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(NEW YORK) — While many Americans have noticed sky-high gasoline prices, the lesser-known increase in diesel costs could be what drives the U.S. economy into a recession, experts told ABC News.

Oil prices, which on Wednesday afternoon stood at $105 per barrel, are likely to remain high through November, when they’ll moderate to around $100 per barrel, according to the U.S. Energy Information Administration (EIA).

Elevated diesel prices could persist even longer as heightened demand for diesel outlasts that for gasoline, experts said. Since nearly all products that people consume rely on trucks, trains, and other modes of transportation that use diesel fuel, the already-inflated prices for many goods will prove difficult to dial back in light of those elevated diesel costs, they said.

“No one really notices diesel prices in the U.S. because it’s really only used by industries,” said Damien Courvalin, head of energy research and senior commodity strategist 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.”

The nationwide average price for a gallon of diesel stands at $5.81, which marks a staggering 80% increase since a year ago, when a gallon cost $3.22, according to AAA data. In California, the average price of a gallon of diesel is just below $7 per gallon, AAA data shows.

‘Diesel is my biggest concern’

While gasoline demand may decline leading into a recession, diesel demand often remains elevated, experts said. “In the pandemic we didn’t see diesel demand fall off the way we saw gasoline fall because we all ordered things off of the internet,” said Denton Cinquegrana, chief oil analyst at market research firm OPIS.

Many facets of U.S. industry rely on diesel-fueled transportation of goods, experts said. Typically, overall consumer demand drops during a recession. But diesel demand could remain at high levels in the lead up to a recession, especially in light of the prevalence of e-commerce and home delivery, experts said.

“Diesel is, quite frankly, my biggest concern, even more so than gasoline,” Cinquegrana said. “You could make behavioral changes when it comes to gasoline — you could carpool to work, some of us have the ability to work from home.”

But with diesel, high costs elevate the prices of everyday goods, since the higher cost of transportation is often passed down to consumers. In turn, consumers restrain their spending habits at grocery and other retail stores, slashing demand and exacerbating an economic slowdown, experts said. Consumer spending accounts for about 70% of U.S. gross domestic product.

“Those trucks run on diesel, and those costs get passed on to the consumer — that’s why the price of eggs, the price of milk, beer, go up,” Cinquegrana said. “It’s the price of diesel that kind of breaks the back of the economy eventually.”

Refineries are nearing capacity

The fundamental issue behind the high prices of both gasoline and diesel: demand is high and supply is constrained. Currently, U.S. refineries are producing about a million barrels less per day than they were pre-pandemic, according to the EIA.

In recent years, energy companies have slowed oil expansion in response to a call for fiscal discipline from shareholders. The rise of renewable energy alternatives has also posed a challenge for long-term investment in oil extraction.

While President Joe Biden is set to travel to Saudi Arabia next month, a prospective oil deal likely won’t help the U.S. in the short term.

“Their oil is in the ground,” said Courvalin, the head of energy research at Goldman Sachs. “None of us use that, we need refined oil — it needs to go through the refining process to get what we consume.”

Last week, Biden sent a letter to major oil refinery companies calling on them to take “immediate actions” to increase output. The letter accused the companies of taking advantage of the market environment to reap profits while Americans struggle to afford gas. It mentioned the possibility of Biden invoking the Defense Production Act, which requires companies to produce goods deemed necessary for national security.

But experts told ABC news that U.S. refineries are already near full capacity, and it would take a prolonged period to build new ones. Refineries are “very complex, highly regulated, and very expensive to build,” the EIA said. “Building new refineries to increase capacity is not something that can be done in a short time frame.”

“You have to realize that up until recently, nobody was screaming for more refining capacity in the world,” said Bob McNally, president of Rapidan Energy Group, a consulting firm. “In fact, if anything, refining capacity was starting to look like horses in buggies did in 1908.”

Biden should ‘go further’

The Biden administration’s short term response to the crisis has involved the release of oil from strategic reserves and a call for a gas tax holiday. The long term response has centered around a transition to clean or low carbon energy, but Cinquegrana criticized this proposal as “not appreciating how difficult an energy transition is.”

