U.S. consumer borrowing surged in November by the most on record, reflecting outsize increases in credit-card balances and non-revolving loans, Bloomberg News reported. Total credit jumped $40 billion from the prior month after a revised $16 billion gain in October, Federal Reserve figures showed Friday. On an annualized basis, borrowing increased 11%. The November gain exceeded all estimates in a Bloomberg survey which had a median projection of $20 billion. Revolving credit outstanding, which includes credit cards, climbed $19.8 billion — the largest increase on record. Non-revolving credit, which includes auto and school loans, rose $20.2 billion, the largest gain in six months. The figures suggests Americans’ are starting to rely more on credit as savings built up on the back of government pandemic-relief funding dries up. Bloomberg Economics estimates that households earning less than $90,000 a year will have exhausted their financial cushions by February.
Though initial shutdowns caused unemployment to surge to levels not seen since the Great Depression, trillions of dollars in government stimulus and the economy’s swift, if turbulent, recovery helped many families reach a new level of financial security, the Wall Street Journal reported. The first two rounds of stimulus payments lifted 11.7 million people out of poverty, according to the Census Bureau. Americans built up $2.7 trillion in extra savings. Some expect that, combined with rising wages, to provide them with lasting stability despite the return to more normal spending patterns and rising inflation. Not everyone benefited equally, and some say the future already looks more tenuous. The federal government’s stimulus checks, expanded unemployment insurance and monthly child tax credit have ended, and the pause on payments and interest on student loans will end soon. The Omicron variant of the coronavirus is driving up infections and disrupting businesses. But Americans of all income levels socked away more money during the pandemic, according to Moody’s Analytics estimates based in part on government data.
For millions of American families with children, the 15th of the month took on a special significance in 2021: It was the day they received their monthly child benefit, part of the Biden administration’s response to the pandemic. The payments, which started in July and amounted to hundreds of dollars a month for most families, have helped millions of American families pay for food, rent and child care; kept millions of children out of poverty; and injected billions of dollars into the U.S. economy, according to government data and independent research. Now, the benefit — an expansion of the existing child tax credit — is ending, just as the latest wave of coronavirus cases is keeping people home from work and threatening to set off a new round of furloughs, the New York Times reported. Economists warn that the one-two punch of expiring aid and rising cases could put a chill on the once red-hot economic recovery and cause severe hardship for millions of families already living close to the poverty line. The end of the extra assistance for parents is the latest in a long line of benefits “cliffs” that Americans have encountered as pandemic aid programs have expired. The Paycheck Protection Program, which supported hundreds of thousands of small businesses, ended in March. Expanded unemployment benefits ended in September, and earlier in some states. The federal eviction moratorium expired last summer. The last round of stimulus payments landed in Americans’ bank accounts last spring. Relative to those programs, the rollback in the child tax credit is small. The Treasury Department paid out about $80 billion over six months in the form of checks and direct deposits of up to $300 per child each month. That is far less than the more than $240 billion in stimulus payments issued on a single day last March. Unlike most other programs created in response to the pandemic, the child benefit was never intended to be temporary, at least according to many of its backers. Congress approved it for a single year as part of the $1.9 trillion American Rescue Plan, but many progressives hoped that the payments, once started, would prove too popular to stop. That didn’t happen. Polls found the public roughly divided over whether the program should be extended, with opinions splitting along partisan and generational lines.
During the first week of every month, the white sheets of paper show up, jammed behind doorknobs, laid on porch chairs or tables, dropped on concrete patios. Janahya Sugick, a nail technician and mother of three, received her first late notice in June 2020, after her hours had been cut and her paycheck had dwindled because of the pandemic. Soon after, her apartment complex filed for eviction. But even though she couldn’t immediately pay, Sugick was not evicted. Instead, she is regularly served eviction papers and then charged hundreds of dollars in fees to avoid removal, in a way that she and other residents of the Brooks Crossing apartments, a 224-unit complex south of Atlanta, say has become commonplace, the Washington Post reported. Management of Brooks Crossing has filed for eviction against its tenants more than any other landlord in the Atlanta area, a total of 427 times since April 2020, according to data from the Atlanta Regional Commission. That equates to 1.9 eviction notices per unit there between April 2020 and early December 2021.
For years, millions of Americans with medical emergencies could receive another nasty surprise: a bill from a doctor they did not choose and who did not accept their insurance. A law that goes into effect Saturday will make many such bills illegal, the New York Times reported. The change is the result of bipartisan legislation passed during the Trump administration and fine-tuned by the Biden administration. It is a major new consumer protection, covering nearly all emergency medical services, and most routine care. Even with insurance, emergency medical care can still be expensive, and patients with high deductible plans could still face large medical bills. But the law will eliminate the risk that an out-of-network doctor or hospital will send an extra bill. Currently, those bills add up to billions in costs for consumers each year. Behind the scenes, medical providers are still fighting with regulators over how they will be paid when they provide out-of-network care. But those disputes will not interfere with the law’s key consumer protections. If you are having a medical emergency and go to an urgent care center or emergency room, you can’t be charged more than the cost-sharing you are accustomed to for in-network services. This is where the law’s protections are the simplest and the most clear for people with health insurance. You will still be responsible for things like a deductible or a co-payment. But once patients make that normal payment, they should expect no more bills.
