Month: July 2022

Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.Va., unveiled the outline of a new tax, climate and health care proposal on Wednesday.

The reconciliation bill — repackaged by Democrats as the Inflation Reduction Act of 2022 — would raise an estimated $739 billion over the next decade, with the revenues going toward initiatives designed to combat climate change and curb pharmaceutical prices, as well as efforts to reduce the nation’s $30 trillion debt. It includes about $433 billion in new spending, while roughly $300 billion of the new revenue raised would go toward paying down the nation’s deficit.

Here is a closer look at the tax increases and other items included in the latest legislation:

The legislation would impose a 15% minimum tax on the book income of corporations. The tax would hit the profit that corporations publicly report on their financial statements to shareholders. Democrats said the levy would affect around 200 of the country’s largest corporations — with profits exceeding $1 billion — that pay less than the current 21% rate for businesses.

Under the bill, the government would have the power to negotiate with drug makers in order to lower prices for certain prescription drugs. The proposal would cap what seniors on Medicare pay out of pocket for drugs each year at $2,000. If pharmaceutical companies raise the prices of their drugs more than the rate of inflation, pharmaceutical companies would be required to rebate Medicare.

The Internal Revenue Service would receive $80 billion in order to enhance tax enforcement by hiring more agents and introducing new technology to pursue tax dodgers. Democrats expect a beefed-up IRS to add an extra $124 billion in revenue by cracking down on tax evasion by wealthy individuals and corporations.

The plan would repeal the break for carried interest, which allows private equity fund managers to pay lower taxes on their earnings than they would for regular income. The loophole allowed for part of an investment manager’s income to be taxed as a capital gain — a 23.8% levy — rather than regular income.

The Federal Reserve on Wednesday raised its benchmark interest rate by a hefty three-quarters of a point for a second straight time in its most aggressive drive in more than three decades to tame high inflation.

The Fed’s move will raise its key rate, which affects many consumer and business loans, to a range of 2.25% to 2.5%, its highest level since 2018.

Speaking at a news conference after the Fed’s latest policy meeting, Chair Jerome Powell offered mixed signals about the central bank’s likely next moves. He stressed that the Fed remains committed to defeating chronically high inflation, while holding out the possibility that it may soon downshift to smaller rate hikes.

Powell also stood by a forecast Fed officials made last month that their benchmark rate will reach a range of 3.25% to 3.5 % by year’s end and roughly a half-percentage point more in 2023. That forecast, if it holds, would mean a slowdown in the Fed’s hikes. The central bank would reach its year-end target if it were to raise its key rate by a half-point when it meets in September and by a quarter-point at each of its meetings in November and December.

The United States became the world’s largest liquefied natural gas (LNG) exporter during the first half of 2022, according to data from CEDIGAZ. Compared with the second half of 2021, U.S. LNG exports increased by 12% in the first half of 2022, averaging 11.2 billion cubic feet per day (Bcf/d). U.S. LNG exports continued to grow for three reasons—increased LNG export capacity, increased international natural gas and LNG prices, and increased global demand, particularly in Europe.

Since the end of last year, countries in Europe have increasingly imported more LNG to compensate for lower pipeline imports from Russia and to fill historically low natural gas storage inventories. LNG imports in the EU and UK increased by 63% during the first half of 2022 to average 14.8 Bcf/d.

Most U.S. LNG exports went to the EU and the UK during the first five months of this year, accounting for 71%, or 8.2 Bcf/d, of the total U.S. LNG exports. Similar to 2021, the United States sent the most LNG to the EU and UK during the first half of the year, providing 47% of the 14.8 Bcf/d of Europe’s total LNG imports, followed by Qatar at 15%, and Russia at 14%, and four African countries combined at 17%.

A new report on Wisconsin employment shows the state is just about where it was before the coronavirus pandemic hit, but that the recovery has been uneven.

Total employment is down about 2.4%, or about 69,500 jobs from December 2019, according to the analysis from the non-partisan Wisconsin Policy Forum.

Employment in clothing stores decreased 20% statewide; gambling and recreation are down 15%; the food services industry declined 9%.

The report shows one sector that is thriving — transportation and warehousing, which grew 6.3% during the last two years.

“Since June 2015, more than 16,000 (warehouse jobs) have been added,” according to the report. “Of those, nearly 10,000 are in Kenosha and Milwaukee counties alone, and large increases in each of those counties occurred in the first few months following the opening of the (Amazon) fulfillment centers.”

The unemployment rate has hovered around 3% the last several months and businesses are still struggling to find workers for their vacant positions.

“Wisconsin’s aging population, low birth rate and lackluster net migration figures have led to a reduction in the working-age population,” according to the report. “The Wisconsin Department of Administration projects the state’s working-age population will remain roughly the same size, if not decline slightly, until at least 2040.”

On Wednesday, the Mortgage Bankers Association (MBA) released its weekly mortgage applications survey that found the Market Composite Index, which measures the volume of loan applications, decreased by 6.3% last week when adjusted to a seasonal basis.

“Mortgage applications declined for the third week in a row, reaching the lowest level since 2000. Similarly, with most mortgage rates more than two percentage points higher than a year ago, demand for refinances continues to plummet, with MBA’s refinance index also falling to a 22-year low,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

“Purchase activity declined for both conventional and government loans, as the weakening economic outlook, high inflation, and persistent affordability challenges are impacting buyer demand. The decline in recent purchase applications aligns with slower homebuilding activity due to reduced buyer traffic and ongoing building material shortages and higher costs.”