“What we really need is that higher investment – we talk about refining capacity: if there is none, then I cannot increase gasoline supply,” Courvalin said. “There is nothing the policy can do at this stage.”

The Biden administration has called for a federal gas tax holiday which would temporarily pause the federal gasoline tax of 18.4 cents per gallon on gasoline and 24.3 cents per gallon on diesel fuel.

“On the one hand, yes, it does reduce prices at the pump,” Courvalin said of the potential holiday. “But when you look at it from a commodity perspective, it also means we are still not balancing, just subsidizing what we are running out of.”

The American Petroleum Institute sent the White House its own 10-step proposal to alleviate supply shortages. Their recommendations ranged from lifting development restrictions on federal lands and waters to revising the NEPA permitting process.

“I would go even further,” McNally comments on the letter, “reversing the ban on cross-border pipelines, removing the prospective risk of onerous regulation of oil and gas companies and investment and so forth until we can legislate a proper climate change policy.”

Some of the major energy companies agree.

“In the short term, the US government could enact measures often used in emergencies following hurricanes or other supply disruptions — such as waivers of Jones Act provisions and some fuel specifications to increase supplies,” ExxonMobil suggested in a statement to ABC News.

“Longer term, [the] government can promote investment through clear and consistent policy that supports U.S. resource development, such as regular and predictable lease sales, as well as streamlined regulatory approval and support for infrastructure such as pipelines,” the company added.

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(COLUMBUS, Ohio) — Ohio State University was granted a trademark to use the word “THE” on apparel and merchandise to promote its athletic teams.

The U.S. Patent and Trademark Office had previously rejected Ohio State’s application, claiming the trademark appeared to be for a “merely decorative manner” and as an “ornamental feature” that didn’t function as a trademark that would differentiate the items from others, the Associated Press reported.

The USPTO did not immediately respond to ABC News’ request for comment on the approval.

In a statement to ABC News, the university said “THE” was used by students at the school for years and that it worked hard to “protect the university’s brand and trademarks because these assets benefit students and faculty and support our core academic mission of teaching and research.”

Ohio State said that the school’s trademark and licensing program generates more than $12.5 million a year in revenue and funds university scholarships and programs.

The university filed its patent application in August 2019, months after fashion designer Marc Jacobs filed to use the word “THE” on his products. The USPTO also struck down Jacobs’ application.

Jacobs and the school reached an agreement last year that allows both to use “THE” on their respective products.

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(WASHINGTON) — President Biden on Wednesday called on Congress to suspend the federal gas tax for three months and asked states to suspend their own gas taxes or provide commensurate relief to consumers.

The federal government charges an 18.4-cent tax per gallon of gasoline and a 24.4-cent tax per gallon of diesel. Suspending the tax for three months — through the end of September, will cost about $10 billion, the White House said.

“I fully understand that the gas tax holiday alone is not going to fix the problem,” Biden said in remarks delivered from the South Court Auditorium. “But it will provide families some immediate relief, just a little bit of breathing room, as we continue working to bring down prices for the long haul.”

But the idea may not get the reception Biden is looking for from lawmakers on Capitol Hill.

House Speaker Nancy Pelosi, D-Calif., was noncommittal on the issue in a statement she released after Biden’s announcement. “We will see where the consensus lies on a path forward for the President’s proposal in the House and the Senate,” the statement read.

Sen. Joe Manchin, D-W.Va., told ABC News on Wednesday that he’s not on a “yes” vote as of now.

“Now, to do that and put another hole into the budget is something that is very concerning to me, and people need to understand that 18 cents is not going to be straight across the board — it never has been that you’ll see in 18 cents exactly penny-for-penny come off of that price,” Manchin said.

Biden specifically called on companies to make sure that “every penny” of those savings are passed through to consumers.

“This is no time for profiteering,” he said.

Biden on Wednesday also called on the industry to use profits to refine more oil and gasoline and lower prices at the pump.

