(AUSTIN, Texas) — The arrest of an Ecuadorian migrant under Texas Gov. Greg Abbott’s initiative “Operation Lone Star” was ruled unconstitutional by a Texas county judge Thursday.
Some immigration advocates are hopeful the ruling by Travis County Judge Jan Soifer could potentially set a pathway for other migrants arrested under the controversial program.
Jesús Alberto Guzmán Curipoma, an engineer from Ecuador who hoped to submit a request for asylum, was arrested in September 2021 at a railroad switching yard in Kinney County on a criminal trespassing charge.
Guzmán Curipoma’s attorneys, Angelica Cogliano and Addy Miró, argued that Operation Lone Star violates the Supremacy Clause of the U.S. Constitution which establishes that federal law takes precedence over state laws and therefore prohibits state laws form interfering with immigration enforcement by the federal government. Cogliano told ABC News that her client should have been able to submit a claim for asylum, but was instead arrested and detained for weeks.
The Travis County District Attorney’s Office, which represented the state in the hearing, also agreed that Guzmán Curipoma’s arrest violated the Constitution.
“After careful consideration, the Travis County District Attorney’s Office agreed that Mr. Guzmán Curipoma’s prosecution for criminal trespass as part of Operation Lone Star violates the Supremacy Clause of the United States Constitution and represents an impermissible attempt to intrude on federal immigration policy,” said Travis County District Attorney José Garza in a statement. “In addition, DA’s office concluded that based on the evidence, there were multiple ways in which the OLS program has failed to satisfy basic, fundamental, and procedural state and federal constitutional safeguards.”
Abbott launched Operation Lone Star in March 2021, deploying thousands of National Guardsmen, Texas Department of Public Safety officers, and other state resources to the border and giving them the authority to arrest migrants under suspicion of criminal trespassing on private and state property.
Human rights organizations and the ACLU of Texas have called on the Department of Justice to investigate the program which they say sets up an alternative immigration system, one where migrants are arrested for faulty charges and detained for months without being given the chance to apply for asylum or seek representation. In December 2021, the ACLU of Texas and other civil rights groups filed a complaint with the DOJ and cited cases where migrants were allegedly lured onto private property by law enforcement agents so they could be arrested on trespassing charges.
“Operation Lone Star is a policy whereby they pretextually arrest people that they suspect of being here illegally, which is a fancy legal way of saying people that are brown on the border because there’s no other way for anybody to try and determine if somebody looks like they could be illegal. That’s not a thing you look like,” Cogliano told ABC News “It’s authorizing people to use that as a reason to arrest those people for certain offenses and detain them far longer than any U.S. citizen would be detained for that offense in Texas.”
Kathryn Dyer, a clinical professor at the University of Texas School of Law, testified at the hearing on Thursday and spoke about her experience representing other clients arrested under the program.
“When you start taking away rights and building a separate legal system for people there’s kind of no limit to it. This is concerning for immigrants and non-immigrants alike,” Dyer told ABC News.
At a briefing in November, Texas DPS officials said there have been over 9,300 criminal arrests since Operation Lone Star’s launch.
“These very serious constitutional issues have finally been heard and there’s a judge that thinks that there were constitutional violations such that the case needed to be dismissed,” Dyer said. “I do think that those issues and that ruling could open the door to other challenges.”
A spokesperson for Gov. Abbott told ABC News in a statement that they expect the ruling will be overturned.
“The district court did not have legal authority to enter this flawed and collusive judgment without hearing from the Office of the Attorney General. There is no doubt that this will be overturned,” said Nan Tolson. “In the meantime, Texas will continue to do what the Biden admin refuses to do: stepping up to secure our border and protect Texans from the catastrophic open border policies allowed by President Biden.”
On Friday, Texas Attorney General Ken Paxton said in a Tweet that he’d challenge the ruling.
“Lib Austin judge lets a Soros Travis County DA represent State of TX, then declares Op Lone Star unconstitutional. Ridiculous. Biden has FAILED to secure the border. Texas stepped in. We have the right to defend our border if the feds refuse. I’ll fight this nonsense on appeal,” he tweeted.
(NEW YORK) — Dogecoin rallied Friday after Tesla CEO Elon Musk tweeted the carmaker would now accept the cryptocurrency as payment for merchandise.
Originally started as joke poking fun at exuberance in the crypto market, Dogecoin surged some 10% by Friday afternoon in the wake of Musk’s early morning tweet.
Musk’s five-word message — “Tesla merch buyable with Dogecoin” — garnered more than 270,000 likes on the platform and sparked a spirited, meme-filled debate in the comments section.