The survey covered over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.

Wisconsin companies will pay 8.47 percent less in worker’s compensation insurance rates starting October 1, 2022, giving a boost to businesses​ around the state, the Wisconsin Department of Workforce Development reported.

The 2022 rate decrease, approved by the Wisconsin Commissioner of Insurance, marks the seventh year in a row worker’s compensation insurance premiums have declined in Wisconsin. The latest reduction in premiums is expected to save Wisconsin employers some $146 million.

“Strong partnerships among employers, workers, training providers, and other stakeholders are helping to keep employees safe and healthy on the job,” said DWD Secretary-designee Amy Pechacek. “Wisconsin’s proactive, collaborative approach is delivering real benefits for workers and their families while supporting the competitiveness of employers statewide.”

Worker’s compensation insurance rates are adjusted annually by a committee of actuaries from members of the Wisconsin Compensation Rating Bureau. This independent body examines and selects the methodology and trends that produce the proposed rate adjustment, which is then reviewed and approved by the Wisconsin Commissioner of Insurance. While the overall rate level will decrease by 8.47 percent, the impact to policyholders will vary based on specific circumstances.

Wisconsin’s housing market is still being affected by lack of supply, according to a report from the Wisconsin Realtors Association.

Statewide median prices have gone up 10 percent through six months this year compared to the same timeframe in 2021.

However, overall listings during the month of June were down 14 percent compared to June 2021.

WRA President and CEO Mike Theo is anticipating that the current high demand is going to settle down by the end of the year.

“Without more inventory or a slowing down of demand to bring that equilibrium, we’re still going to see this upward pressure on prices and that means we’re going to start pricing more and more families out of the market,” Theo said.

U.S. retail sales rose 1% in June, from a revised decline of 0.1 % in May, the Commerce Department said Friday.  The retail sales report covers about a third of overall consumer spending and doesn’t include services, such as haircuts, hotel stays and plane tickets.

The figures aren’t adjusted for inflation and so largely reflect higher prices, particularly for gas.

Kathy Bostjancic, chief U.S. economist at Oxford Economics, said that excluding inflation, retail sales still rose about 0.3% in June, up from a contraction of 0.4% in May. She expects the economy to grow at a slim 0.5% annual rate in the April-June quarter, after shrinking in the first three months of the year.

The report showed consumers’ ongoing appetite for non-essentials like gadgets and furniture. In fact, sales at furniture stores rose 1.4%, while consumer electronics stores rose 0.4%. Online sales showed resurgence, posting a 2.2% increase. Business at restaurants was up 1%. But department stores took a hit, posting a 2.6% decline.

The Federal Communications Commission is fining the company responsible for about 10 million robocalls that directed customers to call “ScammerBlaster” — which scammed customers.

The commissioners voted unanimously to fine the company $116 million at their monthly meeting Thursday.

“I too can’t believe we are dealing with a company called ScammerBlaster,” said Chairwoman Jessica Rosenworcel during the meeting. “I detest robocalls and I believe that if we want to stop them we need both defense and offense.”

The commission’s Enforcement Bureau found Thomas Dorsher and his company, ChariTel Inc., made nearly 10 million scam calls to businesses between January and March 2021 with pre-recorded messages referencing ScammerBlaster, according to the commission.

This fine comes as the commission implemented a rule earlier this year to have phone companies implement technology to stop robocalls. And the commission sent cease and desist letters to companies last week to stop carrying calls from known scammers.

And Rosenworcel hopes the commission can get greater enforcement power to crack down further, she said.

“We have issued many fines just like this one. But after we do, we have to hand them over to our colleagues at the Justice Department and hope for further action. I like hope. But instead of wishing for the best, I would like the certainty of this agency being able to go to court directly and collect fines against these bad actors — each and every one of them,” Rosenworcel said. “This will take a change in the law and we need Congress to fix that. But I think this is a robocall change worth fighting for.”

The Labor Department said Thursday that its producer price index, which measures inflation at the wholesale level before it reaches consumers, climbed 11.3% in June from the previous year. On a monthly basis, prices grew by 1.1%.

Core inflation at the wholesale level, which excludes the more volatile measurements of food and energy, increased 0.3% for the month, following a 0.4% increase in April and May. Over the past 12 months, core prices climbed 6.4%. Economists lauded the potential slowdown in core inflation increases, suggesting it could be a sign that consumer prices are beginning to moderate.

“It’s clear that food and energy are driving PPI higher, as was the case in yesterday’s inflation print,” said Peter Essele, the head of portfolio management at Commonwealth Financial Network. “When removing these volatile components, PPI appears to have peaked and is starting to roll over, a tell-tale sign that the economy is shifting into late-cycle territory.”

Overall, prices for goods jumped 2.4% last month, the sixth consecutive rise and the biggest contributor to the headline inflation figure. Nearly 90% of the June increase in services stems from a 10% leap in prices for final demand energy, including a stunning 18.% increase in gasoline prices, according to the Labor Department.

The services index, meanwhile, advanced 0.4% in June, with increases in transportation and warehousing services accounting for about two-thirds of the gain.