USA finance and payments summary news: 21 june
Headlines: 21 June 2022
- Average price of gasoline dips to $4.968 - which states have the most expensive gas?
- Democrats introduce bill strengthening Social Security - will this increase benefits?
- Experts, including Fed Chairmen Jerome Powell, expect further interest rate increases in 2022
- Bitcoin price rises to $21,300 on Tuesday
- Fed outlines reasons for 0.75 percentage point hike for interest rates - why have they increased rates?
- 'Shrinkflation' reduces product sizes for consumers
Helpful links & Information
- When will theSocial Security COLA for 2023 be announced?
- Gas prices in US: which countries have the most expensive gasoline?
- When will President Biden make a decision over student loan forgiveness
- Do I have to pay taxes on Social Security benefits? How much?
- 30-year fixed-rate mortgage interest rates hit 5.78%, the highest level since late 2008. When will home loan rates fall?
Related News from AS USA:
The Cost-of-living-adjustment, or COLA is a percent increase applied to Social Security benefits each year based on price increases in the market. The Consumer Price Index, which measures inflation across a wide variety of goods and services, is used to calculate the COLA.
I don’t think the president or Democratic candidates could withstand the political fallout of a recession, because if that hits, that means unemployment rises. Right now, the president has very clearly benefited from the tight labor market and low unemployment. If we go into a recession, that will no longer be true.
Recession? What recession says White House
Biden’s approval ratings have tanked in 2022 as inflation has soared to its highest level since the early 1980s and the national average gas price has reached $5 per gallon. The president’s approval rating stood just under 40 percent on Monday, according to the data and polling site FiveThirtyEight.
If the US enters a recession then it could spell the end of a functioning government in the US as the Democrats face losing both the House and the Senate in the November elections.
Homebuyers have been struck by expensive house prices since the covid-19 pandemic had its first let up in July 2020, especially in the last year. The year-on-year price increase is more than 18 percent, pricing out many people from getting into the housing market.
One group that has been disproportionately affected has been the LGBTQ+ community. This is due to a confluence of factors, but with such an expensive market a big problem has been acquiring the capital to pay for their first house.
At this point, a recession is no longer just a tail risk given the Fed's predicament with inflation.
This dynamic raises serious growth risks, and we now see the US restart of economic activity stalling over the coming quarter
Stock markets expect recession
2022 has been a tough year for the stock market. The S&P 500 index is already down around 21 percent this year after last week posting a 20 percent decline from its highs that defines a bear market. A bear market occurs when a market has dropped 20 percent or more from a recent high for a sustained period of time.
How high could gas prices go?
The price of gasoline has been around the $5-mark for much of the last week, the first time in US history that fuel prices have got that high. Fuel companies are being blamed, in part, for the sudden rise with many of the sector's biggest producers announcing record profits in the first quarter of this year. President Biden has written to a group of the biggest US oil companies demanding answers, as experts predict that the price could go far higher in the coming months.
How are unemployment and inflation linked?
The US economy is in a very precarious position currently, with President Biden left to navigate between dangerously fast growth and a potentially catastrophic recession. The jobs market has grown at the fastest ever rate in the past 12 months, adding more than six million new jobs. However this influx of new business and more salaried workers have flooded the market with cash and pushed up prices. Former US Treasury Secretary Larry Summers explains why a recession could be inevitable without higher unemployment.
Property taxes are used to fund essential government services like the fire and police departments, water systems and schools, among other things. So, no matter where you live, if you own a home you will have to pay property taxes.
However, property taxes are calculated differently depending on where you live with home values and rates being set at the local level. Both of these factors can drastically change how much you have to pay the tax collector.
"From my perspective, you talked about a recession. First of all, it’s not inevitable. Secondly, we’re in a stronger position than any nation in the world to overcome this inflation."
"Why is [inflation so high]? If it’s a consequence of our spending, we’ve reduced the deficit. We’ve increased employment, increased pay. There was a survey done [by the Federal Reserve] about three months ago. You had more people had lower debt, credit cards, more savings in their savings account, higher pay in the job they had, more satisfaction in the job they had and they were in good shape financially."
Gas prices take their toll across the world
The high price of gasoline is causing headaches for motorists in the US, but over the pond there's even more pain at the pump. In parts of the UK drivers are paying around twice as much as their American counterparts, a huge increase in gas prices which stems from the Russian invasion of Ukraine.
The spike in global crude oil markets is affecting people all around the world, but it's largely up to national governments to find a solution for their people. President Biden is thought to have briefly considered introducing gas rebate debit cards last week but the logistical issues related to the idea meant it was quickly ruled out.
Last year the enhanced Child Tax Credit for 2021 pulled millions of children out of poverty, but failure to extend the program meant that those gains were lost. The current four-decade high inflation is expected to worsen the lot for many more and there are renewed calls for a new boost to the program.
A group of over 40 racial justice organizations including the NAACP, the Economic Security Project, the National Urban League, UnidosUS, The Leadership Conference and Community Change Action, implored Congress in a letter to include a reinstatement of the enhanced Child Tax Credit as part of any must-pass legislation.
What has Larry Summer said about the threat of recession?
