(NEW YORK) — Market reports show the U.S. economy is seeing strong job numbers and a waning inflation rate, but some small business owners tell ABC News they are still feeling the pinch.
When Mia Sakai opened her Chicago bodega in December 2020 she had to deal with the pandemic, supply chain issues and then rising costs of goods — costs that she passed on to her customers.
“It’s not an easy thing to do, and it’s not something we like to do, but we also want to be able to keep our business here and continue to be able to service the neighborhood,” Sakai told ABC News.
Rising grocery store prices are one of the reasons why Americans are down on the economy, according to experts.
Between 2019 and 2023, food inflation increased by 25%, faster than other categories like housing, clothes and medical care, according to government data.
Treasury Secretary Janet Yellen told ABC News that she does notice sticker shock when she buys her goods, but said that she doesn’t expect that to continue.
“Food prices have largely stabilized. They’re not increasing at rapid rates,” she said.
Yellen recently gave a speech in Chicago about the state of the economy and let Americans know that the economy isn’t as bad as they think.
The secretary stressed that wages are finally catching up to rising prices.
The typical American household is now spending $1,019 more every month on the same goods and services compared to three years ago, because of inflation, according to economic data from Moody’s Analytics, but wages are up an average of $1,072 per month during that time, offsetting the higher prices.
Consumer confidence has slowly been rebounding since a low in June 2022, according to recent surveys, and Yellen suggested that the data shows a shift in the public’s sentiment on the economy.
Alexandria Jones, an owner of a Chicago vintage clothes and goods store, however, said she still struggling.
Her landlord increased the monthly rent from $1,400 to $1,750 and she’s been unable to hire additional staff.
“Last year, I clocked not being here 11 days out of 365 days because I had to be here,” she said.
Paul Ruffino, the owner of Rattleback Records, told ABC News he’s lucky to say business has been steady despite a rise in prices.
He said that the problem with the economy now isn’t as much about the message as it is the messenger. Ruffino said the Biden Administration and other leaders need to get the word out more.
“Unemployment is low, inflation has slowed, so I think that things seem to be moving in the right direction and, hopefully, will continue to,” he said.
General view of the TikTok headquarters on Oct. 13, 2020 in Culver City, California. (AaronP/Bauer-Griffin/GC Images)
(NEW YORK) — Social media platform TikTok stands on the brink of a forced sale after the House passed a measure on Wednesday that would ban the app unless it parts ways with its Chinese-owned parent company ByteDance.
If ByteDance opts to sell, the move would set off a sprint to reach a deal worth up to hundreds of billions of dollars within the 180-day time limit set by the bill.
The popular and fast-growing platform makes for an attractive acquisition but buyers may face significant hurdles, including lingering doubts over the role of the Chinese government and challenges raising the necessary funds, experts told ABC News.
Some tech giants with deep pockets would likely forgo the acquisition over antitrust fears while smaller firms may lack the resources to afford TikTok, they added.
“The government wants China to divest U.S. TikTok operations that will cost a buyer a lot of money but the same government doesn’t want tech companies and media companies to get bigger and more powerful,” Erik Gordon, a business professor at Michigan University who studies mergers and acquisitions, told ABC News. “Those two priorities are contradictory.”
In response to ABC News’ request for comment, TikTok said the bill aims to ban the company from the U.S.
“This is a ban bill — full stop. Members of Congress know that and some of the bill’s biggest cheerleaders have publicly said this is a ban bill. And they’ve always made clear that their actual intention is banning TikTok in the United States,” a TikTok spokesperson said.
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.
It’s not yet clear if there would be the groundswell of support needed to get 60 votes for the legislation to advance in the Senate. President Joe Biden has vowed to sign the measure into law if it reaches his desk.
In theory, the biggest players for a TikTok acquisition would be Meta, the owner of Instagram, or YouTube-parent Google. However, the two leading firms in digital advertising and short-form video would invite strong antitrust opposition, leaving slim prospects for either company, experts told ABC News.
“Getting acquired by Google and Meta is an absolute no-go,” Florian Ederer, a professor of markets, public policy and law at Boston University, told ABC News. “It would make the Department of Justice antitrust division aghast.”