“My message is simple to the companies running gas stations and setting those prices at the pump: this is a time of war, global peril, Ukraine,” Biden said. “These are not normal times. Bring down the price you are charging at the pump to reflect the cost you are paying for the product to it now. Do it now, do it today. Your customers, the American people, they need relief now.”

The administration has been putting public pressure on oil companies to help Americans at a time of financial need.

“Companies, of course, are beholden to their shareholders, but they really need to be beholden and conscious of customers, and their fellow neighbors, and their fellow citizens, just like this administration’s doing,” another senior administration official told reporters. “And we hope that that’s the spirit that CEOs of these companies will take.”

Energy Secretary Jennifer Granholm is scheduled to meet with oil company executives Thursday, during which they will press executives to ensure they’ll pass on the savings if the gas tax holiday is enacted.

“We are encouraging these oil and gas companies to invest, to help their fellow citizens, to help their own workers,” Granholm told reporters at the daily White House press briefing. “We need them to come to the table.”

When asked about the apparent lack of support for the gas tax holiday from lawmakers, Granholm said there will be ongoing discussions.

“I would hope that both sides of the aisle are listening to their constituents about getting relief,” she said. “I think the citizens will be the loudest voice in the room.”

On Wednesday, Biden also called on state and local governments to provide “relief” to Americans by suspending their state gas taxes or provide other remedies, like delaying planned tax and fee increases, or even consumer rebates or relief payments.

State gas taxes average about 31 cents per gallon of gasoline, according to the U.S. Energy Information Administration.

Researchers at the University of Pennsylvania’s Wharton School recently found that the suspension of gas taxes in Maryland, Georgia and Connecticut were, in fact, “mostly passed onto consumers at some point during the tax holiday in the form of lower gas prices,” but that the lower prices “were often not sustained during the entire holiday.”

In Maryland, 72% of the tax savings were passed on to consumers; in Georgia, 58-65% were, and in Connecticut, 71-87% were, according to their analysis.

When asked why Biden wants the federal tax suspended for three months specifically, the official said the president wanted to balance the need of “the unique moment that we’re in” — particularly during the summer driving season — with the fact that the tax provides important revenue for the government to pay for highways and other transportation projects.

“The purpose of this suspension,” the official said, “is really to address the unique moment that we’re in, and with a particular focus on the summer driving season and the pain that families are feeling at the pump right now, while recognizing that on a longer-term basis, the gas tax is an important source of revenue for federal infrastructure.”

The gas tax revenue goes to the federal government’s Highway Trust Fund, which provides for much of the government’s spending on highways and mass transit.

Biden said his proposal wouldn’t affect the Highway Trust Fund, and an administration official previously told reporters that Congress can fill in the $10 billion gap with “other revenues.”

“I promise you I’m doing everything possible to bring the price of energy down, gas prices down,” the president said.

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(NEW YORK) — For months, sky-high gas prices have bedeviled Americans. The nationwide average price for a gallon of gas stands just under an eye-popping $5 per gallon, AAA data shows.

But a significant policy change may soon offer drivers some relief. President Joe Biden on Wednesday will call on Congress to pass a gas tax holiday that would run through the end of September.

Suspending the federal gas tax, which amounts to 18.4 cents per gallon, would almost immediately reduce the price drivers pay at the pump, experts told ABC News. But they cautioned that the policy would slash funds for maintaining roads and highways, while potentially worsening a supply-demand imbalance and pushing prices even higher in the long term.

“As a motorist, I’ll take any price reduction I can get,” said Patrick De Haan, an energy analyst at GasBuddy. “As an analyst, I think it could exacerbate imbalances that could lead to higher prices.”

What is the federal gas tax?

The federal gas tax, first imposed as a 1 cent per gallon tax in 1932, makes up a portion of the price that drivers see at the pump. The tax gradually increased over the decades after its enactment, reaching its current level of 18.4 cents per gallon in 1993. Since 1997, all revenue from the federal gas tax has gone to the Highway Trust Fund, the major source of federal funding for highways, roads and bridges.

