WELCOME BACK TO THE FIRST WEEK OF SPRING
Welcome back to a new edition of The Weekender… where the U.S. Federal Reserve is deciding the best option in its fight against inflation. Also, the extraordinary costs of senior living are causing challenges for seniors and their families. Plus, a three-day staff strike occurred in Los Angeles, disrupting classes for almost 500,000 students. There’s much to discuss and more to learn below in the latest edition of The Weekender.
P.S. Women’s History Month, we would like to take a moment to recognize our women staff, clients, family, and friends, including our very own President, Co-Founder, and CEO, Christine Stineman. With 75% of our firm made up of women — leaders and developing leaders — we are a proud certified woman-owned business and equal opportunity employer. Learn more about our company and team here.
The Federal Reserve Walks the Line Between Inflation and Recession
On Wednesday, the Federal Reserve doubled down on its fight against inflation by raising interest rates by another quarter percentage point. This move came after Silicon Valley Bank’s (SVB) collapse, which is expected to reduce bank lending and weaken inflation’s economic impact. Federal Reserve Chair Jerome Powell said the fall of SVB is “the equivalent of a rate hike and perhaps more than that,” based on how the Federal Reserve forecasts its broader economic implications. According to Reuters, updated projections show 10 out of the 18 Fed policymakers also see another rate hike by the end of 2023 as well. While the Fed remains resolute in seeing the U.S. banking system’s strength, it released a statement on the recent banking crisis, saying it’s “likely to result in tighter credit conditions for households and businesses.” Although the raised rates and constricted bank lending are expected to reduce inflation concerns, the Fed has been upfront in declaring that the dollar’s devaluation has not yet begun to recede. USA Today reports that the Fed’s actions to reduce inflation, paired with the downfall of SVB, may lead to a national recession (a looming threat for about a year already). Despite mixed expectations, one thing is certain: the Federal Reserve is stuck between a rock and a hard place. Meanwhile, American families continue to feel the impact. CBS News found food insecurity among American adults rose 5% compared to last year, caused by a 20% increase in grocery costs and a 13% rent increase over two years. Insider reported that the annual bonuses (which 63.4 million American employees have access to) are worth $25.6 billion less due to inflation, drastically reducing employees’ spending power. Americans are feeling the heat on their feet and doing everything in their power to push back, including lying during job interviews. A recent study found that 57% of candidates are prepared to lie in the course of getting hired due to the desperation they feel caused by rising inflation and living costs. At this time, there is no way to know how the Fed’s actions to maneuver between rising inflation and an economic recession will play out. Read more at Bloomberg.
Senior Care Expenses are Skyrocketing
Growing older is tough enough without the growing list of expenses that comes along with it. A new wave of Americans is reaching retirement age and needs to prepare for the high costs of specialized care. Baby Boomers pose an unprecedented challenge to the U.S. economy, as individual families are up against mounting financial burdens with uncertainty from policymakers in Washington. Middle-class Americans are finding they can’t afford the high care costs but also don’t qualify for federal safety-net insurance. An estimated 18 million middle-income Boomers will require care for moderate to severe needs but won’t be able to pay for it. Even if you do have a plan for getting by in the Golden Years, there are few good options. Home care aides are in short supply. Nursing homes cater primarily to those with more complex needs. Assisted-living facilities provide an independent, homelike environment for seniors but start at $60,000 a year on average, and costs go up as residents age and need more care. According to a National Council on Aging and UMass Boston report, long-term care costs represent “the single largest financial risk” facing seniors and their families. While people prefer aging at home, the median costs are more than $56,000 annually. Nursing homes provide the most intensive care and average $120,000 a year unless you qualify for Medicaid, which only kicks in once a person’s resources are depleted. Medicare is also in the mix regarding long-term care funds, but it is misleading. More than half of seniors believe Medicare covers long-term care under their health plans, but that’s not the case for most people. Medicare typically does not pay for ongoing long-term care services. One potential way to cover long-term care is with a reverse mortgage. A reverse mortgage is a type of home equity loan that allows the mortgage holder to receive cash against the value of a home without selling it, requiring the person receiving the loan to receive care at home. Of course, one must own a home, which is not the case for many. Other tools that can assist with paying for long-term care include:
- A long-term care insurance policy.