Experts differed over the prospects for the remaining tech giants, such as Apple and Amazon. The two firms — each of which exceeds $1.8 trillion in value — risk antitrust opposition but may face less scrutiny since neither one operates a social media business comparable to Instagram or YouTube, some experts said.
Amazon, which has sought to grow its footprint in digital advertising, could view TikTok as a potential target, David King, a professor of management at Florida State University, told ABC News.
“There could be synergies with TikTok and its growing advertising business,” King said.
In 2020, then-President Donald Trump negotiated an agreement over national security concerns that would have seen a major stake in TikTok shared between Walmart and Oracle. But the sides failed to complete a deal.
At the time, Microsoft also fell short in an attempt to acquire TikTok. Microsoft, currently the most valuable company in the world, may try again but would likely seek to avoid the uncertainty of pushback from China and antitrust backlash from the U.S., Brian Wieser, founder of the consulting firm Madison and Wall, told ABC News.
“Take Microsoft, do they have the capital to theoretically do it? Sure,” Wieser said. “Would they take on that risk? Would their shareholders support it? Could they get the Chinese government’s support?”
“You can’t rule it out,” Wieser added.
Several experts who spoke to ABC News raised the possibility of an acquisition by X, formerly known as Twitter, since the platform could potentially avoid major antitrust backlash while benefiting from the considerable funds of owner Elon Musk. Though the frequent headlines and advertising exodus at X may scare off investors, they added.
“I’m not sure who would provide Musk with funding after what happened at Twitter,” Charles Whitehead, a professor of business law at Cornell University who focuses on corporate mergers, told ABC News.
The absence of a clear-cut favorite among the top tech firms leaves the field open for a relatively small or unknown firm, or an institutional investor like private equity, some experts said.
The front-and-center role of politics in a potential forced sale adds a significant degree of uncertainty, Gordon said.
“Dealmaking is fairly easy to predict but politics are difficult to predict,” Gordon added. “This would be a deal driven entirely by politics, so who knows what will happen?”
Tik Tok supporters are seen outside the U.S. Capitol, March 13, 2024, in Washington. (Tom Williams/CQ-Roll Call, Inc via Getty Images)
(WASHINGTON) — TikTok influencers — accustomed to their voices being heard by thousands on the wildly popular social media app — now are speaking out in hopes lawmakers hear their frustrations about efforts in Congress to possibly ban the platform in the United States.
The House on Wednesday passed bipartisan legislation to force TikTok’s Chinese parent company, ByteDance, to sell it or face a ban in the U.S. It’s now headed to the Senate where its future is uncertain.
While several steps would need to happen before any ban would be implemented — including giving ByteDance six months to divest from TikTok — influencers are fighting back, with many saying a ban would hurt their businesses or dissolve a popular online community with more 170 million Americans users.
Influencers took to Capitol Hill Wednesday to fight the bill — and leading up to the House vote many heeded TikTok’s call on its users to reach out to their members of Congress. Lawmakers who want the ban say there are national security risks associated with the China-owned app; many who oppose the ban say it violates First Amendment rights.
TikTok estimates that about five million businesses use the social media platform to reach customers — and many influencers are saying their businesses would take a hit if the app is banned in the U.S.
TikTok content creators like Lynda Truong and Paul Tran said a ban would crush their business, which has nearly 140,000 followers. The couple estimates that around 95% of the sales for their beauty brand, Love & Pebble, are tied to TikTok.
“A ban on TikTok would be devastating,” Tran said.
The authenticity and direct connection with customers make it irreplaceable, Truong said.
“There’s really no other platform like TikTok,” Truong said. “… When I got onto TikTok, I was able to connect with people that really resonated with our brand.”
Sophie Beren, founder and CEO of The Conversationalist, a website that works to empower members of Gen Z — frequent users of the app — said Gen Z recognizes the downsides of TikTok, but said a ban is something that could hit their wallets.
“A lot of young people see the inherent danger when it comes to privacy and data concerns, but see an inherent good when it comes to TikTok,” Beren said on ABC News Live. “I think the jury is still out and a lot of people will be effected … who rely on TikTok for their income.”