Meanwhile, Tesla’s website for merchandise and accessories (which doesn’t sell its famous electric vehicles) on Friday showed updated checkout buttons next to some of its products for those wanting to pay with Dogecoin. Among products available for purchase with Dogecoin were Tesla’s “Giga Texas Belt Buckle” and its “S3XY Mug.”
For years, the so-called meme coin had been worth less than a penny. After the Musk’s tweet on Friday, it was trading at around 19 cents — a big leap compared with historical lows but still roughly one-third of its record value last May of over 60 cents.
It’s not the first time a Musk tweet has been linked to swings in the crypto market. The price of Bitcoin nosedived last May in the wake of Musk’s Twitter announcement that his company would no longer be accepting Bitcoin as payment due to its ties to fossil fuels — a steep fall that dragged down other popular cryptos at the time as well. This saga came just months after a separate announcement that Tesla would accept Bitcoin as payment was linked to a sharp rally.
He has also long embraced Dogecoin both on Twitter and beyond, appearing as the character of the “Dogefather” during his “Saturday Night Live” appearance last May. In the comedy skit, Musk’s character is repeatedly pressed with the question “What is Dogecoin?” before ultimately admitting it’s “a hustle.”
The billionaire has more than 70 million followers on Twitter and has been known to openly share his opinions in unfiltered ways that have sometimes landed him in court or in hot water with the Securities and Exchange Commission.
Aaron C. Davis/The Washington Post via Getty Images/FILE
(WASHINGTON) — The leader of the Oath Keepers militia group, who was indicted Thursday on a series of charges including seditious conspiracy in connection with the Jan. 6 assault on the U.S. Capitol, made his first appearance before a judge Friday in a federal courtroom in Texas.
Stewart Rhodes, a former Army paratrooper and graduate of Yale Law School, could spend decades behind bars if convicted on all five federal counts he faces — including the most serious seditious conspiracy charge, which carries a maximum sentence of 20 years in prison.
A lawyer for Rhodes told ABC News Friday that the allegations against Rhodes were “lies,” and said that no members of the Oath Keepers ever “planned or conspired to attack the Capitol.”
In his Friday court appearance, Rhodes responded “Yes” when asked by Magistrate Judge Kimberly Priest Johnson if he understood the charges against him. He then waived his right to have the full indictment read aloud.
Prosecutors asked that Rhodes be detained while he is awaiting trial, and the judge set a detention hearing for Jan. 20. Rhodes will remain in custody until then.
The indictment of Rhodes, along with 10 other alleged members of the Oath Keepers, signals a significant escalation in the Justice Department’s sprawling investigation of the Jan. 6, 2021, attack and its prosecution of members of the far-right Oath Keepers militia group, described by prosecutors as a “large but loosely organized collection of individuals” who “explicitly focus on recruiting current and former military, law enforcement, and first-responder personnel.”
Prosecutors allege Rhodes and other Oath Keepers began coordinating as early as just after Election Day “to oppose by force the execution of the laws governing the transfer of presidential power” between outgoing President Donald Trump and incoming President Joe Biden, according to court papers.
While Rhodes himself is not alleged to have entered the Capitol during the attack, prosecutors say he did enter the restricted area surrounding the building and coordinated with Oath Keepers who were part of a military-style “stack” formation seen walking into the building up the east side steps. Prosecutors said in their indictment Thursday that the members of the so-called “stack” were specifically searching for House Speaker Nancy Pelosi, but left after they couldn’t find her.
In their 48-page indictment, investigators chronicled in detail Rhodes’ alleged communications with members of the group over private and encrypted apps, and their alleged accumulation of heavy weaponry and tactical gear that the group is accused of storing just outside Washington at a hotel in Virginia, where on Jan. 6 prosecutors say a so-called “Quick Reaction Force” of militia members waited on standby in case they were called into the city.
Nine of those charged in Thursday’s indictment had been previously charged in connection with the Jan. 6 attack as part of what was already the Justice Department’s largest and most complex conspiracy case tied to the insurrection.
In addition to Rhodes, 63-year-old Edward Vallejo of Arizona was arrested in Phoenix on Thursday and also charged with seditious conspiracy. Vallejo was allegedly part of the “Quick Reaction Force” that was lying in wait at the Virginia hotel.
After the riot, Rhodes and Vallejo allegedly met up at a restaurant where they “celebrated their attack” and discussed “next steps,” according to the indictment. Vallejo allegedly sent a message to a Signal chat group the morning after Jan. 6 where he discussed making a “recon” trip to the Capitol to probe the “defense line” put up by law enforcement in the wake of the attack, court papers said.