- A deferred long-term care annuity.
- A health savings account.
- A Medicare Advantage plan.
Read more at The Washington Post.
Staffers on Strike
A three-day strike occurred at the second-largest school district in the United States from Tuesday to Thursday this week. The strike by 30,000 Los Angeles education support staff refused to cross their picket line and was backed by the Service Employees International Union Local 99. Education, meals, counseling, and other social services were disrupted for 420,000 students and their parents. The union, which represents non-teaching jobs like bus drivers, cafeteria workers, and special education workers, said 96% of its members had authorized the strike and demanded a 30% salary increase plus a further $2 per hour for the lowest-paid workers. The 35,000-member United Teachers Los Angeles also walked off the job to support their fellow staffers. They argue they are working to bring educational workers out of poverty, reduce class sizes, and ensure each school is fully staffed. Los Angeles Unified Superintendent Alberto Carvalho offered a 23% raise plus a 3% bonus with “additional resources to put on the table.” The strike forced families to scramble, frustrating many parents as they had to deal with the lengthy school closures prompted by the COVID-19 pandemic. The school district attempted to provide food services for hungry students that count on school for hot meals and advised parents to identify multiple alternatives in case some meal stations were overwhelmed. Other schools also supervised students during the strike, including 18 recreation centers offering games, open gyms, and computer labs. Read more at Reuters.
Let’s Make TikTok #1 Today
TikTok is under attack in the United States while the country battles with China for dual tech leadership. Persistent claims about the app have been made that it threatens national security and uses privacy or is possibly used to promote pro-Beijing propaganda and misinformation. However, with 150 million Americans using the app, the TikTok CEO, Shou Chew, in testimony before the House Energy and Commerce Committee on Thursday, sought to convince Congress that the app is not a security threat. Lawmakers had their first opportunity to ask Chew questions, under oath, about TikTok’s relationship with its Chinese owner, ByteDnce, and ask about the app’s handling of sensitive U.S. user data and the risks it poses to teens and children. U.S. officials are concerned that the company could be legally obligated to turn over U.S. users’ data if Chinese authorities demanded it. Several bills are under consideration in Congress that would ban TikTok, typically by banning U.S. companies from doing business with it. At the same time, some would also allow the government to ban or restrict other apps with ties to hostile foreign governments. In his testimony, Chew pledged to firewall U.S. user data from foreign access and shelf the platform from government interference. He said the platform would work to ensure a safe environment for young people. For example, accounts registered to teens under 16 are private by default, and they can’t send direct messages. Their content will be ineligible for a recommendation. “TikTok will remain a platform for free expression and will not be manipulated by any government,” Chew said in his prepared remarks. Opponents of a ban claim TikTok could hurt creators, businesses, and the American economy. On Wednesday, TikTok helped organize a news conference at the Capitol featuring dozens of TikTok personalities who said banning the apps would suppress Americans’ speech. The company has also recently expanded its lobbying and public-relations efforts by running ads at Washinton subway stops with the company’s commitment to user safety. For now, putting Tik Tok in the hot seat is one of the few things that seems to unify Republicans and Democrats in Washington. Read more at The New York Times.
Dirty Little Secrets
Classified documents are currently a hot topic in the United States. Former President Donald Trump, former Vice President Mike Pence, and President Joe Biden all have classified document cases. The FBI found 184 documents in Trump’s Mar-a-Lago home this summer. A “small number” of President Biden’s vice presidency documents were found at the Penn Biden Center and his Wilmington, Delaware, residence. Pence engaged outside counsel to review records at his Indiana home, and they also found a “small number” of documents that could contain classified information. Trump and President Biden are under investigation, and Pence is under review.
What is considered a classified document? The modern classification system was created in 1951 in an executive order issued by Harry Truman. That order established the categories used to keep information secret and the rules and practices for classifying and securing information. There are just three main classifications, each defined by the degree of “damage” the material could cause:
- “Top Secret” information “could be expected to cause exceptionally grave damage to national security.”
- “Secret” information “could be expected to cause serious damage to national security.”
- “Confidential” information “could be expected to cause damage to the national security.”
