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(NEW YORK) — The borrowing cost for student loans is poised to reach a 16-year high.

The interest rate on a federal undergraduate student loan is expected to climb to 6.5% in July, which would mark its highest level since 2008, financial-aid expert Mark Kantrowitz told ABC News. The current interest rate of a new student loan is 5.5%.

The borrowing rate for student loans is set by adding a fixed amount of 2.05 percentage points to the yield on the 10-year Treasury bond, which is determined annually at a May auction. At the auction on Wednesday, 10-year Treasury bonds were sold at a 4.48% yield.

The yield for 10-year Treasury bonds, in turn, closely tracks the benchmark interest rate set by the Federal Reserve. That benchmark rate remained relatively low for years but has surged since 2022, when the Fed undertook an aggressive series of interest rate hikes to fight inflation. In response to rising interest rates, student loan rates have soared.

“It’s a shock because people had gotten used to low rates,” Kantrowitz said.

Since student loans are typically fixed, the forthcoming rate will apply to new loans but will not affect previous ones. The new rate will apply to loans for the 2024-2025 academic year beginning on July 1.

On a 10-year student loan of $28,000 under the forthcoming rate, the borrower will pay interest of about $10,000, which amounts to a roughly 35% higher cost for the borrower when compared with a student foregoing loans, Nancy Goodman, founder and executive director of higher-education nonprofit College Money Matters, told ABC News.

Under the forthcoming rate, such a borrower would pay an additional $2,000 over the course of the loan when compared with the current rate, Goodman explained.

“That’s a big burden,” Goodman added. “I hate to see that for students.”

In December, the Fed forecasted three quarter-point interest rate cuts over the course of 2024. Due in part to stubborn inflation since then, however, the Fed has recently cast doubt about whether those rate cuts will happen after all.

At a meeting earlier this month, the Fed held interest rates steady at their highest level since 2001.

Because the interest rate for student loans depends on the yield for 10-year Treasury bonds set at an auction in May, the postponement of interest rate cuts locked in high borrowing costs for students for the next academic year.

“Student loans have gotten caught up in the Fed’s attempt to rein in inflation, and the students who are borrowing are going to pay the price,” Goodman said.

The average annual tuition for a four-year, in-state public college stood at $11,260 for the most recent academic year, which amounted to a 2.5% increase before inflation adjustment, the College Board says.

For a private, four-year college, the average annual tuition stood at $41,540 over the most recent academic year, which marked a 4% increase before inflation adjustment, according to the College Board.

The jump in borrowing rates will exacerbate the rising cost of tuition, especially for low- and middle-income students, Kantrowitz said.

“College is becoming less and less affordable every single year,” Kantrowitz added.

Meanwhile, the rate of students pursuing federal loans has plummeted.

During the current academic year, roughly 35% of college students have completed the Free Application for Federal Student Aid, or FAFSA, according to data from the National College Attainment Network. That share of college students completing FAFSA forms marks a decline of 13 percentage points when compared to the previous academic year, the National College Attainment Network found.

The drop in aid applications suggests that many college students are pursuing low-cost options or opting against college altogether, Goodman said.

“Colleges should be a little concerned,” Goodman said. “Students are getting smarter about the cost of borrowing and colleges are having a more challenging time filling their classes.”

“This is hard for everybody,” Goodman added.

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(NEW YORK) — ByteDance, the parent company of TikTok, struck the latest blow in a high-stakes clash between the social media company and the U.S. government, filing a lawsuit this week challenging a forced sale of TikTok as unconstitutional.

The case could nullify the measure enacted last month that requires ByteDance to sell the platform or suffer a ban of TikTok. The move raises a question for roughly 170 million TikTok users and others interested in the outcome: Can TikTok win in the courts?

Legal experts who spoke with ABC News said TikTok has a viable case on First Amendment grounds, saying the ruling will come down to how judges weigh free speech protections against national security concerns tied to Chinese ownership of the app.

In the end, federal courts will likely side in favor of the forced sale since they have shown themselves to be deferential to the government when it invokes national security interests, some experts predicted.

“This case is not a slam dunk in either direction,” Alan Rozenshtein, a law professor at the University of Minnesota who focuses on the First Amendment, told ABC News. “There’s a chance TikTok could win — it’s more likely the courts, including the Supreme Court, will uphold the law.”

TikTok did not immediately respond to ABC News’ request for comment.