Vallejo also made his first appearance before a magistrate judge in Phoenix on Friday afternoon, where a public defender representing him said he plans to plead not guilty to all charges against him. The judge set a detention hearing for next Thursday as the Justice Department seeks to keep Vallejo behind bars pending further legal proceedings in his case.
The deployment of the rarely-used seditious conspiracy charge will pose a major test for the Justice Department in its investigation into the Capitol attack and the prosecution of Rhodes as the founder and self-described leader of the Oath Keepers.
Only days after the Jan. 6 attack, the then-acting U.S. attorney for Washington, D.C., Michael Sherwin, said prosecutors were considering the potential for seditious conspiracy charges against some of the most “heinous acts” that took place at the Capitol. But as the investigation crossed the one-year mark and the number of arrests stretched beyond 700, such charges had yet to materialize, with prosecutors instead opting to bring charges like conspiracy or obstruction of an official proceeding, which similarly carries a maximum sentence of 20 years in prison.
Attorney General Merrick Garland appeared to foreshadow Thursday’s charges last week in a speech marking the one-year anniversary of Jan. 6, when he addressed criticism of the department’s handling of the investigation and the lack of charges to date against the more prominent figures believed to have coordinated the assault on Congress.
“The actions we have taken thus far will not be our last,” Garland said. “The Justice Department remains committed to holding all Jan. 6 perpetrators, at any level, accountable under law — whether they were present that day or were otherwise criminally responsible for the assault on our democracy.”
John Sandweg, a former acting general counsel at the Department of Homeland Security, told ABC News that Thursday’s indictment “confirms that the attack on the Capitol was not just an impulsive act, but was part of a premeditated conspiracy to forcibly steal the levers of power.”
“It also demonstrates that, while much of the focus has been on the prosecution of those on lesser charges related to storming the Capitol, DOJ has been actively investigating the root causes of the attack,” he said. “The question remains how far up the food chain will the rest of the investigation lead, but this indictment significantly ups the ante.”
ABC News’ Juan Renteria, James Scholz and Mireya Villarreal contributed to this report.
(NEW YORK) — Some 75 million Americans in 33 states, from the Dakotas to Georgia to Maine, are under alert Saturday through Monday for a massive winter storm and chilling temperatures.
At least 11 winter weather alerts and advisories are in effect, including a wind chill advisory for much of the Northeast, where wind chills — what temperature it feels like — were as low as minus 40 degrees F early Saturday.
A winter storm watch also is in effect from Arkansas to Pennsylvania for a much-anticipated winter storm that’s already dumped more than a foot of snow across North Dakota and Iowa.
As the storm heads southeast toward the mid-Mississippi states Saturday into Sunday, and then toward the Northeast Sunday into Monday, more snow, ice and rain is expected.
Three to 6 inches of snow is possible in parts of the South, with Atlanta having the potential to see its first measurable snowfall in four years. Six to 18 inches of snow is possible in the mountains of Tennessee, North Carolina, Virginia and West Virginia.
The interior Northeast up through New England is expected to get hit with 6 to 18 inches of snow. Coastal areas of the Northeast, including Washington, D.C., Philadelphia, New York City and Boston, could see up to 3 inches of snow, though that will likely get washed away as the snow changes to rain by early Monday.
Dangerous road conditions, as well as power outages, are expected throughout the holiday weekend. The Interstate 95 corridor will likely see a wintry mix of rain, snow and ice Sunday into Monday.
Four states — Georgia, North Carolina, South Carolina and Virginia — declared states of emergency Friday ahead of the storm, while West Virginia declared a statewide “state of preparedness.”
North Carolina Gov. Roy Cooper urged residents to gather essentials Saturday and stay off the roads Sunday and Monday as “significant impacts” are expected statewide.
“This storm’s a menace,” the governor said during a press briefing Saturday. “As much as a foot of snow’s expected to fall in the mountains and foothills. And in central North Carolina, freezing rain and sleet on top of some snow will fall. The eastern part of our state expects heavy rain and flash flooding, plus high winds and gust.”
In preparation, 10,000 workers from Duke Energy are being activated to help restore power. The state has also activated 200 National Guard members to assist with the transportation needs in western and central counties.
More than 1,200 state Department of Transportation employees and contractors have spread 2.5 million gallons of brine on roads since Thursday and prepared over 400 trucks ready to respond after the storm hits, North Carolina Department of Transportation Secretary Eric Boyette said.
