(WASHINGTON) — The U.S. economy slowed at the start of 2023, suggesting that an aggressive series of interest rate hikes at the Federal Reserve has cooled business activity even as the stock and job markets have made gains.
U.S. gross domestic product grew by a 1.1% annualized rate over the three months ending in March, according to government data released Thursday. The data marked a slowdown from 2.6% growth in the previous quarter. In turn, that performance indicated a downshift from 3.2% growth in the previous quarter.
Consumer spending, which accounts for roughly two-thirds of the U.S. economy, surged over the first three months of this year, said the Bureau of Economic Analysis, a government agency.
Government spending at the federal and local level also fueled the economic growth, the agency said.
However, the slowdown from the previous quarter resulted from a decline in business investment and residential fixed investment, which includes money spent on home buying and construction, the data showed.
The data offers a snapshot of economic activity over a period that brought robust hiring but also a banking meltdown on a scale last seen in the 2008 financial crisis.
The widely anticipated measure arrives at a sensitive moment for the U.S. economy.
Over the last year, the Fed has imposed rate hikes last seen in the 1980s.
The policy aims to slash inflation, but risks slowing the economy and bringing about a recession.
So far, the approach has succeeded in cooling price hikes, but fallen short of the Fed’s goal.
Consumer prices rose 5% last month compared to a year ago, extending a months-long slowdown of price increases, but leaving inflation more than double the target rate of 2%.
Meanwhile, a variety of measures suggest that economic performance remains robust, but has slowed in recent months.
The U.S. added 236,000 jobs in March, which marks strong job growth, but a reduction from an average of 334,000 jobs added each month over the previous six months, according to government data released last week.
Meanwhile, U.S. retail sales fell moderately in February but remained solid, suggesting that households still retain some pandemic-era savings.
Still, the economy remains under threat of a recession.
Fed economists said in March that they anticipate a “mild” recession later this year, escalating a previous forecast, central bank meeting minutes showed.
Sixty-five percent of economists expect a recession within the next year, according to a Bloomberg survey last month.
Many observers define a recession through the shorthand metric of two consecutive quarters of decline in inflation-adjusted GDP.
The National Bureau of Economic Research, or NBER, a research organization seen as an authority on measuring economic performance, uses a more complicated definition that takes into account several indicators that must convey “a significant decline in economic activity spread across the economy, lasting more than a few months,” the group says.
This definition determines whether a downturn is formally designated as a recession, since the NBER is the official arbiter on the subject.
(NEW YORK) — On the heels of Bed Bath and Beyond filing for bankruptcy and planning to close all of its stores, The Container Store has good news for customers with excess blue coupons.
Through the end of May, The Container Store will accept the commonly seen coupons from its home organization competitor.
On Wednesday, the Coppell, Texas-based company announced it would offer a 20% discount off any single item through May 31 “for customers who bring a competitor’s blue coupon to any store location.”
After the bankruptcy news, Bed Bath & Beyond said it would no longer accept coupons after Wednesday.
In a tweet, The Container Store also mentioned its “blue coupon” offer along with a wink-face emoji as a nod to the reference.
So. Much. NEW. Bring in a blue coupon 😉 to receive 20% off a single item and experience our vast array of NEW products for college. Terms and conditions apply. We’re here for you. Welcome to the organization. #TheContainerStorepic.twitter.com/o8kp8csZC8
In a statement to ABC News, a representative for Bed Bath & Beyond and buybuy BABY confirmed that “customers’ registry data is safe” and existing registries can still be viewed.
The statement continued, “We expect to partner with an alternative platform where customers will be able to transfer their data and complete their registry. No new registries will be created. We are focused on providing updates as quickly as practicable and are working to provide details in the coming days.”
(NEW YORK) — If you’re looking to buy a home, new federal rules may impact how much you pay for a mortgage.
Beginning May 1, upfront fees for loans backed by Fannie Mae and Freddie Mac will be adjusted because of changes in the Loan Level Price Adjustments (LLPAs). Those fees are based on things including the borrower’s credit score, size of the down payment, type of home and more. In some cases, people with better credit scores may pay more in fees, while those with lower credit scores will pay less.
Here’s what to know about the new federal rules:
Why is this happening?
The rule changes are part of the Federal Housing Finance Agency’s (FHFA) efforts to provide “equitable and sustainable access to homeownership” and to strengthen capital at Freddie Mac and Fannie Mae.
“The [Biden] administration’s stated purpose behind making these changes is to help make it easier for borrowers who have historically been disadvantaged and have had a hard time accessing credit,” Realtor.com chief economist Danielle Hale told ABC News.
