USA finance and payments summary news: 26 june
Headlines: 26 June 2022
- Average US gas price at $4.90 on Sunday - where in the country is it most expensive?
- The likes of Netflix, Meta, Apple and Nike will provide travel expenses for employees' abortion costs
- High price of gasoline could cause issues ahead of record-breaking 4th July weekend of travel
- President Biden pushes Congress to pass a three-month federal gas tax holiday
- Energy expert warns of "apocalyptic" gas prices if hurricane season affects US oil refineries
- Biden administration agrees to cancel $6bn in studen loan debt for 200,000 borrowers
Helpful links & Information
- What is 'shrinkflation'?
- Strategies for investing in cryptocurrency
- When will mortgage interest rates go down again?
- How does the COLA affect my Social Security retirement benefits?
Check out some of AS USA's related news articles:
Inflation affecting nearly everything
The US economy has made enormous progress in the past year as businesses were able to return to full operations after the vast majority of covid-19 restrictions were removed last year. The reopening of businesses and return to pre-pandemic condition is part of the reason for the current high rate of inflation, with fresh cash pouring into the market.
Excessive interest rate hike could slow economic growth to such an extent that the US actually slips into a recession, when the inflation rate drops below zero. The Federal Reserve will have to maintain a careful balance to stabilise the economy at the time when it remains vulnerable to changing circumstances.
Polling suggests more and more Americans unhappy with economy
A new CBS News-YouGov poll suggests a large majority of Americans are worried about the economy.
The percentage of Americans who view the economy as fairly bad or worse has grown for each of the past two months, rising from 63 percent in April to 75 percent in the latest poll.
And it should be no surprise. Inflation has been persistently high all year, especially in terms of energy. With many of these prices controlled by the ongoing war in Ukraine, there is little the US government can do about it.
After the Supreme Court overturned Roe v Wade, abortion is expected to be banned or become increasingly restricted in as many as 26 states in the coming months. Women can get the procedure in states where it is still legal, but the cost associated with interstate travel will make it prohibitively expensive for some.
This means that many women from poorer background may have little choice but to carry the pregnancy to term, even if they don't feel equipped to look after the child. Numerous studies have shown that reduced access to abortion typically increases a woman's risk of going into debt, entering bankruptcy and suffering financial hardship in general.
What is the current price of Bitcoin in USD?
The cryptocurrency markets enjoyed a period of almost unchecked growth during the first 18 months of the pandemic, reaching an all-time high of $68,000 in November 2021. However since that point the coin's prospects have changed dramatically and investors have been stung by extreme dips in value. Last week the price dropped to $18,000, the lowest figure since the start of the pandemic.
However there are now signs of a tentative resurgence that could bring investors flooding back into cryptocurrency markets.
How can I get a Social Security Benefit Verification letter?
If you're in the process of applying for a loan, housing assistance or mortgage yo may well have been asked to produce a Benefit Verification letter, detailing your Social Security payments. Sometimes this is known as a “budget letter,” a “benefits letter,” or a “proof of income letter,” but each term essentially just refers to the Benefit Verification letter.
The letter will give a break-down of the money you receive, or don't receive, from the Social Security Administration (SSA). Fortunately, you can easily find it online by logging into your My Social Security account. If you have not yet made an account you can do so quickly online.
The Social Security Administration (SSA) oversees the two main financial relief programs on offer to disabled Americans, both of which place limits on the recipient’s income.
Social Security disability insurance benefits (SSDI) is allocated along with the rest of the Social Security benefits for retired Americans. Supplemental Security Income (SSI), provides support for disabled people in the United States and recorded a total of 7.6 million monthly recipients in April 2022.
Each program is designed to support slightly different groups and has its own terms for eligibility...
White House wants federal gasoline taxes removed
The high cost of gasoline in the United States is a consequence of numerous factors, many of which are outside of the government's control. However one area where the federal government could make an instant impact is in terms of the taxes levied on motor fuels. The White House is calling for a three-month pause for the taxes to give some respite to consumers and bring down the price of gasoline across the country. However not everyone is convinced that this tax break will be passed on to the consumers, as the oil companies could simply raise their prices to account for the lost taxes.
"I think for gasoline, we go back above five [dollars per gallon], and…apocalyptic numbers come into play with hurricanes. The thing that people have to watch…[what] is really insidious for inflation are the values for diesel and jet fuel. Stocks of those fuels are not building. They're tight internationally, and that's where… we're going to have to pay the piper in the last hundred days of the year."
Ethanol prices remain high due to E15 gasoline use
Earlier this year the Biden administration issued a temporary pause on the limits on E15 gasoline products, which have a higher amount of ethanol. Ethanol, a corn-based fuel that is a common gasoline additive, has been linked to higher pollution in the summer months so previous administrations have tried to limit its use.
As a result ethanol prices have risen steadily this year, and have experienced a 14% price jump in this quarter alone.
Biden arrives in Germany for G7 talks
President Biden will attend the G7 summit in Berlin with hopes of finding a solution to high inflation which is causing major problems in nations across the world. The United States is far from the only country experiencing rapid price increases and Germany is struggling with a high rate of inflation.
The European Central Bank's rate hikes are hoped to be sufficient and enough to avoid further policy changes, according to Bundesbank President Joachim Nagel.