The federal gas tax has never been suspended, though a gas tax holiday was proposed by presidential candidates John McCain and Hillary Clinton during the 2008 campaign.

How would a gas tax holiday work?

A federal gas tax holiday, which would require a law passed by Congress and signed by Biden, would suspend the tax for a temporary duration. The proposal put forward by Biden on Wednesday will call for a suspension through September.

A handful of states — led by both Democratic and Republican governors — have suspended their gas taxes as a means of delivering some financial relief for drivers. Biden on Wednesday will call on states to suspend their gas taxes if they haven’t already.

But the moves only reduce costs by a fraction of the price. In New York, for instance, Gov. Kathy Hochul this month suspended a tax of 16 cents a gallon. With the average price of a gallon of gas in New York standing at $5, according to AAA, the tax relief amounts to a 3.2% cost reduction.

Suspension of the federal gas tax would also reduce the cost of a $5 gallon of gas by less than 5%. Still, consumers would likely prefer some relief to no relief.

What are potential downsides of a federal gas tax holiday?

There are two main potential downsides to a federal gas tax holiday. First, it would deny the federal government a primary source of funding for maintaining roads and highways. U.S. roads received a D grade last year in a report from the American Society of Civil Engineers. Eliminating the federal gas tax would likely leave them even worse off, experts said.

Second, as the U.S. struggles with an imbalance between low oil supply and high demand, a federal gas tax holiday would partially undermine the role that heightened prices play in decreasing consumer demand. In theory, if gas prices remain high or go even higher, people will buy less gas, which should help bring equilibrium between supply and demand, thereby reducing prices.

But a gas tax holiday would almost immediately reduce the price, which could increase demand and worsen the supply-demand balance even further, said De Haan, the energy analyst at GasBuddy.

“It would cause a jolt potentially to demand at a time when it is difficult for refiners to keep up with demand now,” he said.

What happens next?

If Biden decides to support a federal gas tax holiday, it would likely boost momentum in Congress for a law to enact it. But the passage of such a measure remains uncertain.

One such law, the Gas Prices Relief Act, has been proposed by Sen. Mark Kelly (D-AZ). It would eliminate the gas tax through the end of the year, and specifically stipulates that the price savings should be passed along to consumers.

In addition to Kelly, seven senators have backed the bill. So far, no Republican senators have supported it.

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(WASHINGTON) — President Biden will on Wednesday call on Congress to suspend the federal gas tax for three months and ask states to suspend their own gas taxes or provide commensurate relief to consumers, according to the White House.

The federal government charges an 18.4-cent tax per gallon of gasoline and a 24.4-cent tax per gallon of diesel. Suspending the tax for three months — through the end of September, as Biden will call for — will cost about $10 billion, the White House said.

When asked if Biden believes Congress can somehow mandate that oil companies pass on those savings, in full, to consumers, a senior administration official did not directly say but noted there is “some evidence that state tax suspensions, in particular, do get passed through to consumers.” Biden is scheduled to deliver remarks at the White House complex at 3 p.m. ET Wednesday.

The official, in a Tuesday evening call with reporters, said “the president is absolutely calling on companies to make sure that those savings are passed through to consumers.”

The administration is also putting public pressure on oil companies to help Americans at a time of financial need.

“Companies, of course, are beholden to their shareholders, but they really need to be beholden and conscious of customers, and their fellow neighbors, and their fellow citizens, just like this administration’s doing,” another senior administration official told reporters. “And we hope that that’s the spirit that CEOs of these companies will take.”

U.S. Energy Secretary Jennifer Granholm is scheduled to meet with oil refining executives Thursday.

On Wednesday, Biden will also call on state and local governments to provide “relief” to Americans by suspending their state gas taxes or provide other remedies, like delaying planned tax and fee increases, or even consumer rebates or relief payments, according to the White House. An official said Biden wants states to “match” what the federal government would be doing in the short term.

State gas taxes average about 31 cents per gallon of gasoline, according to the U.S. Energy Information Administration.

