Federal Reserve set to make interest rate decision days after election of Trump
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(WASHINGTON) — The Federal Reserve on Thursday will announce its latest decision on the direction of interest rates, setting the path for borrowing costs just two days after the victory of President-Elect Donald Trump.
The Fed cut its benchmark interest rate a half of a percentage point in September, dialing back its yearslong fight against inflation and delivering relief for borrowers saddled with high costs.
The Federal Open Market Committee (FOMC), a policymaking body at the Fed, has forecast further interest rate cuts.
By the end of 2024, interest rates will fall another half of a percentage point from their current level of between 4.75% and 5%, according to FOMC projections. Interest rates will drop another percentage point over the course of 2025, the projections further indicated.
The central bank is widely expected to cut interest rates by another quarter of a percentage point when it meets on Thursday, according to the CME FedWatch Tool, a measure of market sentiment.
In recent months, the U.S. has inched closer to a “soft landing,” in which inflation returns to normal and the economy averts a recession.
Government data released last week showed robust economic growth over a recent three-month period, alongside a continued cooldown of inflation.
U.S. hiring slowed in October, but fallout from hurricanes and labor strikes likely caused an undercount of the nation’s workers, U.S. Bureau of Labor Statistics data on Friday showed.
Since 2021, the Fed has sought to rein in inflation with elevated interest rates. Even after the Federal Reserve cut its benchmark interest in September, it still stands at a historically high level.
Inflation has cooled dramatically from a peak of about 9% in 2022, hovering right near the Federal Reserve’s target rate of 2%.
The trajectory of inflation could shift in the coming months. Trump’s proposals of heightened tariffs and the mass deportation of undocumented immigrants are widely expected to raise consumer prices, experts previously told ABC News.
To be sure, the Fed says it bases its decisions on economic conditions and operates as an independent government body.
When asked previously about the 2024 election at a press conference in Washington, D.C., in December, Powell said, “We don’t think about politics.”
The election of Trump appears to have delivered a boost for the stock market. The U.S. stock market soared at the open of trading on Wednesday, just hours after Trump declared victory.
The Dow Jones Industrial Average climbed more than 1,300 points, amounting to a nearly 3% rise in the index. The S&P 500 and the tech-heavy Nasdaq each jumped more than 2%.
Shares of Tesla, the electric vehicle company headed by Trump ally Elon Musk, spiked about 14.5% in early trading on Wednesday.
The Michael Kors Store on Rodeo Drive on Feb. 23, 2017 in Beverly Hills, Calif. (Fg/bauer-griffin/GC Images via Getty Images, FILE)
(NEW YORK) — The Federal Trade Commission is asking a federal judge in New York to block the $8.5 billion merger of Tapestry, the company behind Coach, Kate Spade, and Capri, which controls Michael Kors.
In April, the FTC sued to block the sale, arguing that these brands dominate what’s known as the “accessible luxury” market and that if they combined, consumers would suffer by paying higher prices.
“This has to be the first time the focus of a federal court hearing turned to a $279 Kate Spade tote described as ‘colorful, joyful, feminine, green and white seen on Emily in Paris,” ABC News senior investigative reporter and correspondent Aaron Katersky said on Good Morning America Tuesday.
Tapestry argues the FTC is ignoring the reality of a marketplace, in which consumers have a lot of choices, suggesting it takes a mere stroll through Bloomingdale’s or Macy’s to see Gucci, Kors and Calvin Klein bags fighting for attention.
Michael Kors himself testified last month during a hearing, telling the judge there’s already plenty of competition for handbags, noting that he learned about one brand when he saw a photo of pop superstar Taylor Swift wearing an Aupen bag similar to those made by Kate Spade.
Kors also testified his handbags have “reached a point of brand fatigue” and a lawyer arguing in favor of the merger said it would revitalize the Michael Kors brand, so consumers have yet another choice. The goal, he said, is to sell more handbags to consumers.
The judge took these arguments under advisement and could rule at any time.
(NEW YORK) — For the first time in its history, Instagram on Tuesday announced the launch of accounts designed specifically for teenage users with built-in privacy protections.