In its lawsuit, ByteDance criticizes the measure enacted by the U.S. as an “unprecedented step” aimed at singling out and banning TikTok.

“For the first time in history, Congress has enacted a law that subjects a single, named speech platform to a permanent, nationwide ban, and bars every American from participating in a unique online community with more than 1 billion people worldwide,” the lawsuit says.

The main argument brought by ByteDance centers on the government’s alleged infringement of the free speech rights of TikTok users and the company. The measure unlawfully invokes national security fears as a means of shutting down TikTok, leaving open the possibility of the government doing the same to any newspaper or website, the lawsuit argues.

“There are clearly First Amendment questions here,” Timothy Zick, a professor of constitutional law at William and Mary Law School, told ABC News. “It’s a viable claim.”

In support of its First Amendment challenge, ByteDance says in its lawsuit that the measure amounts to an outright ban, since the company will not be able to sell TikTok within the allotted nine-month period due to technical issues and commercial impediments.

The question of whether the measure equates to a ban of TikTok could end up being a key pivot point for the case, Amanda Shanor, a professor of First Amendment law at the University of Pennsylvania, told ABC News.

“A law that just prohibited TiKTok outright would be much more vulnerable to a First Amendment challenge than a requirement that ByteDance sell TikTok,” Shanor said. “The question otherwise becomes a little more like: Does TikTok have a First Amendment interest in keeping its parent company? To me, that’s a much weaker contention.”

The Department of Justice has yet to respond but is likely to argue that national security concerns should be prioritized over First Amendment protections, the experts said. The bipartisan passage of the law in the House and Senate on national security grounds will help bolster the government’s argument, some experts added.

The social media platform has faced growing scrutiny from some government officials over fears that user data could fall into the possession of the Chinese government and the app could be weaponized by China to spread misinformation.

There is little evidence that TikTok has shared U.S. user data with the Chinese government or that the Chinese government has asked the app to do so, cybersecurity experts previously told ABC News. In its lawsuit, ByteDance blasts the national security fears as “speculative.”

Rozenshtein, of the University of Minnesota, said the U.S. government may not provide direct evidence of Chinese tampering with TikTok. However, the government will likely argue that it holds substantial evidence for the “component parts” of its claim.

“We know China has engaged in widespread hacking,” Rozenshtein said. “We know China is willing to act in an extremely heavy-handed way to control its private corporations.”

Ultimately, some experts said, the courts will likely defer to the government’s assessment of national security risks and rule in favor of the law.

“The courts don’t want to substitute their own judgment for Congress’ or the president’s,” Rozenshtein said.

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(NEW YORK) — TikTok announced on ABC News’ Good Morning America Thursday morning that beginning immediately, the social media giant will automatically label Artificial Intelligence-generated content when it is uploaded from certain platforms.

“Our users and our creators are so excited about AI and what it can do for their creativity and their ability to connect with audiences.” Adam Presser, TikTok’s Head of Operations & Trust and Safety, told ABC News in an exclusive interview. “And at the same time, we want to make sure that people have that ability to understand what fact is and what is fiction.”

The social media giant says they are becoming the first video-sharing platform to implement Content Credentials technology — an open technical standard providing publishers, creators, and consumers the ability to trace the origin of different types of media.

“This is like a nutrition label for content. It tells you what happened in the image, where it was taken, who made it, and the edits that were made along the way,” explained Adobe’s Chief Trust officer Dana Rao during an interview with ABC News earlier this year.

Adobe is one of the founding members of the Coalition for Content Provenance and Authenticity, a coalition of companies working together to push forward the adoption of this new digital standard.

And Content Credentials (digital nutrition labels) are becoming more widely used as a standard to certify digital content.

Earlier this year, OpenAI announced that they would be adding this technology to all images created and edited by DALL.E 3, their latest image model. OpenAI also said it plans to integrate Content Credentials for its video-generational Model, Sora, once it is launched more broadly.

Other products with generative AI capabilities like Adobe Firefly, Photoshop, Express and Microsoft Copilot are among others who are already using the technology to embed metadata into visual content created using their platforms.

“Parts of the picture are falling into place,” remarked Sam Gregory, executive director of Witness and expert on deepfakes. “It’s essential that specific companies make it as easy as possible to know when content was created with their tools by providing tool-specific classifiers.”

TikTok said the rollout of this new label starts Thursday and will apply to all users globally in the coming weeks. Over the coming months, TikTok will also start attaching Content Credentials to content, which will remain on the content when downloaded, allowing other platforms to read the metadata.