Researchers at the University of Pennsylvania’s Wharton School recently found that the suspension of gas taxes in Maryland, Georgia and Connecticut were, in fact, “mostly passed onto consumers at some point during the tax holiday in the form of lower gas prices,” but that the lower prices “were often not sustained during the entire holiday.”

In Maryland, 72% of the tax savings were passed on to consumers; in Georgia, 58-65% were, and in Connecticut, 71-87% were, according to their analysis.

A federal gas tax holiday “isn’t going to solve the whole problem,” the official said. “It is something that can be done to take a real step to relieve some of that pain at the pump. And we see it as part of a suite of policies that are designed to provide that relief, including policies that focus on the supply side.”

When asked why Biden wants the federal tax suspended for three months specifically, the official said the president wanted to balance the need of “the unique moment that we’re in” — particularly during the summer driving season — with the fact that the tax provides important revenue for the government to pay for highways and other transportation projects.

“The purpose of this suspension,” the official said, “is really to address the unique moment that we’re in, and with a particular focus on the summer driving season and the pain that families are feeling at the pump right now, while recognizing that on a longer-term basis, the gas tax is an important source of revenue for federal infrastructure.”

The gas tax revenue goes to the federal government’s Highway Trust Fund, which provides for much of the government’s spending on highways and mass transit. Biden believes Congress can fill in that roughly $10 billion gap with “other revenues,” an official said.

When asked if that money would come from last year’s $1.2 trillion infrastructure law, to which Biden signaled openness Tuesday, the official wouldn’t say but did note that there were proposals in Congress that would cover the revenue shortfall.

The official said the administration was “encouraged by the fact” that members of the House and Senate have already made similar proposals to what Biden will call for on Wednesday, but suggested the White House had yet to engage in depth with members of Congress on this topic — saying “we expect to” engage with Congress.

The official also said that all of the policies Biden is proposing — from gas tax holidays to pressuring oil refiners to expand capacity — could, combined, save consumers up to $1 per gallon or more. But that assumption is predicated on steps oil retailer and refiners have yet to show a willingness to take.

“President Biden understands that a gas tax holiday alone will not, on its own, relieve the run up in costs that we’ve seen,” the White House said in a statement. “But the President believes that at this unique moment when the war in Ukraine is imposing costs on American families, Congress should do what it can to provide working families breathing room.”

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(NEW YORK) — Kellogg has announced that it will separate into three different companies to create “greater strategic, operational, and financial focus” for each of the new firms that will be named at a later date.

Under the plans announced on Tuesday, Kellogg will separate its North American cereal and plant-based foods business — which represent an estimated 20% of Kellogg’s net sales in 2021 — from its global snacking brands, cereal and noodle brands and frozen breakfast brands.

“Kellogg has been on a successful journey of transformation to enhance performance and increase long-term shareowner value,” said Steve Cahillane, Kellogg Company’s Chairman and Chief Executive Officer in a statement announcing the company’s plans. “This has included re-shaping our portfolio, and today’s announcement is the next step in that transformation.”

“These businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities,” Cahillane continued. “In turn, each business is expected to create more value for all stakeholders, and each is well positioned to build a new era of innovation and growth.”

Kellogg expects these moves to be completed by 2023 and the headquarters for the three companies set to focus on their global snacking brands, their cereal brands and their plant-based food brands will remain unchanged.

Said Kellogg: “After several years of transformation and improving results, the Company believes it is the right time to separate these businesses so they may pursue their particular strategic priorities.”

After the announcement, Kellogg rose more than 6% in pre-market trading on Tuesday.

The global snacking company, which earned $11.4 billion in revenue last year, will be made up of well-known brands such as Pringles, Cheez-It, Pop-Tarts, Kellogg’s Rice Krispies Treats, the Kellogg said. Sales at the snacking company last year also came from some cereal brands as well as frozen breakfast brands and the Eggo brand, the company added.

The cereal company accounted for $2.4 billion in sales last year through business in the U.S., Canada, and Caribbean, Kellog said. The cereal company sells brands such as Frosted Flakes, Froot Loops, Mini-Wheats, and Special K.