Boyette warned of likely delays in response times due to the widespread impact of the storm across the state, as well as labor shortages due to COVID-19.
“Travel could be greatly impacted for several days after the storm,” he said, urging people to stay off the roads. “We will do everything we can to reopen roads as quickly as possible.”
In Georgia, Gov. Brian Kemp said agencies are preparing to mobilize and deploy resources as needed in the state, as well as to aid neighboring states if needed.
Atlanta also is preparing for snow, with Mayor Andre Dickens telling Ellen Lopez of “Good Morning America”: “We have 40 pieces of equipment that’s ready to go. We have 300 employees. Gallons and gallons of brine. So we’re trying to stay ahead of it.”
ABC News’ Hilda Estevez and Melissa Griffin contributed to this report.
(WASHINGTON) — The White House announced this week that Hamse Warfa will join the Biden administration, making him the first Somali American presidential appointee in U.S. history.
He is currently a deputy commissioner for workforce development in Minnesota but will come on at the end of January as a senior adviser to the State Department on civilian security, democracy and human rights. In that role, he will help develop strategies for protecting and promoting democracy at home and abroad.
“My acceptance of this role is in direct response to President Biden’s call to action to protect and promote democracy,” he told ABC News.
Warfa’s family fled Somalia after the country’s civil war started in 1991 and lived in various refugee camps across Kenya, he said. After arriving in the United States as a teenager in 1994 alongside his family, he received a bachelor’s degree in political science from San Diego State University and his master’s in organizational management and leadership from Springfield College in the same city. He moved to Minnesota in 2012 after he was recruited by the state’s largest philanthropic foundation, Margaret A. Cargill Philanthropies, he explained.
The 2016 election season inspired Warfa to become more active in civic engagement.
“The strong anti-immigrant, and anti-Muslim policy and actions, motivated me to organize and get more involved at the state level,” Warfa said. “Some of the Minnesota gubernatorial candidates talked about shutting down the refugee program, and in some cases, created fear about refugees in Minnesota, especially about Minnesota’s Muslim, Somali community.”
In 2019, the Minnesota governor’s office appointed Warfa as deputy commissioner at the Minnesota Department of Employment and Economic Development, making him the highest-ranking Somali American official in the state’s executive branch, according to the department.
Warfa’s list of accomplishments also includes being the co-founder of BanQu, Inc., a blockchain service created to broaden economic opportunities for low-income people across the globe, as well as the recipient of a 2016 Bush Fellowship, which is granted to help develop leadership skills, and an Ashoka Fellowship for social entrepreneurs.
During his time in Minnesota government, he “successfully advocated for the largest job bill in state history, supplying workforce training to youth and adults,” according to his department.
He served as an economic adviser to the Biden campaign, helping develop the administration’s plans to reverse the Muslim ban and increase refugee admission numbers.
“When we talk about democracy, I want to make sure we talk about inclusive democracy,” he told ABC News. “I want to bring my both lived and professional experiences to help the administration expand access to those affected by government policies and actions.”
“I want to see America live through its ideals in building multiethnic and multiracial democracy that protects everyone,” he added. “I hope people see in my example — from the refugee camp to representing America — hope for democracy and value of everyone’s voice and vote.”
(WASHINGTON) — Advocates are taking action across the country as they hope to pressure members of Congress to pass voting rights legislation by Martin Luther King Jr. Day.
One of the actions being taken right now is a hunger strike by individuals in different parts of the U.S. as a form of protest to get the legislation passed.
Rev. Stephen A. Green, chair of Faith for Black Lives, organized a hunger strike that included him and 24 other faith leaders from across the country prompted by Senate Majority Leader Chuck Schumer’s “Dear collogues” letter released in early January.
“From Jan. 3, we noticed that there was a deadline or a date was identified for voting on or before Jan. 17,” said Green. “And so, we decided to engage in this hunger strike to continue to apply pressure on the Senate to get it done on or before Jan. 17.”
Green and the other faith leaders began their hunger strike on Jan. 6.
Un-PAC, a nonpartisan organization with a current mission is to get The Freedom to Vote Act passed, has restarted its hunger strike from last month and currently has members and allies protesting outside the U.S. Capitol.
“This is a last-minute push and a desperate plea because if this bill does not pass, by Martin Luther King Jr. Day or the end of January, it will be too late to implement many of the major facets of the bill [for the 2022 midterms],” said Callynn Johnson, a member of Un-PAC.