With the United States presidential election around the corner and elections stacked across the world, demands to detect AI-generated content online have been growing more intense.

“Neither is a silver bullet, not now or when they are fully utilized and provided – they are a form of harm reduction that makes it easier to discern when and how AI was used,” explained Gregory. “Malicious and deceptive creators and distributors will still find a way around them, but most of us will be happy to use them if they don’t compromise our privacy or our ability to create.”

Rao believes that we will move toward an online world where content that carries these digital nutrition labels might be more trustworthy or more valuable than those that do not.

“The real value is going to be in authenticity,” emphasized Rao. “The creators want to have an authentic communication with their viewers, and so this content credential allows creators to establish the level of authenticity that they want with their audience.”

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(MOUNT PLEASANT, Wis.) — President Joe Biden is set to announce on Wednesday a $3 billion investment by tech giant Microsoft to build an artificial intelligence data center in southeast Wisconsin.

The sprawling facility will be located on the same plot of land where, in 2018, former President Donald Trump announced a multi-billion dollar investment by Taiwanese company Foxconn that largely failed to materialize.

The project sits at the convergence of several key Biden administration goals: upgrading U.S. infrastructure, rejuvenating domestic manufacturing and stewarding the responsible development of AI.

Here’s what to know about the economic impact of the project, the significance of the location and why Microsoft is building a data center in the first place.

What’s the expected economic impact of the data center?
The data center in the midsize city of Racine, Wisconsin, is expected to create 2,300 construction jobs and an additional 2,000 permanent jobs at the facility, the White House said in a press release on Wednesday.

The burst of employment will coincide with a venture undertaken by Microsoft to open a so-called “Datacenter Academy,” which will train roughly 1,000 people for data center and other technology roles by 2030, the White House said.

Microsoft will also open an innovation lab in the region, which will aim to educate about 1,000 business leaders on how to adopt AI for their enterprises, the White House added.

In a statement, Microsoft President Brad Smith said the data center would help restore the manufacturing sector in Wisconsin. In the 1960s and 70s, the state lost thousands of manufacturing jobs when companies relocated plants overseas.

“Wisconsin has a rich and storied legacy of innovation and ingenuity in manufacturing,” Smith said. “We will use the power of AI to help advance the next generation of manufacturing companies, skills and jobs in Wisconsin and across the country.”

The datacenter makes up a portion of the $6.9 billion invested in infrastructure, clean energy and semiconductor projects in Wisconsin since Biden took office, the White House said, part of an administration initiative devoted to domestic industry called “Invest in America.”

In all, roughly $540 billion have been invested nationwide as part of the Biden administration’s initiative, according to the White House.

What’s the significance of the location of the project?
The site of the Biden announcement on Wednesday marks the same location where Trump touted a different corporate investment six years ago.

Back then, Trump boasted of a $10 billion investment by electronics manufacturer Foxconn, which he said would create about 13,000 manufacturing jobs.

Despite razing nearby homes and attracting about $3 billion in state tax incentives, Foxconn has largely failed to deliver on its lofty goals. In 2022, the company said it employed more than 1,000 workers in the state, The Milwaukee Journal Sentinel reported.

The Biden administration has characterized the AI data center as an effort to make up for the challenges endured by the local area under Trump. It will “showcase a community at the heart of his commitment to invest in places that have been historically overlooked or failed by the last administration’s policies,” the administration said.

Why open a data center in the first place?
The computing power required to train and deploy artificial intelligence tools like ChatGPT has triggered a spike in demand for data centers.

The complexes, which typically span 100,000 square feet, provide the brick-and-mortar infrastructure underlying the explosion of the AI sector.

Microsoft, which owns a major stake in ChatGPT-maker OpenAI, has become the most valuable company in the world. Shares of the company have jumped 9% so far this year.

In 2022, roughly 2,700 data centers in the U.S. accounted for over 4% of the nation’s electricity use, according to an International Energy Agency report released in January. By 2026, that share of electricity use is expected to reach 6%.

The proportion of U.S. electricity use for data centers is expected to continue to climb in the ensuing years, the report said, citing in part anticipated broader adoption of AI.

By 2026, the AI industry alone is expected to consume at least 10 times its energy demand from just three years prior, the IEA report found.

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(NEW YORK) — Fast casual restaurant chain Panera Bread is doing away with highly caffeinated Charged Lemonade drinks that have been at the center of multiple wrongful death lawsuits since last fall.