Ophelia Nichols, who has more than 12.5 million followers on TikTok, said the platform is a place for connection that “helps people.” She said she uses her account, shoelover99, as a hub for “love and compassion.”
“You’ll find when you open up and share things you’ve been through or you like or what you’re doing, the people come — they find you and they see something in you they like and they just stay around,” Nichols said.
TikTok is a place where people can support one another, too. The influencer recounted how she walked a bride down the aisle after the bride reached out via TikTok.
“She reached out to me and said that, ‘Unfortunately, I don’t have a mom, could you be my mom on my wedding day and walk me down the aisle?’ and I said absolutely,” Nichols said. “So I did.”
“I was a mom for her that day,” she said.
Nichols said lawmakers don’t understand TikTok and the value it brings.
“For me as a content coordinator and a watcher, I know what TikTok does, I know what it is, what it’s for, how it helps people, I know what it does for the community and for other people,” she said. “It’s just the same as any other social media app, so I’m not really sure what the focus is on the TikTok app. I feel like they’re getting picked on or something.”
Beren said TikTok is a platform that Gen Z has used for building movements and starting conversations, but if TikTok goes away those efforts won’t stop.
“Whether TikTok is banned or not, this is cause for more conversations that I hope will be had face to face, which is where we can find real solutions,” Beren said.
In this photo illustration, a TikTok logo is seen displayed on a smartphone screen. (Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)
(WASHINGTON) — The high-stakes battle on Capitol Hill between lawmakers and TikTok over a potential ban of the popular social media app is set for a watershed House vote on Wednesday on a bill that could bar access to the platform in the United States.
TikTok, which boasts more than 170 million U.S. users, has emerged in recent years as a fixture of American life, shaping popular culture, supercharging the growth of the influencer economy and challenging some of the nation’s largest companies, such as Meta and Google.
A ban could carry far-reaching implications for everything from the discovery of music stars to the dominance of tech giants, to the fundamental issue of how millions of Americans spend their leisure time, experts told ABC News. A landmark First Amendment battle in response to such a measure could make its way to the Supreme Court, according to one expert.
“TikTok is a hugely popular app,” Matt Navarra, a social media industry analyst, told ABC News. “There would be a noticeable impact.”
The House is set to vote Wednesday on legislation that would force the sale of TikTok from its Chinese parent company, ByteDance. The House Energy and Commerce Committee had unanimously voted to advance the bill, which gives ByteDance six months to divest from TikTok or face a U.S. ban. While it appears poised to pass in the House, it’s not yet clear if there would be the groundswell of support needed to get 60 votes for the legislation to advance in the Senate.
In response to ABC News’ request for comment, TikTok condemned the proposed bill as an infringement on the right to express oneself freely.
“This legislation has a predetermined outcome: a total ban of TikTok in the United States. The government is attempting to strip 170 million Americans of their Constitutional right to free expression. This will damage millions of businesses, deny artists an audience and destroy the livelihoods of countless creators across the country,” a TikTok spokesperson said.
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.
Still, there’s reason to believe the Chinese government could compel the company to share data on U.S. users or manipulate content on the app to forward a pro-China agenda, the cybersecurity experts added.
“Catastrophic” for some companies and a “gift” for others
Tens of millions of TikTok users in the U.S. spend an average of 82 minutes each day on the platform, according to a report released by market research firm SensorTower in 2022.
That sizable share of daily media consumption nationwide grants content creators on the platform considerable power to spread culture, promote political campaigns and sell products.
In the event of a TikTok ban, industries that advertise on the platform and creators who post on it would need to go elsewhere but may face difficulty replicating the appeal of the app, Tatiana Cirisano, a music industry analyst at data firm Mida Research, told ABC News.
“There’s this difficult-to-pin-down cultural capital that exists on TikTok,” Cirisano said. “It ends up being the place where current culture forms. That isn’t necessarily happening in the same way on other platforms.”
The music industry has come to depend on TikTok as a means of identifying talent, reaching new listeners and generating revenue through licensing agreements, Cirisano said.
“The industry would lose a very significant pathway to music discovery, especially for younger audiences,” Cirisano said.