At least 20 guaranteed income pilots have launched in cities and counties across the U.S. since 2018, and more than 5,400 families and individuals have started receiving between $300 and $1,000 a month, according to a Bloomberg CityLab analysis. If all these programs complete their pilot periods as planned, they’ll have given out at least $35 million. These figures mark the close of a year of rapid growth for U.S. programs that give some residents direct cash payments, with a half-dozen other pilots promised to launch in cities next year. For many advocates, the concept of “basic income” has evolved from the more expansive UBI — a universal basic income to all residents — to more targeted guaranteed income programs that have the goal of narrowing inequality and dismantling poverty. As local programs sprouted up in cities across the U.S. in 2021, more than 60 mayors joined a coalition to advocate for the policy in their cities and nationally. Among Democrats, at least, it is no longer considered radical to propose giving low-income residents money with none of the traditional strings of welfare attached. And at the national level, Congress engaged in its own temporary mass cash distribution program, in the form of stimulus checks to the vast majority of Americans. Still, the local programs are small in scale and duration, and the nationwide push to expand them comes as the quest for a federal guaranteed income policy has not yet succeeded. The fate of the closest thing to it — the child tax credit — hangs in the balance. Since July, the U.S. government has sent eligible parents between $250 and $300 a month for each child they have. With Congress in a stalemate on the federal spending bill, the chance of extending the benefit, which is set to expire at the end of December, looks unlikely. And there is still significant debate among those on the left over whether the massive government investment it would require to take basic income national should be a higher priority than other social programs like universal health care or affordable housing.
President Joe Biden extended the pause on federal student-loan repayments by another three months as the U.S. faces a fresh wave of COVID-19 cases from the omicron variant, removing a near-term threat to millions of Americans’ finances, Bloomberg News reported. The move on Wednesday takes the moratorium on payments, interest and collections through May 1. Biden had initially extended the pause through September after he took office and then stretched the end to Jan. 31. The president had faced pressure from Democratic lawmakers to provide an extension. “We know that millions of student-loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments,” Biden said in a statement. He urged students to take steps to “prepare for payments to resume,” including looking at lower payments, exploring loan forgiveness and getting vaccinated and boosted. The latest extension will help 41 million people save $5 billion per month and it provides additional time for borrowers to plan for the resumption of payments and reduce the risk of delinquency and defaults, the U.S. Education Department said in a statement Wednesday.
The Biden administration is considering extending the moratorium on federal student loan payments just weeks before it is set to expire as the highly transmissible omicron variant of the coronavirus poses a new threat to the economy, NBCNews.com reported. A spokesperson for the Education Department said yesterday that the administration will announce "whether to extend the pause further" this week. Administration officials said in September that they did not intend to extend the pause beyond the Jan. 31 deadline, warning borrowers that they should be prepared to resume payments in February. For weeks the White House has maintained that President Joe Biden would stick to the timeline, even as Covid case numbers began to increase and as inflation concerns began to grip the country. White House press secretary Jen Psaki said earlier in the day that "the president has not made a decision yet." Debt relief advocates and some Democratic lawmakers have pressured Biden to extend the moratorium, especially because his Build Back Better plan — which the White House has argued would lower costs for Americans — has failed to pass the Senate.
Bank of America says the recent probe by a U.S. consumer watchdog into "buy now, pay later" (or BNPL) services is “potentially overblown,” YahooFinance.com reported. Analysts from BofA in a note out Monday reiterated their Buy rating for Affirm, one of the BNPL companies whose shares slid last week after the Consumer Financial Protection Bureau (CFPB) launched an inquiry into the growingly popular industry on Thursday. In the note, Bank of America said Affirm seems “reasonably well-positioned among BNPL players to withstand increased regulatory scrutiny,” indicating the firm, unlike its competitors in the sector, does not charge the late and reactivation fees flagged in the CFPB’s investigation. The split pay loans also highlighted by the agency as an area of concern comprise less of Affirm’s gross merchandise volume than the percentage for other providers, analysts emphasized. Other industry experts have argued that buy now, pay later instruments could be a better, cheaper alternative to credit cards — but need stronger regulation and consumer education. “Unfortunately, a growing body of research shows that a good percentage of users do not use BNPL wisely,” Sheila Bair, former chair of the FDIC and a Yahoo Finance contributor wrote recently. “Because decision-making comes at point-of-sale, users do not always take time to reflect on whether they can afford the repayment obligation they are incurring.”
Kansas officials continue working to speed up the distribution of aid money to help people avoid eviction, the Associated Press reported. More than 40% of the $169 million allocated to the state program has been given out so far, according to Ryan Vincent, executive director of the Kansas Housing Resources Corporation that is overseeing the aid program. Kansas, like most states, fell short of the federal goal of distributing at least 65% of the aid money by Nov. 15, according to the Topeka Capital-Journal. Federal reporting shows only 10 states and the District of Columbia met that target. But Vincent said Kansas has been making steady progress and roughly 32,000 Kansans have received help so far. The amount of aid money the state handed out has more than doubled since late August when it had given out just $31.9 million or about 17% of the total. And Kansas isn’t in danger of having the federal government reclaim some of the money because the state had distributed at least 30% of the aid by the November deadline.