A spokesperson for Panera confirmed to ABC News that is has undergone a “recent menu transformation,” as first reported by Bloomberg.

In an emailed statement, the spokesperson said that the company “will be focusing next on the broad array of beverages,” which includes “low sugar and low-caffeine options.”

The spokesperson declined to comment further to ABC News on litigation or further details on the Charged Lemonade, including when the controversial drink will be pulled from menus.

Panera has faced at least three separate lawsuits regarding its caffeinated lemonade drink since last fall.

In documents previously obtained by ABC News, the lawsuits claimed high levels of caffeine as a result of drinking Panera’s Charged Lemonade led to health complications and two customer deaths.

The latest of the ongoing suits was filed on Jan. 16 and alleged the drink led to “permanent” heart problems suffered by the plaintiff.

Panera has denied any wrongdoing.

In a statement last October following the initial wrongful death lawsuit, which involved 21-year-old University of Penn student Sarah Katz, who died from cardiac arrest after drinking the Charged Lemonade, a Panera spokesperson told ABC News, “We were saddened to learn last week about the tragic passing of Sarah Katz. While our investigation is ongoing, out of an abundance of caution, we have enhanced our existing caffeine disclosure for these beverages at our bakery cafes, on our website and on the Panera app.”

The company issued a separate statement to ABC News in December, following a second wrongful death lawsuit involving 46-year-old Dennis Brown, who had a chromosomal disorder and avoided energy drinks due to high blood pressure, according to his family. According to the complaint, Brown had been drinking charged lemonades for six days before he died, allegedly believing they contained “a reasonable amount of caffeine safe for him to drink.”

“Panera expresses our deep sympathy for Mr. Brown’s family. Based on our investigation, we believe his unfortunate passing was not caused by one of the company’s products,” a spokesperson for Panera told ABC News at the time. “We view this lawsuit, which was filed by the same law firm as a previous claim, to be equally without merit. Panera stands firmly by the safety of our products.”

Panera did not respond to a request for comment on the third lawsuit, which was filed in January and involved a woman named Lauren Skerritt, who claimed she suffered “permanent cardiac injuries” as a result of drinking Panera’s Charged Lemonade.

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(NEW YORK) — Apple unveiled new models of its iPad at an event on Tuesday, promising revamped devices at affordable prices.

“This is the biggest day for iPad since its introduction,” CEO Tim Cook declared.

The announcement exemplified the current strategy at Apple: Rely on new models of its signature items, rather than transition to the next big product, analysts told ABC News.

While the world’s second-largest company, in terms of market capitalization, risks dependence on longstanding products in a competitive sector, analysts say the approach allows Apple to capitalize upon its loyal customer base and popular devices while it develops new products like Apple Vision Pro, the company’s mixed reality headset.

However, with a starting cost of $3,499 and a higher-powered version at around $4,000, Apple Vision Pro remains far from a price point that would make it affordable for a wide audience, says Ben Bajarin, an analyst at research firm Creative Strategies. Further, Apple has remained largely quiet in the industry-wide race toward artificial intelligence technologies and products.

“We still don’t know what’s next,” Bajarin said. “That’s what’s hard for everybody,” though he added, “There’s still no company on the planet that has the level of consumer hardware scale that they do.”

Apple did not immediately respond to ABC News’ request for comment.

In its latest earnings report, Apple last week revealed a sales slump for some of its mainstay products. Smartphone sales dropped 10% over the three months ending in March, when compared with the same period a year earlier. Even more, iPad sales fell 17% over that period, the earnings report said.

In all, Apple sales fell 4% over the three-month period ending in March, when compared with the same stretch last year.

Speaking on a conference call last week, Cook attributed the decline in sales to a difficult comparison with the quarter one year earlier, when a loosening of COVID-related supply blockages triggered a sales boom. In the absence of that one-time surge, sales would have grown to start 2024, Cook said.

The earnings report set the stage for Apple’s event on Tuesday, in which the company rolled out fresh models of its iPad in an effort to bolster sales.

Apple showcased a redesigned 11-inch iPad Air and a newly released 13-inch iPad Air, each of which is equipped with the M2 Chip. The 11-inch iPad Air cost starts at $599, while the 13-inch model goes for $799.

The company also released fresh models of its premium iPad Pro, describing it in an online statement as “the thinnest Apple product ever.” The 11-inch iPad Pro starts at $999, while the 13-inch iPad Pro begins at $1,299.