On the whole, the prospect of a TikTok ban poses an imminent threat to creators who depend on it for their livelihoods, as well as businesses that rely on it to reach customers, Navarra said.
Roughly 5 million businesses have TikTok accounts, the company said last year. Many users have made their livelihood on the app, including some who make millions of dollars each year.
“For some small businesses and creators, the consequences will be catastrophic,” Navarra said.
However, rival companies such as Meta-owned Instagram and Google-owned YouTube could benefit significantly from a potential TikTok ban, Navarra added.
Creators would likely flock to Instagram and YouTube in search of different platforms, Navara said, bringing advertisers with them as they chased the audience likely to follow their favorite stars. The user growth would lead directly to higher ad revenue for Google and Meta.
“A large number of users and eyeballs and attention would be gifted to rival platforms,” Navarra said. “It would be a significant win.”
Court battle over the First Amendment
The potential ban of TikTok would likely elicit a legal challenge on First Amendment grounds that could reach the nation’s highest court, Anupam Chander, a professor of law and technology at Georgetown University, told ABC News.
TikTok and its users could challenge the law as an infringement upon constitutionally protected freedom of speech, Chander said.
In opposition, Chander said, the U.S. government would likely argue that national security concerns should outweigh First Amendment protections.
“There would be substantial questions raised for the courts and ultimately the Supreme Court,” Chander said.
Last May, TikTok sued Montana in federal court over a ban of the app enacted by the state, saying the law violated the First Amendment rights of users. Months later, in November, a federal judge ruled in favor of TikTok and blocked the law before it took effect.
If the U.S. enacts a law banning TikTok, a federal judge may order a temporary pause while the legal challenge makes its way through the court system due to the wide-reaching ramifications of such a measure.
“The First Amendment concerns are clearly very serious,” Chander said. “And blocking the app would have enormous consequences for the livelihood of millions of people and the speech of millions of people.”
(NEW YORK) — Consumer prices rose 3.2% in February compared to a year ago, increasing slightly from the previous month and offering the latest sign that progress toward lowering inflation has struck a rough patch, a report from the Bureau of Labor Statistics released on Tuesday showed. The fresh data came in higher than economists expected.
Price increases have cooled dramatically from a peak of about 9%, but inflation still stands more than a percentage point higher than the Federal Reserve’s target rate of 2%.
Core inflation — a closely watched measure that strips out volatile food and energy prices — increased 3.8% over the year ending in February, which marked a slight cooldown from the previous month.
Food prices rose 2.2% since the previous year, trailing the overall inflation rate; and energy prices fell compared to a year earlier, BLS data showed. Housing prices, however, came in nearly double the overall inflation, rising 5.7% over that period.
Offering a sign of good news, the prices for many grocery story staples have moderated. The prices of biscuits and muffins have risen just 1.1% over the past year, while the price of bread has risen 1.5%.
A host of food items have dropped in price over the past year, including rice, bacon, chicken and fish.
The prices for some routine grocery goods have continued to rise faster than the overall inflation rate. The price of beef is up 7.4% over the past year; and the price of crackers has jumped 4.9%.
After progressing steadily lower for much of last year, the inflation rate has hit a snag in recent months.
The bout of stubborn prices has arrived as the Federal Reserve weighs interest rate cuts. Such a move would start to reverse a near-historic series of rate hikes that dates back to March 2022, when the Fed sought to rein in excessive price increases.
Addressing House members at the Capitol last week, Fed Chair Jerome Powell reaffirmed the Fed’s plans to cut rates this year but cautioned that the central bank first wants to see inflation fall lower.
“The economic outlook is uncertain, and ongoing progress toward our 2% inflation objective is not assured,” Powell told lawmakers.
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.
But the Fed risks a rebound of inflation if it cuts interest rates too quickly, since stronger consumer demand could lead to an acceleration of price increases.
At its most recent meeting, in January, the policymaking body at the Fed opted to leave rates unchanged. The fed funds rate remains between 5.25% and 5.5%, the highest interest rate since 2021.
Still, the economy has largely defied expectations of a slowdown imposed by elevated borrowing costs.