Last month, Un-PAC went on a hunger strike for just over two weeks outside the White House to push for voting rights legislation. The organization has more people joining them on their strike, including the faith leaders.
Another major event to support voting legislation will happen in Phoenix on Saturday, where there will be a voting rights mobilization.
“We will march over the 16th Street overpass here in Phoenix and march back to Eastlake Park,” said Dr. Jannah Scott, a liaison and member of the leadership council with the African American Christian Clergy Coalition of Arizona. “Then, at the park part, we will have a program of speakers, of music, of people just coming together and giving their exhortation about why this is so important and about calling in Congress and the president to do what they need to do at this critical time in our history.”
Eastlake Park has been a focal point for African American history. The park has traditionally been used for the annual Martin Luther King Jr. birthday celebration. The park has also held civil rights rallies, civil rights leaders’ visits and is the starting point of all civil rights marches to the state Capitol.
Over the past year, the Arizona state legislature has passed state laws restricting voting access.
Arizona is also the home of Democratic Sen. Kyrsten Sinema, D-Ariz., one of two key Democrats needed to end the filibuster and create a pathway for voting legislation. However, on Thursday, Sinema made it clear during her speech on the Senate floor that she does not intend to do that.
“There’s no need for me to restate my long-standing support for the 60-vote threshold to pass legislation,” said Sinema. “There’s no need for me to restate its role protecting our country from wild reversals in federal policy is a view I’ve held during my years serving in both the U.S. House and the Senate and it is the view I continue to hold.”
All these events lead up to Martin Luther King Jr. Day on Monday when over a 100 national and grassroots organizations will gather in Washington, D.C., for a march that will start at Potomac Avenue and end at Frederick Douglass Memorial Bridge. A press conference will follow where Martin Luther King III, Arndrea Waters King and other voting rights leaders and community organizers will speak on the urgency to pass voting legislation.
Even after discussions with President Joe Biden and other Democratic colleagues, Sinema and Sen. Joe Manchin, D-W.Va., are still not agreeing to end the filibuster. Without their votes, there is seemingly no pathway for voting legislation to pass before or on Martin Luther King Jr. Day, but that is not stopping protesters and voting rights advocates from taking action.
“We will escalate our mobilization if our demands are not met to have legislation passed by [Martin Luther King Jr. Day],” said Green.
“We will continue the calling for [voting rights],” said Scott. “We will not rest until this gets done.”
(WASHINGTON) — While the U.S. Supreme Court considers a case that could potentially overturn Roe v. Wade, some states are enacting or discussing protections for reproductive rights.
This week, New Jersey Gov. Phil Murphy signed a bill that codifies the right to an abortion, previously recognized by the state Supreme Court, into state law.
The so-called Freedom of Reproductive Choice Act, which quickly passed through the state legislature after first introduced on Jan. 6, grew out of concern that the conservative-leaning high court could overturn or limit Roe in the coming months through its decision on a Mississippi case, Dobbs v. Jackson Women’s Health, that asks the justices to directly reconsider the nearly 50-year precedent.
“The United States Supreme Court is preparing to take a wrecking ball to its own precedent, Roe v. Wade, and that would also demolish our case law-based foundation here in New Jersey. Neither I nor those with me today can let that happen,” Murphy said Thursday at a public bill signing. “Now, once I sign this bill, regardless of whether or not the Supreme Court overturns Roe v. Wade, New Jersey’s position in supporting the right to reproductive autonomy will remain clear and unchanged.”
The Democratic governor additionally signed a bill that requires insurers to cover 12 months of birth control prescriptions at one time.
Sarah Fajardo, policy director for the American Civil Liberties Union of New Jersey, called the two bills an “important step” for residents as the country is “experiencing a crisis related to reproductive rights access and equity.”
“These two bills not only declare the rights to abortion and reproductive autonomy in the Garden State, but expand much-needed access to contraception,” Fajardo said during Thursday’s bill signing.
Other states are also poised to address protecting abortion rights while the U.S. Supreme Court considers whether to uphold the Mississippi abortion ban.
The Vermont House of Representatives heard testimony this week on Prop 5, an amendment that would enshrine “reproductive autonomy,” including abortion, in the state constitution. If ultimately passed by the state legislature, the proposal could go before voters in November.
In California, lawmakers are expected this year to consider a plan to make the state a “sanctuary” for anyone seeking abortion services should Roe be overturned. The California Future of Abortion Council, which Gov. Gavin Newsom convened in September, has recommended that the state help cover the cost of the procedure, as well as transportation, lodging, child care, food and lost wages, for those seeking an abortion there.