Customers can order the new products online now and find them in-store next week, the company said.

Many analysts are looking ahead to the Worldwide Developers Conference next month, when Apple is expected to make a “major AI announcement,” Dan Ives, a managing director of equity research at the investment firm Wedbush, said in a note to investors that was shared with ABC News.

The company may reveal plans to incorporate AI into its next round of iPhone models, potentially supercharging sales of the product, Ives said.

The combination of potential AI updates, coupled with the new iPad models, could amount to a “broader Apple hardware-driven upgrade cycle over the coming year,” Ives further noted.

“We believe the seeds for an Apple growth turnaround are being planted in the field by Cook & Co.,” Ives added.

Still, the strategy of improving pre-existing products rather than introducing new ones leaves Apple’s long-term vision somewhat unclear, Bajarin said, while acknowledging that Apple Vision Pro – which became available for purchase in February in the U.S. only – remains in the early development stages. He also acknowledged that the buzzy product’s steep price will eventually come down.

“We’ve gotten glimpses of what’s next but everybody realizes it’s not around the corner,” Bajarin said. “It’ll take many years to flesh that out.”

In the meantime, Bajarin said, Apple will likely draw upon its massive customer base and potential AI-driven product upgrades to stabilize sales.

“I’m not concerned at all,” Bajarin said. “It’s not like they’re losing customers to someone else. People are holding onto their stuff for longer because it’s good enough.”

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(NEW YORK) — In an effort to be more inclusive, The Boy Scouts of America is changing its name to Scouting America, the organization announced Tuesday.

The rebrand reflects “the organization’s ongoing commitment to welcome every youth and family in America to experience the benefits of Scouting,” the group said in a release.

The Boy Scouts name change will take place on Feb. 8, 2025, the organization’s 115th anniversary.

“Though our name will be new, our mission remains unchanged: we are committed to teaching young people to be prepared for life,” Roger A. Krone, president and chief executive officer of Scouting America, said in a news release. “This will be a simple but very important evolution as we seek to ensure that everyone feels welcome in Scouting.”

The announcement comes five years after the organization began including girls into scout programs. The organization said it has more than 176,000 girls in its programs, including 6,000 who have earned the rank of Eagle Scout.

“Scouting America provides a welcoming, safe environment where youth can become the best version of themselves by learning from and respecting each other,” Krone said.

 

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(NEW YORK) — Starbucks shares have plummeted more than 17% in value since the company revealed a sales slump in an earnings report last week.

“The brand is incredibly resilient, but it’s clearly not business as usual,” former CEO Howard Schultz said in a post on LinkedIn on Sunday.

The coffee giant is viewed by many analysts as a bellwether for consumer spending, which accounts for nearly three-quarters of the nation’s economic activity. The company’s latest struggles, in turn, raise a question: Is the engine of the U.S. economy faltering, or is something wrong at Starbucks?

The explanation involves a little of of both, analysts told ABC News.

The experts described consumers fatigued by a years-long bout of inflation alongside high borrowing costs. In addition, they added, Starbucks has struggled to adapt to a post-pandemic economy, and also faces backlash over controversy tied to its alleged corporate stance regarding the Israel-Hamas war.

“Consumers have less demand for expensive coffee,” Albert Wang, a professor of finance at Auburn University, told ABC News. “There are also issues at the company.”

Starbucks did not immediately respond to ABC News’ request for comment.

In an earnings report last week, the company announced a roughly 2% decline in revenue over the first three months of this year, falling short of analysts’ expectations. Same-store sales, a measure of revenue generated at existing locations, dropped 4%.

On a conference call with analysts, Starbucks CEO Laxman Narasimhan last week attributed the sales slump in part to a generally “cautious consumer,” and noting as an example a decline in visits among U.S. customers who patronize the store only occasionally.

Narasimhan also cited additional sales headwinds, including the controversy tied to the Israel-Hamas war, as well as slower-than-expected performance in China.

Waning consumer enthusiasm, however, is hardly limited to Starbucks, analysts told ABC News.

Consumer spending in the U.S. slowed markedly at the outset of this year when compared with the final months of 2023, according to U.S. Commerce Department data released last week.

The trend coincided with stubborn inflation and a spike in credit card debt, suggesting challenges faced by consumers as they navigate rapid price increases and expensive borrowing costs.