U.S. job gains far exceeded expectations in February, U.S. Bureau of Labor Statistics data on Friday showed.
The U.S. added 275,000 jobs in February, surpassing predictions of about 200,000 jobs added, but marking a substantial decline from the hiring of roughly 350,000 workers in January, according to BLS data.
The S&P 500 — the index that most people’s 401(k)’s track — reached a record high last week.
Attitudes about the economy have improved in recent months. Consumer sentiment inched lower in February but preserved much of the large gains achieved in previous months a University of Michigan survey found.
Even so, some areas of the economy have cooled.
Consumer spending, which accounts for roughly two-thirds of U.S. economic activity, fell sharply in January.
Meanwhile, the housing market has slowed substantially due in large part to soaring mortgage rates.
The average interest rate for a 30-year fixed mortgage has soared to 6.88%, rebounding after a steady decline at the end of last year, according to a report from Freddie Mac on Thursday.
Looking back further, that figure has skyrocketed from an average 30-year fixed mortgage rate of 3.76% prior to when the Fed began raising interest rates in March 2022, data shows.
Taken together, economic performance has not shaken the Fed’s steadfast pursuit of lowering inflation down to its goal of 2%, Powell told federal lawmakers last week.
The Airbnb website on a laptop computer arranged in the Brooklyn Borough of New York, U.S., on Thursday, May 4, 2023. (Gabby Jones/Bloomberg via Getty Images)
(NEW YORK) — Airbnb has made the decision to ban the use of indoor security cameras to “prioritize the privacy of our community,” according to a statement from the company on Monday.
The ban, which is a global one across all of their listings, is an effort to “simplify our policy on security cameras and other devices,” according to a statement released by the company announcing the new change in policy.
Airbnb had allowed indoor security cameras in common areas like hallways and living rooms, but they were only allowed if they were disclosed on the property listing page before booking and if the cameras were clearly visible and not located in spaces like sleeping areas and bathrooms.
This new policy changes that and prohibits indoor cameras altogether.
“The update to this policy simplifies our approach and makes clear that security cameras are not allowed inside listings, regardless of their location, purpose or prior disclosure,” said Airbnb. “As the majority of listings on Airbnb do not report having a security camera, this update is expected to impact a smaller subset of listings on the platform.”
The policy also implements more rigorous and comprehensive rules on the use of outdoor security cameras and other devices, including noise decibel monitors, the company said.
“Devices like doorbell cameras and noise decibel monitors continue to be permitted on Airbnb and can be an effective, privacy-protective way for Hosts to monitor security for their home and get ahead of issues like unauthorized parties,” said Airbnb. “However, Hosts will be required to disclose the presence and general location of any outdoor cameras before guests book. These cameras will also be prohibited from monitoring indoor spaces of a listing and are not allowed in certain outdoor areas where there’s a greater expectation of privacy, like an enclosed outdoor shower or sauna.”
Airbnb says that properties will also now be required to disclose the presence of noise decibel monitors “which assess decibel level only and do not record or transmit sounds or conversations and are only allowed in common spaces of listings.”
These new policies will take effect from April 30. After that date, reported violations will be investigated and violators could have their listing and accounts removed from the site.
“Our goal was to create new, clear rules that provide our community with greater clarity about what to expect on Airbnb. These changes were made in consultation with our guests, Hosts and privacy experts, and we’ll continue to seek feedback to help ensure our policies work for our global community,” said Airbnb’s head of Community Policy and Partnerships, Juniper Downs, in the statement released on Monday.
Airbnb says these new changes are coming into effect after “extensive consultation with guests, Hosts, privacy experts and advocacy groups.”
(NEW YORK) — Inflation data to be released on Tuesday will reveal the latest price movements, a key economic signal for central bankers weighing interest rate cuts and voters turning their attention to the general election.
Price increases have cooled dramatically from a peak of about 9%, but inflation still stands more than a percentage point higher than the Federal Reserve’s target rate of 2%.
The latest release from the U.S. Bureau of Labor Statistics is expected to show that consumer prices increased 3.1% over the year ending in February. That finding would leave the annual inflation rate unchanged from the prior month.