After hearing arguments last month over the Mississippi law, which would ban most abortions after 15 weeks of pregnancy, the Supreme Court’s conservative majority appeared inclined to scale back abortion rights. A decision on the case is expected by the end of the court’s term in June.
Should the court overturn Roe, leaving the right to an abortion decided on a state-by-state basis, 26 states are “certain or likely” to ban abortion, according to a report published in October by the Guttmacher Institute, a pro-abortion rights research organization.
Among those, 21 states already have so-called trigger laws that would immediately ban abortion if Roe were overturned. The other five states are likely to ban abortion should Roe be overturned, the Guttmacher report said.
Fifteen states and Washington, D.C., currently have laws that protect the right to abortion, according to the institute.
(WASHINGTON) — In an effort to cut emissions, the Federal Aviation Administration announced it’s changing the way some planes land at U.S. airports.
Currently, most planes that land at airports descend in a stair-step method, where aircraft repeatedly level off and power up the engines during the descent. Under the agency’s new 42 Optimized Profile Descents, or OPDs, planes will instead descend from cruising altitude to the runway in a smoother, continuous path with engines set at near idle.
“If you just think about what takes more energy, walking down the stairs or sliding down a slide, that’s basically what the plane is doing,” FAA spokesperson Matthew Lehner said in an interview with ABC News.
The move is part of the agency’s work to achieve a net-zero greenhouse gas emissions aviation sector by 2050 — part of Transportation Secretary Pete Buttigieg’s U.S. Aviation Climate Action Plan announced at the United Nations Climate Change Conference last November.
“There’s less fuel burn as you’re sliding down toward the approach to the airport,” Lehner said. “It also means with less fuel burning you get less emissions in the air.”
In 2013, researchers with the FAA and the Georgia Institute of Technology found OPDs cut about 41 million pounds of carbon dioxide emissions and 2 million gallons of jet fuel at Los Angeles International Airport in one year, which is equivalent to cutting 1,300 flights from Atlanta to Dallas, the FAA said.
The FAA implemented OPDs at various airports across the country in 2021, including Dallas-Fort Worth International Airport, Miami International Airport and Florida’s Orlando International Airport. This year, it plans to implement the descents at New York’s LaGuardia Airport, Missouri’s Kansas City International Airport and Omaha, Nebraska’s Eppley Airfield. It is also adding additional routes at Orlando International Airport.
In addition to cutting emissions, the agency said passengers might notice a smoother, quieter approach with the engine not revving throughout its descent. The continuous landing technique is also quieter for areas surrounding airports.
(NEW YORK) — The sneaky sting of inflation is catching many Americans by surprise as soaring prices erode their savings and prompt major sticker shock at the supermarket, gas pump and seemingly everywhere they look.
Rapidly rising prices have become a major new wellspring of anxiety for American families. Some 3 in 10 Americans said everyday bills (15%) or inflation specifically (14%) was the single biggest concern facing their family right now, according to a Monmouth University poll released last month. This is nearly double the 16% of Americans naming rising prices or household bills as their biggest concern last July, and more than triple the 8% who named household bills as their top concern in August 2020.
Government data indicates consumer prices last month jumped at their fastest pace since 1982 — the tail-end of an agonizing period in the U.S. economy when out-of-control inflation forced policymakers to orchestrate a steep correction that resulted in a recession and double-digit unemployment rates.
Many who remember this painful historical era are now retiring, and research reveals that peoples’ expectations about inflation are mostly shaped by their experience of it. This results in a “substantial disagreement between young and old individuals in periods of highly volatile inflation,” economists at the University of California, Berkeley, and the University of Chicago, wrote in a 2014 paper. It also suggests a majority of consumers are now unsure of how to navigate inflation or may be less aware of its broader dangers.
Here is how experts say inflation is eroding Americans’ cash and how they can brace themselves for what might come next as policymakers seek to anchor in the surging prices.
Savings dissolving as those with no cushion get crushed by so-called ‘cruelest tax’
Inflation, defined by the Federal Reserve as increases in the overall prices of goods and services over time, means that Americans are going to have to pay more money than they are used to for their essentials and other expenses.
While the ascending price tags can be a more obvious sting, rising inflation can also impact the value of savings accounts for those who have been able to practice financial prudence in building up a rainy day or retirement fund.
Many Americans were able to save over the course of the pandemic thanks to fiscal support and the fact that COVID-19 shuttered businesses and urged people to stay at home rather than spend on the services they used to go out for, according to Wells Fargo Senior Economist Sarah House.