Who does it impact?
The new rules only apply to loans backed by Fannie Mae and Freddie Mac, and impact any new or refinanced home loan signed May 1 or later. According to Urban Institute, Fannie Mae’s and Freddie Mac’s share of the mortgage market collectively comprised nearly 60% of all new mortgages during the pandemic in 2020. That’s compared with 42% in 2019.
Homebuyers who put down a larger payment of 15% to 20% could see a bigger increase in mortgage fees, but Bankrate.com mortgage analyst Jeff Ostrowski said that shouldn’t change a borrower’s thought process.
“The new matrix everyone is trying to decipher is only part of the equation,” Ostrowski told ABC News. “The other part is mortgage insurance: Borrowers who put less than 20% down have to pay mortgage insurance that more than offsets the lower upfront fee. So there’s no financial advantage to the borrower to put down less than 20%.”
How will it work?
“The new fees are slightly more expensive for some borrowers with good credit, and slightly less expensive for some borrowers with less-than-perfect credit,” Ostrowski told ABC News.
If you have a stellar credit score, you’ll still pay less than if you have a weak one, but the penalty for having a lower credit score will now be smaller than it was on May 1.
“Because of these changes, the advantage of having a higher credit score, or making a larger down payment, is not as big as it used to be,” Hale said.
For example, beginning May 1, a buyer with a good credit score of 750 who puts down 25% on a $400,000 home would now pay 0.375% in fees on a 30-year loan, or $1,125, compared to 0.250%, or $750, under the previous fee rules.
Meanwhile, a buyer with a credit score of 650 putting a 25% down payment on a $400,000 home would now pay 1.5% in fees on a 30-year loan, or $4,500. That compares with 2.75%, or $8,250, under the previous rules.
According to the FHFA, the new rules will redistribute funds to reduce the interest rate paid by less qualified buyers.
Is this a good thing?
It depends on who you ask. Critics say the new rules penalize people with good credit, using them to subsidize loans of riskier borrowers.
“It’s another subsidy to try to buy votes,” former Home Depot CEO Bob Nardelli told ABC News.
The new mortgage fee rules do nothing to address ongoing inventory challenges in the housing market, which is putting upward pressure on home prices. The median U.S. home price in March was $400,528, according to the realty broker Redfin.
Some housing experts fear the new rules will encourage banks to lend to borrowers who perhaps shouldn’t qualify for a mortgage in the first place. Lending to unqualified buyers is what led to the financial crisis of 2008; banks gave too many unqualified buyers home loans that they ultimately couldn’t pay back.
“This confusing approach won’t work and, more importantly, couldn’t come at a worse time for an industry struggling to get back on its feet after these past 12 months,” David Stevens, a former commissioner of the Federal Housing Administration during the Obama administration, wrote in a social media post. “To do this at the onset of the spring market is almost offensive to the market, consumers and lenders.”
Even with the changes, Ostrowski said that overall, mortgage fees continue to favor borrowers with good credit.
“You still get a much better deal with a strong credit score,” he said. “The fee reductions don’t apply to borrowers with credit scores of less than 680 — so tanking your credit score in hopes of scoring a better deal would backfire.”
(WASHINGTON) — After saving up for three years during which they sometimes worked 80 hours a week, Tawanda Hall and her husband purchased their dream home in the suburbs of Detroit in 2010. The five-bedroom house was supposed to be their “forever home” — it had enough room for their family, and the location offered good schools in the area for Hall’s two kids.
“It was almost like a dream,” Tawanda Hall told ABC News Senior National Correspondent Steve Osunsami. “It was a brick home. It had a big yard, open space, a lot of different opportunities around the corner from school, around the corner from the rec center and the library.”
The house was purchased for $67,000, according to public records. Hall told ABC News that after they moved in, she and her husband put in a lot of money to renovate the home.
“Every time we got some money here or there, we just put it in,” Hall said. “I don’t even know where we got half the money. I was working, he was working, and it was coming together.”
“I would say,” Hall said, “we finally got it together right when we lost it.”
Property seizure
Around 2016, the Halls encountered financial hurdles and fell behind on their property taxes. Despite their efforts to chip away at their back taxes with a payment plan they set up with Oakland County, Michigan, they received an eviction notice for missing tax payments.
At the time, the Halls owed $22,654 in property taxes, including interest and penalties. They lost their home when the local county foreclosed on it in early 2018.
But the nightmare for the Halls didn’t end there.