Core inflation — a closely watched measure that strips out volatile food and energy prices — is expected to have increased 3.7% over the year ending in February, which would mark a slight cooldown from the previous month.
After progressing steadily lower for much of last year, the inflation rate has stalled in recent months.
The bout of stubborn prices has arrived as the Federal Reserve weighs interest rate cuts. Such a move would start to reverse a near-historic series of rate hikes that dates back to March 2022, when the Fed sought to rein in excessive price increases.
Addressing House members at the Capitol last week, Fed Chair Jerome Powell reaffirmed the Fed’s plans to cut rates this year but cautioned that the central bank first wants to see inflation fall lower.
“The economic outlook is uncertain, and ongoing progress toward our 2% inflation objective is not assured,” Powell told lawmakers.
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.
But the Fed risks a rebound of inflation if it cuts interest rates too quickly, since stronger consumer demand could lead to an acceleration of price increases.
At its most recent meeting, in January, the policymaking body at the Fed opted to leave rates unchanged. The fed funds rate remains between 5.25% and 5.5%, the highest interest rate since 2021.
Still, the economy has largely defied expectations of a slowdown imposed by elevated borrowing costs.
U.S. job gains far exceeded expectations in February, U.S. Bureau of Labor Statistics data on Friday showed.
The U.S. added 275,000 jobs in February, surpassing predictions of about 200,000 jobs added, but marking a substantial decline from the hiring of roughly 350,000 workers in January, according to Bureau of Labor Statistics data.
The S&P 500 — the index that most people’s 401(k)’s track — reached a record high last week.
Attitudes about the economy have improved in recent months. Consumer sentiment inched lower in February but preserved much of the large gains achieved in previous months, a University of Michigan survey found.
Even so, some areas of the economy have cooled.
Consumer spending, which accounts for roughly two-thirds of U.S. economic activity, fell sharply in January.
Meanwhile, the housing market has slowed substantially due in large part to soaring mortgage rates.
The average interest rate for a 30-year fixed mortgage has soared to 6.88%, rebounding after a steady decline at the end of last year, according to a report from Freddie Mac on Thursday.
Looking back further, that figure has skyrocketed from an average 30-year fixed mortgage rate of 3.76% prior to when the Fed began raising interest rates in March 2022, data shows.
Taken together, economic performance has not shaken the Fed’s steadfast pursuit of lowering inflation down to its goal of 2%, Powell told federal lawmakers last week.
(NEW YORK) — Sam Altman will remain as CEO of OpenAI and rejoin its board of directors following an “extensive” external investigation into his temporary ouster last year, the company’s board announced on Friday.
The OpenAI Board said it has “full confidence” in the continued leadership of Altman and co-founder Greg Brockman following a monthslong review by the law firm WilmerHale.
The board ousted Altman from OpenAI, the maker of the popular conversation bot ChatGPT, in November. Altman’s unexplained exit thrust the company into disarray and sparked an employee revolt, with Brockman quitting in response.
Nearly all 800 employees at OpenAI signed a letter calling for the resignation of the company’s board and the return of Altman as CEO.
Microsoft announced it had hired Altman and Brockman to lead a new artificial intelligence department. Then four days after his removal, Altman was reinstated as CEO of OpenAI. Brockman also returned to the company.
As part of its review of the events surrounding Altman’s removal, WilmerHale conducted dozens of interviews with members of OpenAI’s prior Board, OpenAI executives, advisors to the prior Board, and “other pertinent witnesses,” as well as reviewed more than 30,000 documents, the board said.
WilmerHale found there was a “breakdown in trust” between the prior board and Altman that led to him stepping down in November, but that his removal wasn’t warranted, the board said.
“WilmerHale found that the prior Board believed at the time that its actions would mitigate internal management challenges and did not anticipate that its actions would destabilize the Company,” the board said. “WilmerHale found the prior Board implemented its decision on an abridged timeframe, without advance notice to key stakeholders, and without a full inquiry or an opportunity for Mr. Altman to address the prior Board’s concerns.”
Following the review, OpenAI Board chair Bret Taylor said they have “unanimously concluded” that Altman and Brockman “are the right leaders for OpenAI.”
