USA finance and payments summary news: 23 june
Headlines: 23 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?
Related News from AS USA:
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.
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...
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The two main programs on offer for disabled Americans are Social Security disability insurance benefits (SSDI) and Supplemental Security Income (SSI). SSDI is allocated along with the rest of the Social Security benefits for retired Americans.
In April 2022 the number of disabled Americans benefitting from the program was more than 9 million. Another program, Supplemental Security Income (SSI), provides support for disabled people in the United States and recorded a total of 7.6 million monthly recipients. We take a look at the working thresholds for beneficiaries...
What is the federal gas tax pause?
President Biden has outlined plans for perhaps the most significant piece of federal intervention in the gas price crisis to date. Speaking to reporters yesterday he proposed that the federal fuel tax should be paused for three months to bring down the price of gasoline for consumers, as the national average remains around $5 per gallon.
However it is not clear if the whole 18 cents deducation in taxes will be passed on to consumers, or whether il companies will pocket part of it. Regardless, Biden needs Congress to pass the relevant legislation to allow this pause to be instituted at a federal level.
Advocacy group calls for windfall profits tax for oil giants
The price of gasoline has soared in recent months, with many blaming the Russian invasion of Ukraine, and subsequent sanctions, and the high rate of inflation for the increase. However in the first quarter of 2022 a number of the biggest oil companies in the country reported record profits, fuelling the belief that the high prices are in large part due to corporate greed.
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.
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?
White House to write off $6 billion in student loan debt
The prospect of student debt forgiveness has been front and centre for much of Joe Biden's presidency, based on some vague promises he made during campaigning. Rather than push through a sudden batch of loan forgiveness, any many hoped he would, his adminstration has opted instead to cancel certain sections of the huge student loan debt mountain, and the latest has been announced today.
In this instance, those benefitting are the roughly 200,000 people who brought a class-action lawsuit against the government for schools who misled them. Dozens of schools are the focus of the action and this is an acknowledgement of the student's claims.
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.
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.
Retailer association calls for action to ease consumers' inflation pains
National Retail Federation (NRF), the world's largest retail trade association, is calling on the Biden administration to amend its inflation plan with measures that could help reduce inflation. The rapidly rising prices hit low-income households especially hard with almost three quarters dipping into savings or borrowing money to get by.
On the one hand, the group would like the White House to repeal Section 301 tariffs on goods from China. This could result in an average savings of $1,200 a year for American families. It would also help reduce the Consumer Price Index by 1.3 percentage points, which hit 8.6 percent in May.
Additionally, the NRF feels that through comprehensive immigration reform the labor shortages being experienced could be solved which would aid in controling labor costs for the incredibly competitive retail industry and beyond. A long time supporter of "dreamers", NRF would like Congress to provide a pathway to citizenship for those in good standing. As well, establish new visa programs for entrepreneurs and paths to residence for immigrants who earn a PhD in a STEM field while in the United States.
White House announces baby formula shipments from Mexico to tackle shortage
The Biden administration announced on Wednesday that it will source baby formula from Mexico to help address the supply shortage in the US. Starting this weekend shipments of roughly 16 million 8-ounce baby formula bottles from Mexico will add to the supplies brought from Europe and Australia as part of “Operation Fly Formula”.
By June 26, the operation will have brought 32 flights and almost 19 million 8-ounce bottle equivalents of infant formula into the US according to the White House. The growing shortage became a crisis in February when a Michigan plant run by Abbott, the largest domestic manufacturer of baby formula, was shuttered over health concerns after two infants died from contaminated formula. Although the plant reopened recently, flooding forced its closure again.
The retailers out-of-stock levels reached 74 percent by the end of May.
The Social Security Administration (SSA) allows the spouse of a beneficiary to claim partial benefits when their spouse begins to receive their benefits regardless of how much money the spouse has paid into the system.
The spouse claiming the partial benefits must be at least sixty-two years of age or be in the care of a disabled child or one younger than sixteen. The average spousal monthly payout in January 2022 wsa $839.35, around half that paid to retired workers.
Citigroup's top economist sees 50/50 chance of recession
Chief Global Economist Nathan Sheets at Citigroup in a note to clients warns that there is a 50 percent chance of a recession. According to Sheets the "perfect storm" is brewing which are weighing on consumer spending and economic output, Fed rate hikes and four-decade high inflation.
These latest two factors have added to continuing supply shocks affecting the global economy that "are pushing up inflation and driving down growth."
"We conclude that central banks face a daunting challenge as they seek to wrestle inflation down," Sheets said. Policymakers still envision a soft or softish landing, but that would "require supply shocks to ebb and demand to remain resilient."
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" .
Dollar falls amid recession fears
The dollar fell on Wednesday as US Treasury yields slid on fears the US economy could slide into recession after Federal Reserve Chair Jerome Powell said higher rates are painful but are the means the US central bank has to slow inflation.
The Fed is not trying to engineer a recession to heel inflation but is fully committed to bringing prices under control even if doing so risks an economic downturn, Powell said at a hearing of the US Senate Banking Committee: "'Higher interest rates are painful, but it's the tool we have to bring down inflation".
Despite being a central pledge of his election campaign in 2020, Joe Biden has done little to cut the trillion dollar debt students in the US are under. He campaigned on forgiveness for all, around $50,000 per student, but there has yet to be an announcement of these plans.
In April, the administration said an announcement was “weeks away,” but it is now believed that it will not be until August that plans would be discussed with the public. This would coincide with the ending of the debt repayment pause which is scheduled to end at the same time.
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.
Only 23% of New Yorkers can afford median rent
An average resident In New York City needs to be earning a minimum salary of $110,000 to be able to afford the median rent in the Big Apple - $2,750 per month. That is equivalent to over 30% of the average earner's income going towards housing, according to a recent report by the New York City Department of Housing Preservation and Development. Approximately 23% of full-time workers in New York had six-figure salaries as of 2020.
Jerome Powell says Fed is not trying to provoke a recession
US stock indexes edged higher in choppy trading on Wednesday, after Federal Reserve Chair Jerome Powell said the U.S. central bank is "strongly committed" to bringing down inflation. However, the reassurances from the head of the US central bank weren't enough to keep the three major indexes out of the red by the ned of trading.
In his testimony to the Senate committee, Powell pledged an "overarching focus" on bringing down decades-high inflation and reiterated that ongoing increases in the policy rate would be appropriate, with the exact pace dependent on the economic outlook.
"We are not trying to provoke, and I don't think we will need to provoke, a recession," Powell said.
Powell's comments came a week after the Fed raised interest rate by three-quarters of a percentage point, its largest increase since 1994. Economists expect a similar move next month, followed by a half-percentage-point rise in September, according to a Reuters poll.
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.
Calls to suspend federal taxes on fuel not likely to survive Senate
Plans mooted by Biden to cut fuel duty could meet a stumbling block in the Senate as Republican lawmakers are nlikely to back his plans.
At the moment, fuel tax is 18.4 cents per gallon federally, while states levy a tax of an average of 30 cents per gallon.
The move has not been greeted enthusiatically by many Democrats either. Nancy Pelosi has said she is worried the savings would not be passed on to customers and the fuel companies would keep the difference. The UK brought in legislation recently to remove 5 pence of tax per litre of fuel, but that has done little to keep prices down as they approach £2 per litre.
President Biden urged Congress to take legislative action to give American drivers a three-month gas tax holiday over the summer months. He also asked states to do the same or find some other way to help households dealing with rising prices not seen in over forty years. However, it appears unlikely that the federal government will send taxpayers a gas rebate card.
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 Thursday, 23 June.