President Clinton's former Treasury Secretary Larry Summers has outlined his concerns for the US economy as the Federal Reserve tries to moderate the high rate of inflation. Speaking to NBC News, Summers responded to President Biden's claims that the nation's economy is in good shape as the recovery continues.
Summer said: "My best guess is that there is a recession is ahead. I'm basing that on the fact that we've never had a situation like the present, with inflation above 4% and unemployment below 4%, without a recession following in a year or so."
This year the average monthly Social Security check has increased by about $93, up to a figure of $1,658, after the cost-of-living adjustment (COLA) increase of 5.9 percent for 2022 was implemented. However, inflation has been running at a faster clip than when the 2022 COLA was set last year, 8.6 percent in May alone, the fastest increase since December 1981.
One of the measures in the SSEA would be to boost monthly benefits by $200 which would represent a 12 percent increase for the average recipient. The bill proposes raising the Special Minimum Benefit for the lowest income earners. Tracking with the annual federal poverty level, the minimum payment would be around 125 percent of the federal poverty line.
"It is an uncertain moment and we face real challenges, global challenges. Inflation is a global challenge, 9% in the UK, over 8% in Europe, but we also have real strengths here at home. And so what I would say is, we need to navigate through this transition in a way that gets us to stable growth without giving up all of the incredible economic gains that we've made."
"We have real strengths in this economy. What we need to do now is do what the President has said, put our top priority on bringing prices down and do so in a way where we don't have to give up all of those economic gains."
White House outlines initiatives introduced to tackle inflation
One of the main victims of the recent high rate of inflation has been the price of gasloline in the US, which has soared to record heights in June. The price is currently hovering around the $5-per-gallon mark and experts predict that it could go higher.
The Biden administration is insisting that the high prices are largely a consequence of the Russian invasion of Ukraine, which has disrupted supply from the region and forced global powers to impose a ban on Russia-produced fuels. Biden will need to see some clear imprvement in the coming months or his party risks suffering major losses in the November midterms.
How much is gasoline today? The price of motor fuel has been rising for much of the past six months, reaching the record high of $5 per gallon on average last week. In recent days the national average has dipped slightly but there is still real concern for motorists ahead of the Fourth of July, a time when millions of Americans are expected to travel long distances to visit friends and family.
We take a look at gas prices across the country on Tuesday, 21 June...
Will there be a federal holiday on gasoline taxes?
By the end of this week President Biden is expected to come to a decision on the prospect of a federal gasoline tax holiday to address the high price of motor fuel. It is thought that a suspension of the tax could save consumers as much as 18.4 cents per gallon.
“Yes, I’m considering it,” Biden told reporters on Monday. “I hope to have a decision based on the data — I’m looking for by the end of the week.”
Treasury Sec outlines inflation plans
The Biden administration is desperately trying to balance the competing economic neccessities of trying to bring down soaring costs, while also avoiding a recession. In the past 18 months the rate of economic growth in the US has been rapid, with businesses able to return to normal after the pandemic-induced shutdown.
However the speed of growth has brought about a sustained period of sky-high inflation which has pushed up prices for consumers. Treasury Secretary Janet Yellen is working with President Biden to address the issue.
Last week the Federal Reserve made a major play to combat the sky-high rate of inflation that is pushing up prices and causing headaches for consumers. It was announced that the Fed would be raising benchmark interest rates three-quarters of a percentage point, the single most aggressive interest rate hike since 1994.
The Fed will hope that this action can discourage people from making unneccessary purchases or borrowing agreements at the moment, cooling the economy and bringing down prices for consumers in the medium- to long-term.
Global microchip shortages continue
Chipmakers have been struggling to recover from pandemic-era supply chain bottlenecks that have reduced the global stocks of semiconductors needed for range of consumer products. The shortfall has been acutely felt by car manufacturers. Semiconductors, which account for the largest share of South Korean exports, were beginning to be affected in the Asian nation after truckers went on strike for eight days.
Last week, the government agreed to extend a special minimum wage system to resume cargo shipments. The lastest problem for the industry now comes from export restrictions imposed by Russian on rare gases including neon, argon and helium to "unfriendly" countries needed to made semiconductors. South Korean manufacturers keep a three month stockpile of the inert, or "noble" gases, so initially supplies won't be disrupted.
First-time unemployment claims fall slightly in the US
Last week the US Department of Labor reported that 229,000 initial unemployment claims were made the week before. Initial cliams had crept up in the preceding weeks but the most recent reported a decrease of 3,000.
States with the highest number of new claims for the week ending on 4 June, were Florida (+2,098), Georgia (+2,060), Pennsylvania (+1,134), Missouri (+1,053), and Illinois (+827). On the other hand, the greatest decreases were tracked in Michigan (-2,131), Mississippi (-1,723), New York (-631), Oklahoma (-598), and New Jersey (-440).
How covid-19 continues to affect the labor market
A new post from the Bureau of Labor Statistics reveals the progress the US economy has made since the covid-19 pandemic began. Although the recovery has been strong there are still impacts on the labor market being felt.
The unemployment rate has fallen below the levels seen before the pandemic but labor force participation is still down on 2019 levels. By the end of 2021, around 155 million people were working. This is down from the 158 million that were working in 2019.
Hello and welcome to AS USA
Good morning, and welcome to AS USA! We'll be bringing you all the latest financial news and information from the United States on Tuesday, 21 June.