In the eight months that followed, the property went through a maze of ownership — from Oakland County to the city of Southfield and then to a for-profit organization, the Southfield Neighborhood Revitalization Initiative, which says in court documents that they rehabbed the property then sold it in 2020 for $308,000.
That amount was more than four times what the Halls had paid for the house. The difference between what the home sold for and the taxes the Halls owed on it was more than $285,000.
The Halls, however, received nothing from the sale.
Property seizures like Halls’ — where the government takes property to pay an outstanding tax debt, and then someone other than the homeowner keeps more money than the taxes that were owed — is legal and happening in 11 states and Washington, D.C., according to Pacific Legal Foundation, a nonprofit public interest organization.
According to the group, from 2014 to 2021, homeowners altogether lost more than $860 million in the 8,950 homes that localities and private investors foreclosed on then resold for more money than what was owed in taxes.
Kenson Siver, the mayor of the city of Southfield — which was involved in the handling of the Halls’ home — told ABC News in a statement that he is supportive of the Southfield Neighborhood Revitalization initiative after “witnessing devastation to the neighborhoods after banks sold properties for below market value.” He said that people who can’t afford their homes face tax foreclosure by the county.
Officials from Oakland County and the Southfield Neighborhood Revitalization Initiative did not respond to a request for comment by ABC News.
Enter the Supreme Court
On Wednesday, the Supreme Court heard the case of Geraldine Tyler, a 94-year-old widow from Minnesota who accrued a tax debt of $2,300 that ballooned to $15,000 with interest, fees and other penalties. Hennepin County seized Tyler’s home and sold it one year later for $40,000 without returning the surplus of the sale.
“It’s just like if you owed me $14 and I reached in your wallet and I took everything, no matter how much was in your wallet,” said Christina Martin, a senior attorney at Pacific Legal Foundation who is representing Tyler. “When the government takes home equity from someone like Tawanda and takes more than it’s owed … it’s unfair and it’s unconstitutional and I really hope the Supreme Court agrees.”
The justices will decide whether seizures like Tyler’s violate the “Takings Clause” of the constitution’s Fifth Amendment, which says that “nor shall private property be taken for public use, without just compensation.”
Ralph Clifford, a law professor at the University of Massachusetts who has studied the practice, said the issue comes down to two questions.
“What they’re going to talk about at the Supreme Court are two things: One, if you take somebody’s property, you have to pay them a fair value; and two, the government cannot take more than it’s owed,” said Clifford.
“I think the Due Process clause requires the government to give back to the taxpayer anything that is not owed,” Clifford said. “The tax debt, yes; interest on the tax debt, OK. But if you have a $30,000 debt and you’ve taken a $300,000 property, take your $30,000 and give $270,000 back to the property owner. Because that is theirs, it’s not yours.”
In a statement to ABC News, Hennepin County officials said that in Minnesota’s property tax collection system, when someone abandons their property by not paying property taxes, “title to the property transfers to the state.”
“When properties are sold, net proceeds offset the loss to school districts, cities, and the county of uncollected property taxes,” said Hennepin County Assistant County Administrator Dan Rogan in the statement.
“Forfeiture is not a source of profit” for the county, Rogan said, adding that “factoring in all costs, Hennepin County’s (forfeiture) program does not manage to break even.”
Officials in municipalities like Hennepin County say they see forfeiture and resale as two separate steps. Per the law, they say that if you don’t pay your taxes, with proper notice and a chance to cure, you forfeit your property — period. Once you do, it’s no longer yours and state can do whatever it wants with it.
Courts have previously ruled in favor of municipalities because homeowners are given multiple opportunities to avoid foreclosure. In court filings, Oakland County, Michigan officials said they follow a “carefully reticulated, nearly three-year process that includes ample notice and multiple chances for the owner to pay the delinquent taxes.”
The Eighth Circuit U.S. Court of Appeals has sided with government officials who argued that “nothing in the constitutions of the U.S. or Minnesota, nothing in any federal or state statue, and nothing in federal or state common law give the former owner of a piece of property that has been lawfully forfeited to the state and then sold to pay delinquent taxes a right to any surplus.”
And those who support the practice say that unpaid taxes lead to abandoned homes and distressed neighborhoods, and that financial incentives are needed to attract people who want to come in and revitalize neighborhoods.
But Martin told ABC News the incentives are part of the problem.
“[This] happens because these legislatures have passed these laws that have these built-in perverse incentives that make it profitable for counties to foreclose on people,” Martin said.