Among other developments announced by the board on Friday, three new members have been elected to the board: Dr. Sue Desmond-Hellmann, former CEO of the Bill and Melinda Gates Foundation; Nicole Seligman, former executive vice president and global general counsel of Sony and former president of Sony Entertainment; and Fidji Simo, CEO and chair of Instacart.
OpenAI is also creating a whistleblower hotline “to serve as an anonymous reporting resource for all OpenAI employees and contractors,” the board said.
(WASHINGTON) — President Joe Biden declared triumph on bread-and-butter issues in his State of the Union address, describing the U.S. economy as “the strongest in the world.”
Still, he said, conditions must improve for middle-class Americans, pointing for instance to high costs in the housing market that remains resistant to a cooldown elsewhere in the economy.
Biden proposed a pair of tax credits for current and prospective homeowners meant to ease affordability and stimulate the housing market.
“If inflation keeps coming down, mortgage rates will come down as well,” Biden said. “But I’m not waiting.”
Biden proposed a $5,000 tax credit for first-time homebuyers to put toward their mortgage, which he said amounts to an estimated $400 per month.
In addition, the White House has put forward a $10,000 tax credit for families who sell their starter homes. In theory, the measure will facilitate activity in the housing market, since many homebuyers have clung to their current low-rate mortgages rather than take on a new home at much higher rates.
The average interest rate for a 30-year fixed mortgage has soared to 6.88%, rebounding after a steady decline at the end of last year, according to a report from Freddie Mac on Thursday.
Looking back further, that figure has skyrocketed from an average 30-year fixed mortgage rate of 3.76% prior to when the Fed began raising interest rates in March 2022, data shows.
In response to ABC News’ request for comment, a White House official said the administration believes the tax credits can make a substantial difference for homebuyers when coupled with a proposal that would increase the supply of homes.
Economists who spoke to ABC News cheered the effort to thaw the frozen housing market but warned that the tax incentives may not be enough for homebuyers to overcome the cost of high home prices and mortgage rates.
“I’m very bullish on this first-time homebuyers credit because this will help partially offset the higher interest rates that we’re facing,” Bruce Sacerdote, an economics professor at Dartmouth University, told ABC News.
“The more home ownership, the better,” Sacerdote added. “It ends up being a great investment for families.”
Steve Allen, an economist at North Carolina State University’s Poole College of Management, agreed. “Here’s an eternal truth in economics about taxes: Tax more of it, you get less of it. And tax less of it, you get more of it,” Allen said.
Some economists cautioned, however, that the tax credit for first-time homebuyers may not be large enough to alter the approach of those who stand to receive the benefit.
“I’m worried that this could be too small to make a real difference,” Andrew Levin, an economics professor at Dartmouth College and a former Fed economist, told ABC News.
Julia Fonseca, a finance professor at the University of Illinois at Urbana-Champaign, voiced similar concern in a post on X about the potential insufficiency of the $10,000 tax credit for families selling their starter homes.
If the families choose to pursue the tax credit and sell their homes, Fonseca said, they will likely encounter major challenges finding a new home, because the sluggish market has made so few homeowners willing to sell.
Plus, since mortgages have risen sharply, homeowners will need greater incentive to trade in the relatively low mortgage rates on their current homes for higher rates on a new one, Fonseca said.
The average borrower would need to receive roughly $50,000 to make up for the disparity in mortgage payments, she added.
“The maximum tax credit of $10k is small relative to this amount, so it might not be enough to incentivize even one seller to sell, let alone two,” Fonseca said.
(WASHINGTON) — Enthusiasm about the U.S. economy has soared in recent months but polls indicate most consumers still bemoan inflation. More than 60% of adults say recent price increases have caused financial hardship for their family, a Gallup poll in January found.
Prices, in turn, have taken on outsized importance on the brink of a presidential election that may hinge on bread-and-butter concerns.
In recent months, the White House has announced a raft of measures aimed at lowering onerous fees faced by consumers when they miss a credit card payment, overdraft a bank account or book a hotel room.