The new accounts, called “Teen Accounts,” will be automatic for all Instagram users under the age of 18, both for teens already using the app and for those signing up.
By default, Instagram users younger than 16 will need a parent’s permission to change their account settings.
The changes — expected to impact tens of millions of users — were announced by Instagram head Adam Mosseri in a live interview on ABC News’ Good Morning America.
“They’re an automatic set of protections for teens that try to proactively address the top concerns that we’ve heard from parents about teens online,” Mosseri said on GMA. “Things like who can contact them, what content they see and how much time they spend on their device … all without requiring any involvement from the parent.”
Mosseri said the rollout of Teen Accounts starts Tuesday with new users signing up for the app, while existing teen users will see their accounts switch to the new Teen Accounts model within 60 days.
Among the changes put in place by Instagram include a new privacy setting that, by default, places all teen users in private accounts. In order to switch to a public account, teens under age 16 will need a parent’s permission.
Under the private account setting, teens will need to accept new followers and only people whom they accept as followers can see their content and interact with them.
In addition, teen users will now automatically only be able to message with people they follow, or are already connected to, and parents will have a new tool in their settings that allows them to see with whom their teen has recently been messaging.
With the new accounts, teens will have the power to choose the age-appropriate topics they want to see more of on Instagram, like sports or art, and parents will also be able to see the topics their teens choose.
In order to limit the amount of time spent on Instagram, all Teen Accounts will be placed in “sleep mode” between 10 p.m. and 7 a.m., while parents can also adjust their child’s time settings — including limiting access completely overnight — in the parental supervision tool.
Another change for Teen Accounts is that they will automatically be placed in more restrictive content settings, which will limit the content they see in search functions like Reels or Explore from accounts they don’t follow, according to Instagram.
Antigone Davis, vice president and global head of safety for Meta, the parent company of Instagram, told GMA the company is also implementing new ways to verify users’ ages.
“We are building technology to try to identify if you’ve lied about your age and then move you into those stricter settings,” Davis said. “This is a challenging area for industry, which is why, on top of building that technology that will try to identify age liars and put them into those protective settings, we also will have moments where, if we get a strong signal, we will ask you to age verify.”
Davis said that parents will be able to monitor their teens’ account and adjust their settings from their own Instagram accounts.
“The idea is to really make it simpler, so they [parents] have their own center that they can go and look and see what the privacy setting is for their teen,” she said.
Changes spurred by parents and teens
The changes for teen Instagram users come amid mounting evidence showing the dangers of social media for young users.
Social media use is linked with symptoms of depression and anxiety, body image issues, and lower life satisfaction for some teens and adolescents, research shows. Heavy social media use around the time adolescents go through puberty is linked with lower life satisfaction one year later, one large study found.
U.S. Surgeon General Dr. Vivek Murthy, who previously issued an advisory highlighting a crisis in youth mental health, has said he believes being on social media “does a disservice” to kids early in their teen years. Noting the crisis among kids, the American Psychological Association last year issued the first guidance of its kind to help teens use social media safely.
In January, while testifying at a Senate hearing, Mark Zuckerberg, the CEO of Meta, publicly apologized to parents, caregivers and loved ones of young people who they say were harmed due to social media use, telling them, “It’s terrible. No one should have to go through the things that your families have suffered.”
In his apology, Zuckerberg also emphasized Meta’s efforts on safety, adding, “This is why we invest so much and are going to continue doing industry-leading efforts to make sure that no one has to go through the things your families have had to suffer.”
Davis said the newly-announced changes to Instagram for teen users came after conversations with parents and teenagers around the world.
She said the company focused on making it simpler for parents to know how, when, and with whom their teens are engaging on Instagram.
“We’ve had these incremental changes along the way as we’ve been working back and forth with parents and experts,” Davis said of previous safety changes for teen users. “What we’re really trying to do here is standardize a lot of this approach.”
She added of the new features, “There are these broad protections that we have in place, and if your teen wants to change them, and they’re under the age of 16, they have to come to you for permission, they’ve got to invite you in. It’s just a different way of thinking about things.”