She added that she is not challenging the government’s power to collect taxes and add on interest, penalties and other costs.
“What we’re saying is, there’s a limit,” Martin told ABC News. “You don’t get to just take everything. What we’re saying is, you can seize the property, but when you sell it, you don’t get to take everything.”
“They sold it for $40,000,” Martin said of Tyler’s home. “They should take their $15,000 and be happy with that and give the remainder back to Ms. Tyler.”
A national issue
Across the country, local lawmakers have taken up the issue, with some introducing their own bills to ban the practice.
ABC News spoke with Massachusetts Sen. Mark Montigny, who introduced a bill in the state Senate that would protect homeowners’ equity in a tax foreclosure.
“The most important thing it does is it basically suggests that the homeowner has a remedy,” Montigny, who has been working to ban the practice in Massachusetts for years, said of the bill. “They have an ability to pay off and can continue to stay in their home. And if they are foreclosed upon, they won’t have their equity stolen.”
Over a 6.5-year period, at least 254 Massachusetts homeowners lost a collective $60 million in home equity to municipalities, according to Pacific Legal Foundation.
“It’s unconscionable,” Montigny said of the practice. “You can collect your attorney’s fees, your fees that you went through the foreclosure process, but you should not be able to steal the equity from people who are struggling.”
“[The law] absolutely allows the city to engage in this, to do an improper job of notice, to disrespect or at least be indifferent about the dignity of the homeowner,” said Montigny.
Martin and other experts told ABC News that the practice has resulted in local governments creating special loopholes to allow them to keep the forfeiture surplus — so long as the property is used for public purposes.
Clifford, the law professor, told ABC News that whenever profits are available, “corruption is a possibility.”
“Where there’s money to be made, people are going to come out of the woodwork to make that money,” Clifford said.
In the meantime, Hall is still wondering if she will ever see the surplus from the sale of her home.
After the U.S. Court of Appeals for the Sixth Circuit ruled that the government violated Hall’s constitutional rights and that the government must pay compensation when it takes private property, Oakland County appealed the decision and filed a petition to the U.S. Supreme Court, arguing for the case to be dismissed.
Hall says she felt she was protected because her home was mortgage-free and she was on a payment plan with the county.
“I wish I would have just made sure those taxes were paid,” Hall said. “Because I left a window for someone to come in and change my life.”
(NEW YORK) — The seismic exit of Fox News host Tucker Carlson this week elicited reaction from politicians as varied as former President Donald Trump and Rep. Alexandria Ocasio-Cortez, D-N.Y.
But the move also sent shockwaves across Wall Street.
Shares of Fox News-parent company Fox Corporation on Monday tumbled more than 3%, which amounts to hundreds of millions in value.
Nielsen data on Tuesday showed a roughly 20% drop in audience for the first show featuring temporary replacement host Brian Kilmeade, according to The Hollywood Reporter.
The departure of Carlson, the nation’s most-watched primetime cable news host, could cause significant financial damage for Fox Corporation through diminished stock value, weakened income from cable carriers and lower advertising revenue, some analysts told ABC News.
“It has the potential to be massive,” Matthew Tuttle, the CEO and CIO of Tuttle Capital Management, who closely follows the media industry, told ABC News. “There’s going to be a very large impact from this. I don’t think you can dress it up as positive.”
However, some media industry analysts downplayed the potential damage since the company has overcome previous departures of high-profile hosts and the move offers an opportunity for the 8 p.m. show to draw corporate advertisers alienated by Carlson’s controversial programming, experts said.
When asked if the company would prove resilient, Huber Research analyst Doug Arthur told ABC News, “There’s no doubt in my mind. The company has survived these kinds of talent hits before.”
Following Carlson’s departure, Fox News told ABC News it’s still the most watched cable news network.
“For more than 21 years, FOX News Channel has been cable news’ most-watched network in all categories with more Democrats, Independents and Republicans now tuning in than either CNN or MSNBC,” a Fox News spokesperson told ABC News. “Attracting more of than 50% of the cable news viewing audience with the top 12 programs in cable news, FOX News’ powerhouse team of journalists, analysts and opinion hosts are trusted more by viewers than any other news source.”
The Fox Corporation did not respond to a request for comment. Carlson has yet to comment on his exit from the company.
Here’s how the departure of Carlson could impact Fox Corporation, according to analysts:
Stock value
After news of the Carlson exit broke on Monday morning, shares of Fox Corporation fell more than 3% by the close of trading that day. The following morning, the decline ticked past 3.5%, amounting to a lost value of more than $500 million.