All kinds of information and materials could meet one of the above standards, but most classified material comes from the intelligence community (FBI, CIA, NSA). Others come from the Department of Defense, the State Department, and the White House itself. Any documents or electronic files containing classified information should be marked, and only officials with proper security clearance can see them. Only some people in government have the power to classify information. Individuals with “original classification authority,” a power granted to top-level officials in every agency and branch of government, can see these documents. Those with that authority can then delegate that power to others in their agency. There are more than 1.3 million Americans with “top secret” clearances. But the government does not track the existence of every classified document because there are so many being created every year, meaning there is a constant risk of them being ‘misplaced.’ Since the system of reviewing classified documents is a bit out of control, discussion of tighter regulation of the process and the documents themselves is underway — including a fresh look at whether more classified documents can be made public for Americans to see. Read more at the American Historical Association.
Russia’s Offensive in Ukraine Continues to Heat Up as a Nuclear Arms Race Returns
Chinese President Xi Jinping and Russian President Vladimir Putin concluded three days of talks amid growing geopolitical tensions over the Russian offensive in Ukraine and North Korean ballistic missile testing. While the two leaders exited the meetings with an eye toward “shaping a new world order,” President Xi did not commit to supporting Russia’s efforts in Ukraine, according to NBC News. The United States, holding its breath for the outcome of the discussions, had previously ruled out military interaction to react to a potential Chinese engagement in the Ukrainian conflict. Rather, the Biden Administration has threatened implementing economic sanctions on the Chinese companies and financial institutions supporting Russia. According to Fox News, China claimed to remain an impartial and unaffiliated party in the Russian conflict in Ukraine, and the conclusion of the meetings seems to re-affirms their public position. The United States claims the Chinese position is anything but agnostic, as U.S. National Security Council spokesman John Kirby said China was merely reiterating Russian talking points about the pathways to peace. The geopolitical tension is palpable, as the United States, Russia, and China recently argued in response to North Korea launching dozens of ballistic missiles during a meeting at the United Nations. During the altercation, Chinese and Russian representatives blamed military drills conducted by the United States and South Korea as the igniting force behind the test launches. Nuclear capabilities remain a pertinent threat even without North Korea entering the equation. According to the Wall Street Journal, President Putin informed the international community that Moscow would suspend its application of the New START agreement, one of the remaining nuclear arms-control treaties. Proliferation is once again a main point of discussion as Iran recently began production of near-weapons-grade enriched uranium, and China, free from arms treaties, now has more land-based intercontinental ballistic missile launchers than the United States. President Putin has repeatedly suggested he is willing to utilize nuclear warheads to end his war in Ukraine, creating pressure for non-nuclear states to secure warheads for themselves as protection. Read more at The Wall Street Journal.
- $17 billion: The amount of Credit Suisse’s additional tier-one bonds that ended up being worth $0. The value of the bonds had been completely wiped out in the deal.
- 6: The number of years Finland has won world’s happiest country. Nordic countries made up the top three, with Denmark in second place and Iceland in third.
- 2: The number of NCAA Men’s March Madness Sweet 16’s (including this year) without the “blue bloods” (Kansas, Kentucky, Duke, and North Carolina) since 1980.
- $17.3 billion: The dollar amount that the NCAA March Madness Basketball Tournament will cost companies in lost productivity as workers tune in to the games.
- 9,000: The number of staffers Amazon will be laying off to cut costs. Amazon recently finished letting go of 18,000 employees, or 5% of its workforce. The layoffs will take place over the next few weeks.
- 104,000: The number of people currently waiting for an organ transplant, with 17 people dying per day while waiting. The federal government outlined a plan to revamp the nation’s organ transplant system on Wednesday.
- 5,000: The number of miles wide of a gargantuan mass of seaweed that is headed for the shores of Florida and other coastlines throughout the Gulf of Mexico. This seaweed variety, called sargassum, could be the largest on record and could potentially soil Florida’s coastline.
- 3: The number of athletes (tying the record) who completed in this year’s Barkley Marathons, a grueling and near-impossible annual race held in the mountains of Tennessee. The race consists of over three sleepless days and nights, five loops of around 20 miles each, with a total elevation gain of around 63,000 feet.
Gallup’s latest World Affairs survey finds that adult Americans view cyberterrorism and the accompanying disruption as the most critical threat to U.S. vital interests. https://t.co/O6QaJXbBYc
— GallupNews (@GallupNews) March 22, 2023