—— Fed raises interest rate by 0.75% to fight inflation; Chicago government uses donations to help poor residents; US retail sales fell for the first time in May; Robinhood stock market value is less than the cash on the books; Tesla be the top of crashes suspected of driver-assistance technology; Caterpillar headquarters 97 Moved south to Texas a year later; U.S. childcare costs surged to 20% of household income.
1. Fed raises interest rate
The Fed announced at its meeting today that it will raise its benchmark interest rate by 0.75%, the largest rate hike since 1994. The raised benchmark interest rate will reach 1.5% to 1.75%.
Federal Reserve Chairman Jerome Powell revealed that the rate of increase next month maybe 0.5% or 0.75%, but the Fed will make a decision based on the current economic situation of the month.
Fed officials expect the benchmark rate could hit 3.4% by the end of the year. In addition, the Fed will continue to shrink its balance sheet at a rate of $47.5 billion per month.
After the Fed’s decision was made public, U.S. stocks rose as a whole, U.S. bond yields fell, and the dollar depreciated.
Fed officials expect the benchmark rate to be raised to 3.4% by the end of the year
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2. Chicago government helps poor residents
Beginning as soon as the end of June, a non-profit charitable organization called GiveDirectly will be responsible for providing more than 5,000 poor families in Chicago with a monthly subsidy of $500. The City of Chicago will use $31.5 million in contributions from the federal government’s American Rescue Plan Act to fund the year-long project.
Recently, more and more cities in the United States have launched similar charitable activities, and the GiveDirectly organization also operates a similar project in Georgia.
Philanthropy researchers found that subsidized households often used the money to buy necessities, pay off debt, and use public transportation. The good news is that some of the beneficiaries have also found jobs and improved their quality of life.
GiveDirectly was founded in 2009 by two Harvard University Ph.D. economists, and Google’s philanthropic arm is one of the group’s backers. So far, the organization has donated more than $550 million to 1.25 million poor families in African countries.
Basic Income becomes more important, GiveDirectly will help Chicago government-run programs
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3. US retail sales fell for the first time in May
Total retail sales fell 0.3% in May compared to April, the first decline this year, according to the latest data from the Commerce Department released today.
Falling retail sales mean economic growth is losing steam.
Since the outbreak of the epidemic, government fiscal stimulus and a strong job market have boosted consumer spending, which is also an important driver of the U.S. economic recovery.
Auto sales fell sharply in May, mainly due to low inventory and high prices, as well as higher car loan interest rates. In addition, consumers have also reduced their purchases of furniture and electronics.
Analysts at J.P. Morgan downgraded the full-year U.S. GDP growth to 2.5% from 3.25%.
Inflation is clearly reflected in retail sales figures
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4. Robinhood’s market value was less than cash on the book
The stock price of Robinhood Markets Inc., a stock trading platform, fell again on Wednesday, and the company’s market value has plunged 80% to $5.99 billion. Interestingly, at the end of the first quarter, Robinhood’s cash and cash equivalents totaled $6.19 billion, more than the company’s equity value.
Atlantic Equities analyst John Headgerty (John Headgerty) said the U.S. economy is likely to enter a recession, and user interaction may continue to decline.
Piper Sandler & Co. analyst Rich Repetto said in an interview that many of the users who signed up for accounts affected by the Reddit forums have already cleared their positions.
After stocks crash, cryptocurrencies enter a cold winter, and many retail investors who have lost confidence leave the market
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5. Tesla be the top of crashes suspected of driver-assistance technology
The National Highway Traffic Safety Administration said today that it received nearly 400 reports of crashes involving advanced self-driving features, more than two-thirds of which were Tesla vehicles.
Tesla has been a pioneer in the industry by introducing driver assistance features as early as 2014. Tesla also said the risk of a crash would be significantly reduced with autopilot turned on, but many researchers criticized Tesla’s technology.
According to data provided by Tesla, the cumulative mileage of the company’s electric cars has exceeded 1 billion miles after starting autonomous driving.
The Authority believes that the data of the investigation is too limited and should not be drawn indiscriminately
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6. Caterpillar headquarters moves to Texas
Caterpillar, a well-known heavy industrial equipment manufacturer, announced in a statement that the company will relocate its Deerfield headquarters to Irving, Texas. Previously, Tesla and Oracle also moved south from their California headquarters to Texas.
Caterpillar employs 107,000 people worldwide, and the relocation “big project” could affect 230 jobs.
Texas Governor Greg Abbott tweeted that Caterpillar’s move south to Texas is great news for the people of Texas, which is now home to 54 Fortune 500 companies.
Texas is popular with businesses because it has lower operating costs, zero personal income tax, and a more talented job market.
Caterpillar believes that in the Dallas Fort-Worth area, the company can better attract and retain talents while providing employees with better school districts and housing.
Texas’s good tax policies and lower cost of living attract a lot of talents and tech companies
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7. US childcare costs surge to 20% of household income
According to a new report from childcare recruiting site, Care.com., more than half of the parents surveyed spend at least 20% of their salaries on childcare, up from 31% of parents in 2019, and that could get worse.
The survey showed that 58% of households expect to spend at least $10,000 on childcare, up from 45% in 2019.
More than 30 percent of parents are considering seeking a second job to cover the rising cost of childcare. 20 percent of parents are considering quitting their jobs and taking care of their children themselves. 43% of respondents said they would not have more children.
The average cost of hiring a nanny is about $700 per week, and the cost of off-campus care centers is $200 per week.
To make matters worse, finding a nanny has become more difficult even if parents can afford it, as many people dissatisfied with low wages have left the industry and the pandemic has caused close to tens of thousands of childcare centers to close.
The growing cost and difficulty of raising children is distressing American parents
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The content of this article comes from various financial news media such as The Wall Street Journal, Financial Times, and Bloomberg.