The plant-based company, which earned $340 million in revenue in 2021, will be anchored by the MorningStar Farms brand, which features an array of plant-based items such as chicken nuggets and sausage links, Kellogg said.

The cereal company and plant-based company will both remain headquartered in Battle Creek, Michigan, Kellogg said. The global snacking company will maintain dual campuses in Battle Creek and Chicago, Illinois, with its corporate headquarters located in Chicago.

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(WASHINGTON) — The Federal Reserve’s strongest weapon in its fight against skyrocketing inflation is raising interest rates.

In March, the Fed raised its target federal funds rate by 0.25%, the first rate hike in more than three years. At its May meeting, the central bank hiked rates by 0.50%, and in June it got even more aggressive, raising rates by 0.75%, the largest increase since 1994. The Fed is warning of potentially more rate hikes to come as it tries to cool consumer demand and drive prices down from a 40-year high.

That has resulted in higher interest rates on credit cards, home and auto loans, home equity lines of credit and small business loans. For borrowers, that means those products are only getting more expensive. But the Fed’s rate hike campaign is not all bad news. There is a silver lining for savers.

“Rising interest rates represent a turn of fortunes for savers as interest earnings are finally on the rise, and eventually those higher interest rates will help reduce inflation,” Greg McBride, Bankrate’s chief financial analyst, told ABC News. “This is the opposite of what savers have endured the past three years when interest rates fell and then inflation took off.”

Early in the pandemic, when the Fed was cutting interest rates to stimulate the economy, the average rate for a typical savings account was around 0.06%, according to the FDIC. Now, with the Fed’s benchmark rate rising, banks are starting to follow suit, but don’t expect them to mirror those rate hikes exactly. What the Fed does with interest rates is only one factor banks consider when setting rates. They also take into account how much money customers have deposited and how much their competitors are offering.

Some banks, especially online banks, are starting to offer interest rates on savings accounts of 1% or more. But not all bank interest rates are created equal. McBride recommends doing some comparison shopping and considering switching banks to take advantage of the latest rate increase.

“You want to put your money where it will be welcomed with open arms and higher yields,” he said. “Online banks, smaller community banks, and credit unions offer higher yields than the large banks that already have a mountain of deposits.”

Fed Chair Jerome Powell predicts the central bank could raise rates another 1.75% over the remainder of the year to bring inflation down from its current 8.6% to the Fed’s target goal of 2%. Experts say if the Fed proves to be as aggressive as they’re expected to be, the top-yielding online savings accounts could top 3% by year-end.

In addition to high-yield savings accounts, McBride said if you’re willing to commit your money for a few years, then a certificate of deposit or I-bond, which are also seeing rates rise, could be better suited to your financial goals.

“Evaluate the time horizon for when the money is needed and then pursue the appropriate savings instrument,” said McBride. “Don’t chase the yield and end up locking yourself into something incompatible with your liquidity needs. If you’re evaluating where to put your emergency savings, then you’ll need a liquid account above all else.”

Wherever you choose to keep your money, experts agree you should always make sure you’re dealing directly with a federally-insured financial institution.

“There are plenty of online savings accounts that offer competitive yields, federal deposit insurance, access to the money when needed, and do not require a large balance in the account,” said McBride. “There is literally something for everyone.”

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(NEW YORK) — While June 19, 1865, is widely regarded as a day of liberation, its celebration for some simultaneously brings into question just how far that freedom goes.

For real estate entrepreneur Jude Bernard, Juneteenth is a reminder of generational wealth deprived.

“The whole story behind Juneteenth was that we were technically free, but we didn’t know it and it was years before we actually truly got our freedom,” Bernard told ABC News.

Bernard said Juneteenth can be used to highlight financial equality, which is the type of freedom many, like him, have fought for.

He used student loan funds to buy his first property 25 years ago with the goal of earning extra income on the side. Now, with an extensive portfolio, the investor is the founder and CEO of The Brooklyn Bank–a nonprofit focused on financial literacy and development for people of color.