“The initial stock move was all Tucker,” Tuttle said.
The market reaction stems from the loss of a high-profile star and anticipated attrition among his viewers, analysts said.
On average, Carlson’s 8 p.m. show reached about 3.25 million nightly viewers over the first four months of this year, outpacing competitors in the time slot and other nighttime hosts on Fox News, according to Nielsen.
“He was their ratings leader in primetime,” Huber said. “That’s going to hurt.”
The departure of Carlson compounds the financial damage and uncertainty caused by Fox News’ recent $787.5 million settlement with Dominion Voting Systems, Huber said.
“There’s a black cloud over the stock right now,” he added.
Still, the stock stabilized in trading on Wednesday, ticking up slightly for the day.
“The initial reaction seemed a little bit overdone,” Brandon Nispel, an analyst with KeyBanc Capital Markets, told ABC News. “I heard questions from investors: ‘Is Fox worth anything without Tucker.'”
“The answer is ‘yes,'” he added. “But it’s clearly worth something modestly less than when they had Tucker.”
Fees paid by cable carriers
Fox Corporation sales depend in part on fees paid by cable carriers like Comcast and Dish Network that distribute the company’s broadcasts.
Over the three months ending in December, such fees delivered $1.7 billion or 37% of Fox Corporation revenue, the company’s latest earnings report showed.
Analysts differed over the potential effect that the loss of Carlson poses for carrier fees.
Without Carlson and the promise of his sizable audience, the company will enter its next round of negotiations with cable carriers in a weakened position, potentially hurting the fees it can command, Tuttle said.
“That is a major concern because at least in the short term, they’re going to lose viewers,” he said. “There’s going to be an impact.”
However, the overall lead in audience enjoyed by Fox News in primetime will reassure cable carriers, limiting the effect of the personnel move, Arthur said.
“Their ratings lead is so large at night that I don’t think any distributor is going to screw around with having Fox News fall off of their network,” he said.
Nispel echoed the sentiment, saying he expects a limited effect on carrier fees.
“If anything, it will be a small margin of negative impact,” he said, noting that Fox Corporation already renegotiated several carrier agreements over the past year.
Advertising revenue
Fox Corporation derives the majority of its revenue from advertising, which made up 54% of sales over the final three months of 2022, an earnings report showed.
Since it boasts the largest primetime audience, Carlson’s show generated more advertising revenue last year than each of the 8 p.m. shows on CNN and MSNBC, as well as each of the other primetime shows on Fox News, a New York Times analysis of Vivvixx data showed.
In all, Carlson’s show delivered $77.5 million in advertising revenue last year, according to Vivvixx data.
The likely decline in audience for the 8 p.m. time slot at Fox News, at least in the short term, will hurt advertising revenue, analysts said.
“It creates a lot of uncertainty,” Nispel said. “They’re losing their leader in their primetime lineup.”
However, the move opens up an opportunity for the channel to attract corporate advertisers that previously balked at the controversial views expressed by Carlson, they added.
“It’s going to hurt in the short term,” Arthur said. But he later noted: “The point of strong ratings is to have strong advertising. If you have strong ratings but lousy advertising, what’s the point?”
The opening may attract a more moderate host who reassures major advertisers, Tuttle said, but he cautioned that a replacement would feel pressure to take up similarly controversial positions as a means of gaining a large audience.
“We’re in a society where controversy sells,” Tuttle said.
(NEW YORK) — Disney filed a lawsuit Wednesday in U.S. District Court against Florida Gov. Ron DeSantis and various Florida officials over a campaign the company alleges was “patently retaliatory, patently anti-business, and patently unconstitutional.”
This is a developing story. Please check back for updates.
(NEW YORK) — What happens when a social media company succeeds at building a community, then threatens to destroy what its users spent years building?
Devoted users of TikTok face that very question, as the app faces bipartisan criticism and a potential ban stemming from its political and national security issues.
Having built niche followings on the short-form video site, content creators told ABC News that their communities might be unable to migrate to another platform if TikTok were banned, shattering the rare progress of a social media company accomplishing part of their community-building mission.
“If we lose this, I lose a very large community,” Rayne Loucks told ABC News.
With about 52,000 followers for his account @StarTrekGuy, Loucks is a part of the Star Trek community on the platform, though he is far from the archetype of a TikTok influencer. Lacking the hallmarks of TikTok — millions of followers, lucrative brand deals, prolific dance videos — Loucks posts in his spare time between working as an assistant teacher and delivering food for Pizza Hut.