"The risk of inflation expectations becoming de-anchored has risen over the past months," Nagel said on Thursday. "Risks to price stability exist."
"Inflation expectations of households and firms in Germany are somewhat less anchored than, say, a year ago," he added.
"[The US economy] been growing at a very rapid rate, as the economy, as the labor market, has recovered and we have reached full employment”.
“It’s natural now that we expect a transition to steady and stable growth, but I don’t think a recession is at all inevitable."
“Clearly, inflation is unacceptably high... It’s President Biden’s top priority to bring it down.”
The office of California Gov. Gavin Newsom has announced that the state has recovered approximately $1.1 billion of falsely-claimed unemployment benefits as part of an ongoing investigation into fraud. The program has a pandemic-era boost to provide additional payments for out-of-work Americans but the more generous program quickly became a target for scammers.
The money reclaimed had been distributed across 780,000 benefit cards, which had not yet been activated. Although it was recovered by investigators for the state of California, most of the money will be returned to the federal government, because it was funded by the emergency Pandemic Unemployment Assistance program.
Could diesel costs be the factor that pushes up inflation?
The price of gasoline has caused major headaches for Americans in recent months, adding to the cost of day-to-day living and forcing some households to limit the number of essential journeys they are able to make. But while its less of an immediate pressure on consumers' pockets, experts are warning that rises to the price of diesel could have the biggest effect on the US economy.
“No one really notices diesel prices in the U.S. because it’s really only used by industries,” warned Damien Courvalin, head of energy research at Goldman Sachs. “But that diesel represents a piece of your plane ticket, a piece of that box of cereal… that price is folded into aggregate inflation.”
Will there be a recession in the United States?
After months of worries about high inflation in the United States, the pendulum looks like it could swing the other way and there is now genuine concern that the country could slip into recession. Inflation was caused, in part, by the rapid economic growth as the nation reopened after 18 months of covid-19 restrictions, and the boom in economic activity overheated the markets.
However, after the Federal Reserve announced it was raising interest rates to curb inflation, some experts predict that the US could be facing a recession. A recession occurs when economic growth slips into the negative, meaning that the economy is actually gettin smaller.
The US major indexes have entered bear market territory as inflation soars and the Federal Reserve aggressively raises interest rates to stomp it down. The drop in valuations has hit the cryptocurrency market especially hard as investors flee to the safety of less volatile assets.
After peaking at $2.9 trillion in November 2021, the global cryptocurrency market hemorrhaged $1 trillion in value in the last two months alone. As investors grapple with falling markets, what do the experts say about investing in cryptocurrency?
Record-breaking numbers of Americans are expected to take to the road next week for Fourth of July celebrations, after two years of social distancing requirements that outlawed big parties in much of the country.
But, while the covid-19 situation has improved, the high price of gasoline in the United States looks set to make it an expensive trip for those travelling long distances next weekend. The average price of a gallon of gasoline in the US has dipped slightly to $4.90, but remains extremely high. Experts are offering tips to find the cheapest gas near you.
Biden calls on Congress to pass a gas tax holiday
In little over a year the average price of a gallon of gasoline in the United has risen from around $3 to nearly $5, a huge increase for working Americans. President Biden is under pressure to bring down the cost to consumers with wage increases failing to keep up with the rampant pace of inflation.
To do so, Biden has called on Congress to pass a three-month pause on the federally-levied gasoline tax, which typically adds about 18 cents onto the price of every gallon of gas sold in the US.
Biden at odds with Fed chief over inflation causes
When explaining the reasons behind the sky-high rate of inflation in the United States, President Joe Biden often looks to Russia’s invasion of Ukraine. After seeing the recent inflation report Biden said that “Putin’s price hike is hitting America hard," but is this really the main cause of price rises?
Federal Reserve Chairman Jerome Powell thinks otherwise, and pointed out the the US had been experiencing substantial price rises last year too. At a committee hearing on Wednesday, Powell said, “No, inflation was high before — certainly before the war in Ukraine broke out.”
IRS increase gasoline allowance for expenses
For the remainder of the year the IRS has updated its business mileage allowance to reflect the high price of gasoline in the US. In a press release the tax agency confirmed that the standard mileage rate for business travel will be increased 62.5 cents per mile, up 4 cents from the rate used at the start of the year.
"The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices," said IRS Commissioner Chuck Rettig. "We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses and others who use this rate.”
“I’m always pointing out that the major problems come down to supply chain disruptions, a labor shortage, the war in Ukraine and the lockdowns in China. But I think the blame for inflation might go further than that."
“There’s another reason we have all of these supply shortages: Our government doesn’t have a productive relationship with big business. Like it or not, big business has the ability to rein in inflation, but they don’t have any incentive to do so."
Why could raising interest rates help bring down inflation?
Earlier this month the Federal Reserve opted to use its most powerful tool against inflation when it announced a significant increase on interest hikes. The hike of three-quarters of a point was the largest single increase the Fed has introduced since 1994 but experts are still unsure if it will have the desired impact.
Raising interest rates is designed to cool the economy by making it more expensive to borrow and boosting the returns for consumers who decide to save. But interest rates are a fairly blunt tool and there is the danger that their effort could go too far and push the United States into a recession.
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