“My mission is equality,” he said. “The goal of the Brooklyn Bank is to pretty much bring the information to those that don’t have it. So many times, us as a people, we miss out on opportunities. Not because we’re not willing to learn, but because we don’t even know what we don’t know.”

Reflecting on his upbringing as a first-generation Haitian-American in Flatbush, Brooklyn, Bernard said he feels “lucky” to have come across the information that has brought him to where he is today. He said that not having a “formal financial education” during his childhood encouraged him to share what may not be readily available in their communities with others.

Bernard said education is key to resolving economic inequality.

On Juneteenth, The Brooklyn Bank will be holding its first annual Black Money Forum in collaboration with personal finance app Stash. The free event will focus on “financial freedom, financial education, financial empowerment, and most importantly, changing the financial mindset,” Bernard said.

“A lack of information keeps people on a treadmill,” he said. “A lack of education, has people not saving and not passing wealth down to the next generation.”

According to Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860-2020, the white to Black per capita wealth ratio is six to one. The paper, by researchers Ellora Derenoncourt, Chi Hyun Kim, Moritz Kuhn & Moritz Schularick, drew information from census data and tax records to analyze racial economic disparities over time and what steps should be taken to equalize them.

“So the average white American has six times the wealth of the average Black American. That’s equivalent to Black Americans holding about 17 cents for every white dollar of wealth,” co-author Derenoncourt, an economic historian and assistant professor of economics at Princeton University, told ABC News.

She said while much of the work on the racial wealth gap focuses on recent years–from the 1980s onward–, she sought to show the evolution of the gap since the Civil War to examine “the importance of American history for where the wealth gap is today.”

In 1860, the white-to-Black per capita wealth ratio was 56:1, translating to the average Black American owning less than 2 cents to the dollar of every white American. Legal prevention of enslaved peoples to accumulate wealth exacerbated this gap and continues to severely constrain the ability to close it, she said.

Contrarily, in opening up the possibility for Black Americans to possess and bequeath capital, “emancipation was the single biggest closer of the racial wealth gap.” Policies enacted afterward, however, did not go far enough to continue to resolve this disparity, according to Derenoncourt.

“One major thing that was lacking was any sort of reparations or provision of some form of capital to the formerly enslaved,” she said. “W.E.B. DuBois called this a reckless experiment in emancipation, one that you’ve never seen in the history of humanity–to emancipate a people, but not provide them with any means for providing for themselves while the other group has had the opportunity to accumulate wealth and pass that wealth on to future generations.”

“… I like to regard Juneteenth as not just a day off, but it’s a freedom day,” Bernard said. “A financial freedom day, where it’s an opportunity to learn a little bit more about things that you need to gain the equality that we’re supposedly entitled to.”

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(NEW YORK) — A difficult year for many homebuyers became even tougher when the Federal Reserve dramatically raised borrowing costs this week in an effort to tame sky-high inflation, experts told ABC News.

For months, homebuyers have faced the dual challenges of skyrocketing mortgage rates and continued growth in home prices.

Since mid-March, when the Federal Reserve instituted its first rate hike of the year, the average 30-year, fixed-rate mortgage has jumped from 4.45% to 6.11%, according to Mortgage News Daily. Meanwhile, the median price for existing single-family homes rose 15.7% over the first three months of 2022 compared with the same period last year, according to data from the National Association of Realtors.

The Fed’s decision on Wednesday to raise interest rates by 0.75%, its largest hike since 1994, will further increase mortgage rates and push many homebuyers out of the market, slowing home price increases but intensifying demand in the rental market, experts said.

“It’s got a huge impact,” Mark Stapp, a professor of real estate at Arizona State University, told ABC News. “It’s going to bump a lot of people out of homebuying.”

To be sure, rates for 30-year, fixed-rate mortgages do not move in direct correlation with the Fed’s benchmark interest rate. Instead, mortgage rates trace the ups and downs of the yield on 10-year Treasury bonds, which responds to a host of indicators such as inflation and the outlook for the economy as well as interest rates.