“But that financial cushion is getting whittled away more quickly. Given these elevated rates of inflation, that savings isn’t stretching as far,” House told ABC News.
Chester Spatt, a professor of finance at Carnegie Melon University and former chief economist and director of the SEC’s Office of Economic Analysis, added that rising inflation suggests that Americans’ “spending power, potentially, is going to decrease quite substantially.”
If inflation is rising at a clip of 7%, and your savings account offers interest rates of some 0.5% (or even an enviable higher-yield 1% rate), then “that spending power might decline by about 6%,” Spatt told ABC News.
This means for those with $1,000 saved up, their financial buffer might actually be closer to $940 as inflation at its current pace eats into that money. For those with $10,000 saved up, they might expect to see about $600 seemingly evaporate from that nest egg — without even touching it.
For Americans who are living paycheck to paycheck, the impacts of inflation can be even more devastating. Federal Reserve Chair Jerome Powell warned lawmakers on Tuesday that high inflation takes a toll “particularly for those less able to meet the higher costs of essentials,” such as food, housing and transportation.
“People sometimes talk about inflation being kind of ‘the cruelest tax’ that really hurts poor people disproportionately, and I can see that certainly to be the case,” Spatt told ABC News.
Ultimately, the historically high inflation we are seeing now is becoming impossible for consumers to ignore, House added.
“When you’re seeing roughly 2% price increases, it’s kind of running in the background, that 2% number is by design,” House said of the past. “But when we are seeing 5, 6, 7% inflation, it’s hard for consumers not to notice, and that begins to affect how they think about their decisions, including what they’re asking for in terms of wages out of a job.”
Asking for higher wages is generally a good thing, but during times of inflation, those who were working during the 1970s and ’80s know it can also be linked to further skyrocketing prices — and at the broader level, throw a wrench into efforts to rid inflation from the economy as a whole.
Policies to combat inflation have historically carried painful consequences
Inflation historically has been extremely difficult to eradicate, and past efforts to do so by the government and policymakers have sometimes been accompanied by painful consequences.
At the same time, the inflation we are seeing now is being fueled by vastly different circumstances than in the past, specifically supply-demand imbalances spurred by a global pandemic and the fiscal and monetary policies that buoyed the economy during the unprecedented health crisis.
As supply chains recover from pandemic shocks and reach of pandemic-era stimulus policies wanes, many remain hopeful that this will help ease inflationary pressures.
Economists also note that policymakers now have the lessons from the past to glean how best to respond to inflation.
During “The Great Inflation” period of the 1970s and early 1980s, the most-recent inflationary period that those on the cusp of retirement are warning their children about, inflation snowballed out of control as prices climbed and workers in turn asked for higher wages — creating the economic phenomenon now referred to as the “wage-price spiral.”
Wages are again increasing at headline-making rates, as major companies — especially in the service industry — report struggles to attract and retain staff.
“We are in a tight labor market,” House told ABC News, meaning workers are “able to flex some of that clout a little bit more, and extract some more wage increases” from their employers.
“We’re seeing this filter into inflation expectations to some extent; we’re also seeing it filter into wages, and so I think that’ll be key in the year ahead as to how much inflation comes down,” House said. “We are expecting it to recede, given the unwinding of some of these pandemic distortions — but I think now that we’re seeing more pressure coming from wages in the labor market, it’s going to be harder to cool off.”
As a result, House said she expects the Fed “to step in a little more aggressively” than they may have initially planned to help anchor inflation.
This will likely manifest in interest rate hikes, which the Fed has already signaled will likely occur three times in 2022, and a more rapid end to pandemic-era monetary policies that flushed financial markets with liquidity.
These actions can help cool off inflation and uncertainty, House said, because “it will send a signal to markets, to consumers, to businesses, that they are on top of that, that they are watching inflation numbers and they do not want to let this get out of hand, or at least further out of hand.”
“That signal will help anchor inflation expectation and that can have an influence on further price setting, whether that’s for goods, services or for labor,” she added.
Looking back at history, the Fed was seen as initially behind the curve and slow to raise interest rates in the ’70s to respond to inflation — before announcing a shockingly sudden federal funds rate increase of almost 20% in 1980. Those who held bonds directly or through retirement accounts subsequently suffered huge losses, and real interest rates also soared. The move ended up having ripple effects that devastated the overall economy, as well as the stock market.
“The difference here is that we do have some forces that I think will help bring down inflation on its own,” House said when comparing the present to late-’70s inflation, such as the waning pandemic-era fiscal support that boosted consumer demand and shifting patterns on how consumers are spending their money.