The sluggish spending has weighed on restaurant brands beyond Starbucks. Fast-food giant McDonald’s reported a slowdown in sales earlier this month, as did KFC and Pizza Hut, both of which are owned by Yum Brands.

“When you see it happening at companies outside of Starbucks, that’s when it becomes a broader worry that you’re concerned about,” Michael Jones, an economics professor at the University of Cincinnati, told ABC News.

Starbucks, meanwhile, has encountered some specific challenges amid the wider consumer slowdown.

The company has struggled to sustain a surge in business experienced during the pandemic, when customers flocked to the Starbucks app flush with federal stimulus money and largely unable to dine at restaurants, Cait Lamberton, professor of marketing at the University of Pennsylvania’s Wharton School, told ABC News.

“Starbucks accommodated a global challenge with a solution that worked really well for a time, but they have to fundamentally rethink the value they offer so they don’t become a quick-service fast-food place,” Lamberton said.

“Starbucks could charge a premium because it’s a little bit special,” Lamberton added of the company’s pandemic pricing. “Now, they’re charging $6.50 for people to walk in and walk out 10 seconds later.”

The company has also faced negative publicity centered on a dispute with the labor union Workers United regarding the Israel-Hamas war.

Starbucks sued the union in October after the labor organization, which represents food-service workers, posted a since-deleted message on X expressing solidarity with Palestinians. The message from the union subsequently triggered calls to boycott Starbucks, because some appeared to mistake the union’s position for that of the company.

In response to ABC News’ previous request for comment on the dispute, Starbucks pointed to a statement on the company’s website.

“As the violence against the innocent in the region continues, some people are mistakenly tying these remarks to us, because Workers United and its affiliates and members continue to use our name, logo and intellectual property,” Starbucks said.

Workers United, which represents workers at roughly 400 unionized Starbucks locations, has negatively affected perceptions of the company through strikes and other labor actions, Nick Setyan, an analyst at Wedbush, told ABC News. The two sides are currently engaged in contract negotiations after reaching an agreement to restart talks in February.

“Historically, Starbucks has been billed as forward-looking and liberal,” Setyan said. “When you’re at war with a labor union, it doesn’t necessarily jibe with your brand identity.”

After acknowledging economy-wide and Starbucks-specific causes of the sales slump, Wang said the difficult times for the company may not change anytime soon.

“My expectation is that this will continue at Starbucks for an extended period of time,” Wang said. “I don’t think it will stop.”

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(NEW YORK) — At the start of 2024, the economy appeared to deliver just about everything President Joe Biden could want: falling inflation, robust growth and a forecast of interest rate cuts at the Federal Reserve that might send economic output even higher.

Since then, however, the sunny outlook has darkened. Inflation has proven stubborn and output has slowed. Perhaps most notably, the Fed has cast doubt over whether rate cuts will arrive after all.

Experts who spoke to ABC News described the delay of interest rate cuts as a challenge for Biden that could make his reelection more difficult. The lack of cuts could weigh on economic output and compound the financial pain of inflation, they noted.

Moreover, if the Fed did cut rates, any benefits would likely take hold beyond Election Day. Those benefits would also be muted since key measures of economic health remain fairly strong, such as the pace of economic expansion and the level of unemployment, experts argued.

“High interest rates tamp down economic growth and that is a detriment to the president’s reelection,” Matt Grossman, a professor of political science at Michigan State University who studies the role of economic performance in electoral politics, told ABC News.

“The only unknown there is the timeline,” Grossman added, referring to delayed interest rate cuts. “It might be too late now to have a big effect on economic performance.”

When reached for comment, the Biden campaign directed ABC News to a former member of the Council of Economic Advisers.

At a meeting last week, the Fed decided to hold its benchmark interest rate steady for the sixth consecutive time. The central bank said it does not anticipate cutting interest rates until it’s confident that inflation is moving sustainably downward.

“So far the data has not given us that greater confidence,” Fed Chair Jerome Powell said at a press conference in Washington, D.C., last Wednesday. “It is likely that gaining such greater confidence will take longer than previously expected.”

Inflation has fallen significantly from a peak of 9.1% but it remains more than a percentage point higher than the Fed’s target rate of 2%.

Since last July, the Fed Funds rate has stood between 5.25% and 5.5%, matching its highest level in more than two decades.

The delayed interest rate cuts mark a blow to the Biden campaign, since the Fed’s posture illustrates the need for a continued fight against inflation, Steve Boms, founder and president of D.C.-based consulting firm Allon Advocacy.