Over the past week, as new inflation data showed a reacceleration of price hikes and observers expected the Federal Reserve to escalate its fight to dial back cost increases, mortgage rates increased more than they have over any week since 1987, according to a Freddie Mac survey released on Thursday.

Steep mortgage rate increases significantly elevate the monthly cost of homes, shutting out many buyers, decreasing overall demand, and affording leverage to the buyers who remain, experts said.

Mortgage rates will continue to increase at least moderately and could reach as high as 7%, some experts said.

“A month ago, I would’ve thought that 7% would be outlandish and it would be delusional to think they could go that high,” Holden Lewis, a housing expert at personal-finance site NerdWallet, told ABC News. “Now I think okay, well, 7% might be possible.”

“Every time I think they’ll stop, they keep going up,” he added.

At the outset of the year, when the rate for a 30-year fixed mortgage stood at 3.25%, buyers who could afford a $1,500 per month spend on the home principal plus interest, could borrow enough to afford a $345,000 home, Lewis said. At the current rate, roughly 6%, the same homebuyers can borrow about $250,000, reducing borrowing capacity by about $95,000, he added.

“As mortgage rates increase, the monthly payment you can afford can buy less house,” he said.

The mortgage rate hikes disproportionately impact buyers on the fringe of the housing market, such as people seeking their first home, said D. Sam Chandan, a professor of finance and director of the Center for Real Estate Finance at New York University’s Stern School of Business.

“We’ve seen a significant deterioration in housing affordability over the course of this year,” he said. “In particular for the aspirational first-time home buyer in many markets around the country.”

Forecasters expect a decline in home purchases this year, which should slow price increases, experts said. Total home sales are expected to drop 13.5% to 5.96 million units in 2022, according to Fannie Mae data released this month.

But the supply of homes will also likely decline, as sellers wait for a more favorable market, moderating the price relief expected from waning demand, Chandan said. Further, declining interest in the market for home purchases will spike demand and potentially raise prices in the rental market, he added.

In the short term, a possible rental price hike would coincide with a persistent rise in prices for essentials like fuel and groceries, straining household budgets, Chandan said.

“We find ourselves in a place where apartment rents are increasing faster than many families’ incomes are growing,” he said. “The deterioration in affordability for many income-constrained families is forcing a very tough choice in having to spend less on education, clothing, healthcare and food in order to pay rent.”

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(NEW YORK) — Revlon has officially filed for bankruptcy.

The 90-year-old cosmetics giant announced on Thursday that the company voluntarily petitioned for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York.

Like many other companies, the company has been faced with ongoing global challenges that specifically point to supply chain and rising inflation issues, in addition to the brand’s continued obligations to its lenders.

This legal proceeding was filed with the intention to allow Revlon to strategically reorganize its legacy capital structure and improve its long-term outlook.

“Today’s filing will allow Revlon to offer our consumers the iconic products we have delivered for decades, while providing a clearer path for our future growth,” said Debra Perelman, Revlon’s president and chief executive officer, in a statement. “Consumer demand for our products remains strong — people love our brands, and we continue to have a healthy market position. But our challenging capital structure has limited our ability to navigate macro-economic issues in order to meet this demand.”

With court approval, the company said it could receive $575 million in debtor-in-possession financing from its existing lender base. In addition to its existing working capital, this will provide the company with more financial support for day-to-day operations, it said.

“By addressing these complex legacy debt constraints, we expect to be able to simplify our capital structure and significantly reduce our debt, enabling us to unlock the full potential of our globally recognized brand,” said Perelman.

Revlon was founded in New York City in 1932 by brothers Charles and Joseph Revson and chemist Charles Lachman. In 2016, it was acquired by Elizabeth Arden and its portfolio brands.

Today, Revlon has grown to include cosmetics, skincare, fragrance and personal care. Some of the company’s sister brands include Almay, Creme of Nature, celebrity fragrances from Britney Spears, Christina Aguilera and more.

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