“It’s a fine line for monetary policy to walk, between not choking off a recovery or an expansion and also not letting it overheat to the point where you have further pain down the road,” she said.
There are also only so many tools at the Fed’s disposal, she noted, saying the Fed can’t manufacture semiconductor chips or do much to address the beleaguered global supply side of the equation.
In figuring out how to best anchor inflation without triggering an economic downturn, simply put, House said the Fed is “not in a very enviable position.”
So how can Americans protect their hard-earned cash?
At the individual level, meanwhile, Carnegie Melon’s Spatt warns there is very little consumers can do on their own to tackle inflation as a whole once it takes root in the economy.
“Individuals can, of course, try to make the best decisions that they can to watch out for themselves,” Spatt said. “To the extent that they see opportunities for higher wages, obviously, they should go for those. To the extent that they see prices that haven’t yet moved up, but they think are going to move up, they might want to lock in their purchases.”
To protect their savings, Americans “might want to consider, or might be more open to, buying bonds or buying equities,” Spatt added.
Uncertainty brought on by inflation has traditionally been bad news for the stock market, but at the same time stocks have also been a good source historically for investors looking to grow wealth over the longer term. While there is potential to guard against inflation with sound stock investments (and conversely to further deplete savings with investments that go down in value), going this route comes down to personal risk tolerance and financial goals.
Other savings vehicles that “may be a little bit better than bank accounts” in regards to inflation are inflation-protected government savings bonds, according to Spatt.
“At least in the near term, those [Series] I Bonds are offering extraordinary rates, about 7% because of the current levels of inflation,” he added.
These are capped at relatively modest levels, he noted, but said he still views them as a “terrific kind of low-risk type of inflation hedge of a different kind than investing in equity.”
Investors can also protect themselves from inflation by purchasing Treasury Inflation Protected Securities, or TIPS, which were not around during the ’70s and also have interest rates adjusted for inflation.
The Treasury has a useful breakdown for Americans comparing I Bonds and TIPS on its website.
As inflation tightens its grip on the economy and previous assurances from policymakers that it is “transitory” have gone out the window, Spatt said Americans should now recognize “prices are going to change over time, and they’re going to change adversely.”
People should keep this in mind when doing their shopping and financial planning, and then assess based on individual needs, options and goals how they can best adapt to this ever-evolving economic reality.
At the broader level, however, Scott warned inflation’s unwelcome return to the U.S. economy presents “a tremendous problem.”
“When you think about the policies that may be followed to stamp out the inflation, they may actually bring the economy into recession; that may be necessary like it was in the 1980s,” Spatt said. “It’s not easy to knock it out of the economy; this is one of the lessons of the 1980s.”
(EUGENE, Ore.) — Six people were transported to hospitals after a shooting at a concert hall in Eugene, Oregon, police said.
At 9:29 p.m. Friday, there were reports of multiple shots fired outside WOW Hall, where Lil Bean and Zay Bang were performing.
The Eugene Police Department and multiple law enforcement agencies responded, along with Eugene Springfield Fire.
Of the six victims that were shot, one is in critical condition, Eugene Police Department Chief Chris Skinner said during a press conference early Saturday.
Police don’t yet know if the shooting was random or targeted, but Skinner said it was “one of the highest profile shootings we’ve had in the city of Eugene.”
There are no reported fatalities at this time.
Police are looking for a single suspect, thought to be a male in a hoodie who was last seen running westbound away from the scene, Skinner said. The police chief added that he does not believe there is a broader safety risk to the community, but emphasized the suspect is still likely armed and dangerous.
“You may have heard that there was a shooting outside the WOW Hall tonight at the ‘Lil Bean + Zay Bang’* concert,” WOW Hall’s Board Chair Jaci Guerena and Interim Executive Director Deb Maher said in a statement on the venue’s website. “There is not much information currently available however we heard gunshots in the back parking lot. The motives are not yet known. We do know that some people were injured, but we do not know the extent of the injuries, and we do not want to speculate.”
All classes held at the WOW Hall are canceled until further notice, they said.
“We at the WOW Hall want to thank all first responders who came so quickly to ensure everyone’s safety and administer first aid. We believe all staff and volunteers are safe and accounted for. This is unprecedented at the WOW Hall. The police are investigating. If we receive additional information, we will try to make it available,” Guerena and Maher added.
The shooting is under active investigation.
Police are asking that anyone with information regarding the incident (case 22-00850) call 541-682-5111.