Parents and caregivers as well as teens can learn more about Teen Accounts by visiting Instagram.com/teenaccounts.
Downed trees on a home in the aftermath of Hurricane Helene, Sept.r 29, 2024, in Rutherfordton, N.C. (Sean Rayford/Getty Images)
(NEW YORK) — Hurricane Helene flooded properties and devastated buildings in recent days as it tore across a vast stretch from Florida to Tennessee.
Over the coming days and weeks, households will start to rebuild — and the costs will be enormous. Some homeowners will struggle to afford it.
The devastation arrives after years of skyrocketing prices for home and flood insurance that have left some households without coverage and others choosing low-cost plans with weaker policies, experts told ABC News. The increase owes in part to a surge in costs for building materials as well as the risk of more frequent or intense storms posed by climate change, they said.
Homeowners at properties damaged by Helene are likely to see their insurance costs rise even further, imposing financial strain for years to come, the experts added.
“There’s no question that the burden on households’ budgets has increased in recent years,” Benjamin Keys, a professor of real estate at the University of Pennsylvania’s Wharton School, told ABC News. “It has gotten substantially more expensive to live in harm’s way.”
Helene, which made landfall in Florida’s Big Bend region Thursday night as a Category 4 hurricane, was the strongest hurricane to make landfall in the Big Bend on record.
More than 100 people have been killed by Helene.
Helene dumped more than 30 inches of rain on North Carolina, producing the biggest local flooding in recorded history. The path of the storm’s devastation has spanned more than 600 miles.
Homeowners are set to draw on insurance policies that have become much more expensive in recent years.
In 2023, the nationwide average premium for owner-occupied homeowners insurance climbed about 11%, rising three times more than the overall inflation rate, S&P Global found in January.
Beginning a few years earlier, insurance prices soared even higher for homeowners in the region impacted by Helene. In Florida, the average home insurance price jumped a staggering 43% from January 2018 to December 2023, S&P Global said. Over that same period, the average insurance price for homeowners increased about 36% in North Carolina.
Rising prices leave customers less likely to purchase strong plans with ample benefits in the event of a disaster, Shan Ge, a professor at New York University who studies insurance and climate change, told ABC News.
“With the costs going up, people are getting less insurance and that’s going to be a problem when a disaster like this hits,” Ge said. “The recovery will be slower and the financial effects will be bigger.”
Homeowners insurance sometimes includes separate hurricane insurance, which typically involves an additional deductible paid by the consumer for damage incurred by a hurricane.
Neither homeowners insurance nor hurricane insurance covers flood damage, however. Instead, consumers must purchase flood insurance, but a far lower share of homeowners enrolls in flood coverage than home insurance.
The damage caused by Helene could expose the difficulties caused by that relatively low enrollment rate in flood insurance, Jeff Waters, an analyst at Moody’s Analytics subsidiary RMS, told ABC News.
“With an event like Helene where we are seeing all of the water, there’s likely to be more uninsured losses happening due to water because you don’t have as much take up there as you would on the hurricane policy side of things,” Waters said.
The price of flood insurance has also increased in recent years, and it’s expected to rise at a faster rate for some households going forward as the National Flood Insurance Program puts in place what it has called “Risk Rating 2.0.”
The new approach will set the price of flood insurance based on a calculation of each home’s risk of flooding, altering a previous policy that examined whether a home belonged to a general at-risk area.
Some homes damaged by Helene will face a price crunch as they weather an increase in flood insurance costs, alongside the anticipated increase in homeowners insurance that typically follows a hurricane, some experts said.
“It’s pretty clear in the aftermath of these disasters that homeowners insurance premiums rise a lot,” Ishita Sen, a professor of finance at Harvard Business School who studies home insurance rates, told ABC News.
The prospect of higher insurance costs could prompt difficult choices for homeowners and their communities, said Keys.
“This higher cost of living in disaster-prone areas is hitting households’ pocket books in ways that we haven’t seen,” Keys said. “Eventually it’ll induce substantial chances in these communities, whether that’s deciding where to live or how to build.”
