welcome

Welcome to AS USA's live blog on finance and economic news for Monday 13 June. 

After the Bureau of Labor Statistics reported a one perfect increase in May for the Consumer Price Index on Friday, markets fell to some of the lowest levels recorded this year. Financial leaders including Secretary of the Treasury Janet Yellen and Chairmen of the Federal Reserve Jerome Powell have made it clear that combatting inflation is a top priority. 

Gas prices continue to increase as global competition over limited resources intensifies. The prices being paid at the pump in the US are some of the highest on record. In California records have been shattered with drivers paying over $6 for a gallon. 

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