“An important thing to know about me is that I am autistic. I do not have very many friends in real life,” he said. “Most of my friends are there, so I would be devastated.”
Though the timeline and potential for a nationwide ban of the platform are uncertain, the threat of a ban lingers for creators like Loucks, who worries he would lose his community, friends and support system that has allowed him to come out of his “shell.”
As TikTok grew to have over 200 million downloads in the United States, its initial success was primarily built on viral videos created by the slim minority of app users. More similar to YouTube than platforms like Facebook and Instagram, users grew accustomed to a steady feed of targeted content, according to Ted Murphy, the founder and CEO of social media marketing firm IZEA.
“The majority of people are there to be entertained, and they’re not being entertained necessarily by their cousin or their co-worker,” he told ABC News. “They’re being entertained by other people who are producing content that they’re interested in.”
Rick Mason, who posts to his 9,000 followers with the username @randomgotham, described that he initially thought the platform was “just a bunch of dancing videos” that didn’t appeal to him. Jimmy Shoffman, with about 1,000 followers for his account @TREKNOPOD, shared that initial view of the app. Another user Mary Faulds, who posts to her 15,000 followers under the username @flutemusik, told ABC News that she joined the platform to embarrass her kids.
As dance videos made normal teenagers into megastars, TikTok also began to foster niche communities with devoted content creators making videos for smaller, albeit committed, viewers.
All four creators eventually gravitated toward theStar Trek community on the platform, where they found a strong group of friends and collaborators.
“Star Trek is about people coming together from many different backgrounds and finding a sense of self, a sense of family, community, a place where you can be accepted and be yourself,” Mason said. “And I think that’s pretty much how I feel about the people I meet online. They really have become my family.”
Faulds, 33, added that finding friends in her small town of Galion, Ohio, a community she shares with her ex-husband, can be difficult.
“People will say, ‘Oh, I like Star Trek,’ but then when you start talking about like cosplay and conventions and stuff, suddenly you’re just a little too weird,” she told ABC News. “And I found people on TikTok who did not think that I was too weird.”
They attribute the company’s success to the platform’s approach to curating content on a “For You” page, which aggregates videos the platform believes users prefer based on their scrolling patterns and likes. The app also pushes users into niche communities, such as TrekTok, DatingTok, or PowerToolsTok.
“It’s like going to a party where you don’t know anybody,” Mason said to describe the way TikTok curates content. “I feel like TikTok tends to be like [the] host who tends to say, ‘Hey, so and so likes this, you guys should talk.'”
Despite these redeeming qualities, TikTok and its parent company ByteDance appear constantly embroiled in controversies, with critics accusing the company of giving Chinese government officials access to sensitive user data, including the specific profile that TikTok uses to curate its successful and individualized “For You” page.
“I don’t think that spying is the right way to describe it,” TikTok CEO Shou Zi Chew told members of Congress when asked if his company spies on US users.
ByteDance has denied this allegation multiple times, yet the company faces a ban in Montana and a threat of a federal prohibition.
Despite the national security risk articulated by politicians and federal law enforcement officials, some users see the risk as menial compared to other social media platforms.
“Google steals our data, Facebook steals our data,” Loucks noted. “Stealing data is the price of having a free online. I am willing to pay that price.”
Other users recognized that a foreign company might collect their data. Still, they opted to accept that risk considering the benefits that the platform brings to their lives — not just enjoying videos, but the feeling of finding a community at a time of overwhelming loneliness. Research from Harvard’s Graduate School of Education found that Americans’ mental health during the pandemic suggests that 36 percent of Americans, including 61 percent of young adults, experience serious loneliness.
“All of the sudden, I had friends, and it’s really difficult where I am to make friends,” Faulds said of the niche community on the platform.
However, the political headwinds TikTok faces in the U.S. threaten to damage or remove that community and others. Other platforms like YouTube and Instagram have embraced the short-form video platform that drove TikTok’s growth, but some users expressed doubt if the community they built could successfully migrate.
“A TikTok ban would result in me really feeling isolated because the community is so close,” Faulds added. “The loneliness would be real, whether or not they are ‘just virtual friends.'”
(NEW YORK) — Chevrolet is saying bye-bye to the Bolt.
The Chevy Bolt hatchback, as well as its crossover Bolt EUV sibling, will cease production this year, General Motors has confirmed to ABC News.
The Bolt starts at just under $27,000 before federal and state electric vehicle incentives, making it the cheapest way to get into a new EV in the United States.
