USA finance and payments news summary, Friday 24 June 2022
Headlines: 24 June 2022
- More than 200,000 students to receive $6 billion of student loan debt forgiveness
- Bitcoin returns above $20,000 on Thursday after brief dip below.
- Biden urges Congress to pass three-month gas tax holiday on Wednesday
- Average price of gasoline edges down to $4.94 - 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
- 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?
- When will President Biden make a decision over student loan forgiveness
- 30-year fixed-rate mortgage interest rates hit 5.78%, the highest level since late 2008. When will home loan rates fall?
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We take a look at the latest gas prices across the United States.
President Biden urged Congress to take legislative action to lower the price of gasoline and diesel by suspending the federal gas tax for three months. Additionally, he has asked that states, that haven’t already, to take actions that can give relief to Americans burdened by record high fuel prices by dropping state gas taxes or other measures.
Should we be worried about the prospect of recession?
The United States has been battling high inflation for months, a result of the overheated economy getting up to speed after the pandemic disruption. In response to the concerning trend the Federal Reserve upped interest rates by the largest amount since 1994, in the hope of cooling things down and stemming the growth. Well, the early signs suggest that the Fed's intervention may be working as the markets lost value this week. However the US must tread the narrow path between inflation and recession.
Inflation projections are now in-line with Fed targets
The Federal Reserve aims to secure inflation of around 2% per year, enough to allow solid growth but not so much that consumers are subject to sudden price rises. In recent months the annual figure has soared above 8%, a major concern for the White House, but new projections suggest that the long-term picture has improved. The Federal Reserve announced a significant interest rate hike last week that is hoped to cool the overheating United States economy without pushing it into a recession.
Expert warns that gas prices could remain high for years
"Biden says his goal in the war is “a democratic, independent, sovereign and prosperous Ukraine,” while he seeks to avoid a direct confrontation between NATO and Russia. It could take a year, or five years, for Ukraine to achieve Biden’s desired status. Oil and gasoline prices are likely to stay near current highs, or go even higher, during most or all of that time."
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 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 funds came from the emergency Pandemic Unemployment Assistance program. We take a look at how fraudsters took advantage of the pandemic-era benefits boost...
Strong public support for Biden's gas tax holiday proposal
It has been reported that the White House is pushing for a three-month pause on the federal gasoline taxes, which typically adds around 18 cents to the price of a gallon. The move had been mooted for months but there was uncertainty about the impact that it would have, given that the main problem at the moment appears to be a shortage of supply.
However the gas tax holiday is clearly a popular proposal and will at least offer some relief for motorists in the short-term. Biden's White House Chief of Staff Ronald Klain highlights the policy's strong support in this YouGov poll.
What dictates the price of gasoline in the US?
In response to the wild price increases recorded in the United States' gasoline market in recent months, many theories have been forwarded to explain the rise. Supply chain issues, sanctions on Russian-produced oil, inflationary pressures and fuel taxes all play a part in the price consumers see at the pump, but how does it all work exactly?
Yahoo Finance automobiles correspondent Pras Subramanian explains the price of gas...
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?
Lower demand expectations send price of copper down and markets up
Copper hit a 16-month low on Thursday and is down by 7 percent on the week, its steepest weekly drop since March 2020. The drop in the metal used in a wide range of industrial and construction uses, along with other commodities, comes as investors fear that slowing global economic growth will reduce demand.
Markets reacted positively to the news which could mean runaway inflation will begin to slow. Wall Street was up in pre-market trading looking set to finish with its first weekly gains after several in negative territory.
Elon Musk says "extremely severe" supply chain interruptions costly for Tesla
“Both Berlin and Austin factories are gigantic money furnaces right now," Tesla CEO Elon Musk told CNBC in an interview this week. "It should be like a giant roaring sound which is the sound of money on fire.”
Supply shortages caused by logistics bottlnecks have been hurting businesses and consumers. Two years of supply chain disruptions caused by the ongoing covid-19 pandemic have sent the prices of goods soaring from higher shipping costs to not enough supply to meet demand.
For the auto industry this has been particularly accute with semiconductors reducing car manufacturing output.
More Americans relying on predatory payday lenders to cover rising costs
Inflation that hasn't been seen in over four decades is hitting household finances, especially those with low incomes. Rising prices now have around two thirds of Americans saying they are living paycheck to paycheck but that number rises to 82 percent for those earning less than $50,000.
To fill the financial gap to cover expenses many Americans are dipping into savings or going into debt. For those with poor credit history they are turning to high-interest payday loans unable to access credit through traditional lenders.
This can be a risky proposition with interest rates ranging from 200 percent to over 600 percent. A quarter of payday loan recipients need to take out another loan nine times or more to payback the previous loan.