“If you’re on the Biden campaign, you’re hoping that the rate cuts come as soon as possible because voters tend to vote based on their pocketbooks,” Boms said.

Interest rate cuts would lower borrowing costs for consumers and businesses, potentially triggering a burst of economic activity through greater household spending and company investment.

Credit card holders could gain some immediate relief from sky-high interest rates while prospective homebuyers would see mortgage rates ease. Even a series of two quarter-point cuts at the Fed, however, would not sizably reduce such borrowing costs, Boms said.

Still, he added, the interest rate cuts would send an important signal that the administration has brought inflation under control.

“The headline of rates starting to come down could move the needle politically a little bit even if quantitatively it wouldn’t make that much of an impact on how much folks are spending on credit cards, auto loans and mortgages,” Boms said.

The economy poses a political liability for Biden. Thirty-seven percent of U.S. adults approve of Biden’s handling of the economy, slightly lower than his overall approval rating of 40%, according to a Gallup poll in March.

Public sentiment about the economy has improved in recent months but it remains well below pre-pandemic levels, according to a University of Michigan survey.

That said, the economy has performed well on several key metrics. Economic growth has slowed in recent months but continues apace at a solid clip. Unemployment stands near a 50-year low.

The movement of interest rates prior to Election Day is unlikely to change economic factors that affect voter attitudes, such as the unemployment or growth rate, Joe Stone, a professor emeritus of economics of the University of Oregon, told ABC News.

“Most of the economic factors that would affect the election are already baked in this close to the election,” Stone said.

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(NEW YORK) — Young adults and frequent users push back against the federal government forcing a sale of TikTok or banning the social media app in the United States, but older adults, infrequent users and nonusers are on board, resulting in a tilt toward support for action, according to a new ABC News/Ipsos poll.

Overall, 51% in this ABC News/Ipsos poll say the U.S. government should try to force a sale of the popular app; 46% say it should not. And 53% support a ban on TikTok if it’s not sold to a non-Chinese company, with 44% opposed.

A new law signed by President Joe Biden last month would ban TikTok in the United States unless it’s sold to a non-Chinese buyer in nine to 12 months. As the survey question explains, critics say the app can be used by the Chinese government to improperly gather information about its users and to spread misinformation. TikTok denies this.

Click here to see a PDF with full results from the poll.

The poll, produced for ABC by Langer Research Associates with fieldwork by Ipsos, finds that 34% of adults use TikTok — 12% often, 10% occasionally and 12% rarely. The comparatively small group of frequent users is most opposed to action: 75% of them say the U.S. should not try to force a sale and 84% oppose a U.S. ban.

Others see it differently. Occasional users are divided on a forced sale, 47-51% support-oppose, while among those who use TikTok rarely or never, 56% support a mandatory sale, the poll finds. When it comes to banning the app if a sale doesn’t happen, two-thirds of occasional users are opposed, but rare users and especially nonusers are for it.

There’s a clear generational split, partly reflecting use patterns. Fifty-five percent of 18- to 29-year-olds use TikTok, including 28% who do so often. Use declines with age to a third of Americans ages 30-64 and 14% of those 65 and older.

It follows that just 39% of adults younger than 30 favor a ban, rising steadily with age to seven in 10 seniors, the poll finds. Young women are especially skeptical: Two-thirds of women younger than 30 oppose a ban, compared with 52% of men in this age group. Differences by sex disappear for people age 50 and older.

The poll also finds ideological and partisan gaps. Democrats, independents and moderates divide evenly on a ban, while Republicans and conservatives are at least twice as likely to support than oppose it. Liberals oppose banning the app by a 13-point margin, 55-42%.

Partisan and ideological divisions also are reflected in vote-preference groups. Among people who support Donald Trump over Biden for president, 61% favor a forced sale of TikTok and 64% support a U.S. ban if a sale doesn’t occur. Biden voters, on both counts, divide essentially evenly.

Methodology

This ABC News/Ipsos poll was conducted online via the probability-based Ipsos KnowledgePanel® from April 25-30, 2024, in English and Spanish, among a random national sample of 2,260 adults. Results have a margin of sampling error of 2 percentage points, including the design effect, for the full sample. Sampling error is not the only source of differences in polls.

The survey was produced by Langer Research Associates, with sampling and data collection by Ipsos. See details on ABC News survey methodology here.

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