In a statement, a Chevy spokesperson called the Bolt a “huge technical achievement,” but went on to say that “as construction continues at the Orion Township, Mich., assembly plant in preparation for battery electric truck production beginning in 2024, Chevrolet confirmed Bolt EV and EUV production will end late this year.”
“When the Bolt goes out of production, the American market will have lost its last affordable EV,” said Ed Niedermeyer, an auto industry analyst. The next cheapest electric car on sale is the Nissan Leaf S, which has an EPA-estimated range of 149 miles on a charge. That’s more than 100 miles short of the Bolt’s 259-mile range.
Chad Kirchner, editor-in-chief of EV Pulse, said GM’s decision to ax the Bolt shouldn’t come as a shock.
“It’s not surprising at all,” he said.
In 2021, the Bolt was the subject of multiple recalls over its battery, made by LG Chem. According to the National Highway Traffic Safety Administration, rare manufacturing defects made during the production of those batteries “may pose a risk of fire when charged to full, or very close to full, capacity.” GM issued a statement at the time advising Bolt owners to park their cars outside, and at least 50 feet from other vehicles. The company said at the time it would replace the battery modules. NHTSA says about half of the affected cars have had that replacement done.
The Bolt was also developed before GM rolled out its “Ultium” platform – an electric vehicle architecture that underpins everything from GMC’s Hummer EV pickup truck to a midsize Cadillac SUV called the Lyriq.
The Bolt was launched for the 2017 model year. While it wasn’t GM’s first electric effort, it was the company’s first EV sold in all 50 states. And it sold well – the Bolt was the best selling non-Tesla EV in the last two quarters of 2022.
The company says more affordable Ultium-based Chevy EVs are going to launch soon, including an electric Equinox SUV that’s expected to start around $30,000. Even still, Niedermeyer says price remains a hurdle for wide-scale EV adoption.
“Weak profits in EVs and a lack of regulatory support for lower price points will continue to place the emphasis on expensive premium EVs,” said Niedermeyer. “Only by emphasizing that EVs are best suited to the weekday driving that starts and ends at home, and by aligning incentives for cars and chargers with the opportunity that use case presents, will truly affordable EVs become a widespread phenomenon.”
In the meantime, Kirchner said until the Equinox goes on sale, GM could be leaving market share on the table in the growing EV market.
“I think they’re leaving a fairly big hole in the affordability segment,” he said, adding, “I think that EVs are being priced out of a certain customer’s price range, and that is the customer that could benefit the most from an EV.”
(NEW YORK) — Shares of First Republic Bank plummeted more than 25% in early trading on Tuesday as the banking crisis continued to ripple through the financial system.
The regional lender, left in dire condition after the failure of Silicon Valley Bank last month, suffered a major loss of $102 billion in deposits over the first three months of 2023, an earnings report showed on Monday.
The lost deposits made up more than half of the $176 billion retained by the bank at the end of last year.
In all, shares of First Republic Bank have fallen nearly 90% since the outset of the year.
The bank’s profit fell 33% to $269 million over the three months ending in March when compared with the same period last year, the earnings report showed.
Meanwhile, revenue dropped 13% to $1.2 billion over the first three months of 2023, the report said.
On an earnings call with analysts, First Republic Bank CEO Michael Roffler acknowledged “unprecedented deposit outflows” in the middle of March, saying the bank faces “challenges and uncertainties.”
“Over the past seven weeks as we were impacted by industry events, our commitment to delivering exceptional client service has not wavered,” he added.
The sharp decline of First Republic Bank shares comes more than a month after the nation’s largest financial institutions injected $30 billion in the bank to stem losses and exhibit confidence in the lender.
Bank of America, Citi, JPMorgan Chase, Wells Fargo and Goldman Sachs were among a slew of big banks that participated in the effort.
Over the week following Silicon Valley Bank’s failure, small banks lost $108 billion in deposits, Federal Reserve data showed.
Meanwhile, deposits to the nation’s 25 biggest banks increased by $120 billion over that week, the data said.
JPMorgan Chase, the largest U.S. bank, received a huge wave of customers and deposits, amounting to hundreds of accounts and billions of dollars in the aftermath of the bank collapse, a source familiar with the matter previously told ABC News.
First Republic Bank came under stress in the days following the failure of Silicon Valley Bank on March 10, which marked the largest bank collapse since the 2008 financial crisis.
Two days after that came the fall of Signature Bank, the nation’s 29th-largest bank, suggesting that the banking crisis had spread.
The banking panic spooked many depositors, who rapidly withdrew their funds from smaller banks and placed them in larger ones.