Gas is over $5 a gallon. Why? Well, oil companies made $93 BILLION in profits in the first quarter and are spending $88 billion on stock buybacks and dividends to enrich their wealthy stockholders. Yes, it’s time for windfall profits tax NOW.
US sportswear maker Nike is making a full exit from Russia, three months after suspending its operations there, the company said in an emailed statement Thursday.
Nike said on 3 March it would temporarily suspend operations at all its Nike-owned and -operated stores in Russia in response to Moscow’s actions in Ukraine, adding that those still open were operated by independent partners.
The Biden administration has agreed a deal which would provide a further $6 billion in student loan forgiveness, benefitting an estimated 200,000 borrowers as part of an ongoing class-action lawsuit.
The group of borrowers contend that they were defrauded by a number of colleges who did not provide the education that they had advertised. It is part of a rule known as the borrower defence to repayment, which allows students who were misled by colleges to claim financial relief.
At the beginning of June, 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 near $20,000, its lowest value in years, including a staggering 14 percent drop in a single day.
Binance cryptocurrency exchange is under investigation by US authorities
The world's biggest cryptocurrency exchange, Binance, is under investigation by several US authorities. The US Securities and Exchange Commission, Justice Department, the Commodity Futures Trading Commission and the Internal Revenue Service are all looking into the digital currency exchange headed by founder and CEO Changpeng Zhao.
In one of the investigations the SEC is investigating if its BNB token constitutes an unregistered security. While in another by the Justice Department and Internal Revenue Service are examining if it is a conduit for money laundering and tax evasion.
A report by Reuters, which Binance disputes, claims that the at least $2.35 billion in illicit funds were moved through what they discribe as a "hub for hackers, fraudsters and drug traffickers" .
Major Bitcoin investor outlines his strategy
In the past few years millions of at-home investors have decided to dip their toes in the world of cryptocurrency trading. However one man who truly jumped in the deep end was business owner Michael Saylor who turned his tech company into one of the world's biggest holders of Bitcoin. But is this a savvy investment or a wild gamble that is starting to devalue? Saylor spoke to CNN to explain his decision...
Investors in cryptocurrency are licking their wounds after the cryptocurrency market crashed, some digital currencies have become basically worthless wiping out personal savings. Bitcoin, the biggest and oldest of the cryptocurrencies, is down nearly 60 percent since the start of the year floating around $20,000.
On a recent episode of the Impaulsive podcast, Jake Paul’s older brother Logan Paul, told viewers that despite tens of millions in winnings, his younger brother is “poor”. For his part, Logan says he’s lost over half a million in the crypto winter.
President Biden urged Congress to take legislative action to lower the price of gasoline and diesel by suspending the federal gas tax for three months. Additionally, he has asked that states, that haven’t already, to take actions that can give relief to Americans burdened by record high fuel prices by dropping state gas taxes or other measures.
Should it get through Congress and states follow suit, it could give drivers some instant relief at the pump beyond the national average coming down slightly after topping $5 dollars per gallon last week. However, economists warn that the move could be counterproductive.
Will a gas tax holiday really help motorists?
The White House has announced its intention to introduce a short-term gas tax holiday, which will remove the federally-levied fuel tax on gasoline. The price of motor fuel has been a major concern for Americans in recent months and the average price of a gallon of gasoline has been around the $5 mark for over a week.
However the effectiveness of such a measure has been disputed, particularly given that the major issue seems to be a shortage of crude oil and an abundance of corporate greed. With this in mind, will knocking 18 cents off the price at the pump really help?
What is a gas tax holiday?
In response to the high price of gasoline, President Biden is expected to announce a gas tax holiday to help bring down the cost to consumers. Federal taxes add about 18 cents onto the price of a gallon nationwide, so it is hoped that a three-month pause will provide some much-needed relief for motorists. However there is concern that oil companies may hike their prices even further, essentially pocked the cash intended to help struggling Americans.
Energy Secretary Jennifer Granholm sat down with CEOs and executives of the seven major US oil companies on Thursday to discuss finding “solutions to ensure secure, affordable supply,” of gasoline in the US market to bring down sky-high prices due to “Putin’s Price Hike”. For its part, the White House is calling on Congress and states to do their part to help Americans struggling with the astronomical cost of filling up their vehicles.
President Biden has urged lawmakers to suspend the federal gas tax giving drivers a three-month holiday on the levy. Biden said of the measure “It doesn’t reduce all the pain but it will be a big help.” White House officials have said that in combination with states pausing their own gas taxes along with oil and gas companies passing those savings on to consumers and increasing production could knock up to a dollar per gallon off what drivers are paying.
Check out what price you can expect to see at the pump so you can avoid sticker shock.
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Good morning, and welcome to AS USA! We'll be bringing you all the latest financial news and information from the United States on Friday, 24 June.