The initiatives tackle costs borne by a large swathe of Americans, delivering potential savings while signaling the Biden administration’s desire to protect consumers from corporate practices that it deems predatory, some experts told ABC News.
However, they added, the message may not register with most Americans, since the hidden fees often remain out of sight, leaving them less influential than expenses like gas and grocery prices.
The Consumer Financial Protection Bureau finalized a rule on Tuesday that will cut the typical credit card late fee to $8 from $32, saving U.S. consumers an estimated $10 billion per year. Late credit card payments have reached their highest level since 2011, the Federal Deposit Insurance Corporation found in a report released on Thursday.
The White House policy came roughly two months after the CFPB introduced a rule that would slash the fee charged by banks when customers overdraft an account.
Since last year, the White House has undertaken a separate campaign to reduce “junk fees,” such as hidden costs added toward the end of a purchase involving concert or airline tickets.
“Fighting hidden junk fees is part of the President’s broader agenda to lower costs for Americans. The President thinks about these issues from the perspective of families sitting around the kitchen table working through their bills and balancing their budgets every month. While these fees might not mean much for the wealthy, they add up for middle-class families,” Jon Donenberg, deputy director at the National Economic Council, a Biden administration group that advises the president, told ABC News.
The Biden campaign did not respond to ABC News’ request for comment.
Teresa Murray, consumer watchdog at nonprofit advocacy U.S. PIRG Education Fund, praised the measures as a much-needed assault on unfair costs, especially when price increases burden many households.
“It’s important to have transparency and fairness no matter how good or how bad the economy is – no matter how high inflation is,” Murray told ABC News. “But at a time when a lot of folks are dealing with inflation and high food prices, then every dollar does count.”
The rules may not only lower costs for some Americans but also send a message that the Biden administration understands the challenges posed by high costs and aims to address them, Jon Krosnick, a professor of political science at Stanford University who studies how prices affect perceptions of the economy, told ABC News.
The goodwill toward Biden could extend well beyond those directly impacted, Krosnick said, since decades of research show that voters approach economic news through a wide lens that considers the implications for society at large.
“People ask ‘Is this good for the country as a whole?’ rather than ‘Is this good for me personally?'” Krosnick said.
However, many voters may not become aware of the initiatives in the first place because the measures lower hidden fees that consumers often lose sight of anyway, some experts said.
“Perceived price changes in very salient cases — such as groceries and other everyday goods — are a very crucial determinant of household beliefs about the economy,” Francesco D’Acunto, a Georgetown University finance professor who studies how people understand economic news, told ABC News.
The Biden administration, by contrast, is “targeting potentially important costs households face but ones that are less salient. So it would probably be less effective,” D’Acunto added.
Utpal Dholakia, a marketing professor at Rice University, echoed the point, noting that many of the fees occur less frequently than common household expenses.
“Most of us don’t stay in hotels 20 nights a month — most of us stay occasionally,” Dholakia said. “It’s not something that most people are concerned about on a day-to-day basis.”
For those who do hear about the initiatives, Dholakia added, the response may be determined by partisan affiliation instead of financial relief.
“To the extent that you’re politically engaged and a Democrat, you’ll obviously look at these actions in a positive light,” Dholakia said. “If you’re a Republican or independent, your reaction will be more muted.”
Polling data shows broad support across both major parties for the efforts to address fees, a White House official said. A survey in December from Data for Progress, a left-leaning polling firm, found that a Biden proposal to address junk fees was backed by 81% of Democrats and 77% of Republicans.
The U.S. economy performs well on just about every measure of economic health. Inflation is falling, job growth is surging, and gross domestic product is proving much more resilient than expected in the aftermath of near-historic interest rate hikes.
Attitudes about the economy have improved in recent months, data shows. Consumer sentiment inched lower in February but preserved much of the large gains achieved in previous months. The index, however, remains well below pre-pandemic levels, a University of Michigan survey found.
Despite making up a small share of consumers’ overall expenses, the fees tackled by Biden could draw more attention than some might expect, Amit Bhattacharjee, a marketing professor at the University of Colorado, told ABC News.
“These fees aren’t necessarily a significant component of prices but they feel annoying,” Bhattacharjee said.