In response, the U.S. government took rapid and extraordinary steps to protect the financial system.
Still, many bank stocks plummeted in March, including First Republic Bank. The company’s shares fell 88% over the course of that month.
Since then, the shares have stabilized, jumping 10% this month.
The weak earnings report on Monday and the stock decline on Tuesday, however, left in question the steadiness of the bank.
Bank executives declined to take questions on the earnings call on Monday.
(NEW YORK) — Tech giant Apple last week announced a buzzy product release — but it wasn’t a new version of its iPhone or virtual reality headset. Rather, the company offered its first ever high-yield savings account.
The move reflects growing demand for returns on savings as a topsy-turvy stock market, looming recession fears and aggressive interest rate hikes transform the old-fashioned savings account into a newly attractive financial option, personal finance experts told ABC News.
However, the yields on savings accounts could shift downward if the Federal Reserve reverses its policy of rate hikes, and prospective consumers should make sure that an account offering retains government insurance protection, they added.
Here’s what to know about the rise of high-yield savings accounts, and how to decide whether to open one:
What is a high yield savings account?
Financial institutions have not settled on what exactly constitutes a high-yield savings account, experts said. But the name indicates the key characteristics of this financial product: a savings account that delivers high returns.
While no specific threshold earns an account the moniker of “high-yield,” the enhanced savings from such accounts can prove substantial, experts said.
The average yield for a savings account is 0.24% annual percentage yield, meaning that a typical customer earns a fraction of a percentage point of interest each year for his or her savings deposit, according to Bankrate.com data from last week.
High-yield savings accounts, however, offer customers as much as 5% annual percentage yield, Mark Hamrick, Washington bureau chief and senior economic analyst for Bankrate.com, told ABC News.
“Over a prolonged period of time, it can make a huge difference,” Hamrick said.
For instance, a high-yield saving account that holds $10,000 could return as much as $500 per year. However, if a customer deposits the same amount in a bank account yielding 0.25% each, he or she stands to see just $25 in annual return, Hamrick said.
Instead of seeking out high-yield savings accounts at brick-and-mortar banks with household names or local branches, customers will more often find them at online banks, Christine Benz, the director of personal finance at Morningstar, told ABC News.
Online banks face lower expenses, since they aren’t paying for a commercial space or local bank employees, Benz said.
“Online banks are able to offer more competitive, better yields,” Benz said.
Why are high-yield savings accounts on the rise?
High-yield savings accounts have grown in popularity amid a string of rate hikes from the Fed that have allowed some banks to offer attractive returns and damaged the performance of alternative financial vehicles like the stock market, experts said.
“We’ve seen a huge rise,” Hamrick said.
Over the last year, the Fed has raised interest rates at a breakneck pace not seen since the 1980s.
The interest rate hikes make it more lucrative for banks to hold money, which in turn puts pressure on financial institutions to pass along some of those earnings to depositors through higher yields.
As a result, some banks have bid up each other’s yield offerings to attract customers, Hamrick said.
“They’ve got to be competitive with their rivals,” Hamrick said.
Meanwhile, high interest rates have pummeled some alternative investment options, like stocks. The S&P 500 has dropped about 3% over the past year, though it has surged in recent months.
“A savings account is pretty safe money right now,” Hamrick said.
What are the downsides of a high-yield savings account?
A major drawback of a high-yield savings account stems from the unpredictability of its yield, which shifts in rough correlation with the interest rate environment, Benz said.
If the Fed decides to reverse its rate policy and start bringing down borrowing costs, the high-yield accounts would likely suffer.
“With any type of savings account, the interest rate will vary significantly on an ongoing basis,” Benz said.
Moreover, personal finance experts cautioned that customers should make sure that a given high-yield account falls under government insurance protection, especially in light of recent tumult in the financial system.
The Federal Deposit Insurance Corporation, or FDIC, which safeguards the stability of the financial system, protects depositors at all FDIC-insured banks for up to $250,000 in funds for each different type of account held.
Nearly every bank is FDIC insured, and the vast majority of accounts fall below the $250,000 threshold.
Insurance also covers balances held with the high-yield savings account offered by Apple through its partnership with Goldman Sachs, Apple said.
Meanwhile, high-yield savings accounts often require a minimum deposit size for customers to qualify for the strong returns, Benz said.
“Relate that to your own expectations of how you’ll use the funds or the account,” she said.
“If you’re thinking of it as a checking alternative and don’t think you’ll be able to maintain the minimum balance, you won’t be able to maintain that full yield,” she added.
