New federal rule will remove medical debt from credit reports
(WASHINGTON) — In a major change that could affect millions of Americans’ credit scores, the Consumer Financial Protection Bureau on Tuesday finalized a rule to remove medical debt from consumer credit reports.
The rule would erase an estimated $49 billion in unpaid medical bills from the credit reports of roughly 15 million Americans, the CFPB said.
That could help boost those borrowers’ credit scores by an average of 20 points, helping them qualify for mortgages and other loans.
“No one should be denied economic opportunity because they got sick or experienced a medical emergency,” Vice President Kamala Harris said in a statement touting the new rule.
She announced the proposal for the rule last June alongside CFPB Director Rohit Chopra.
“This will be life-changing for millions of families, making it easier for them to be approved for a car loan, a home loan or a small-business loan,” Harris added.
Major credit reporting agencies have already announced voluntary steps to remove medical debt from their reports.
The final rule is set to take effect in March – but that timeline could be delayed by legal challenges.
Debt collection industry groups like the Association of Credit and Collection Professionals have opposed the change, saying it would result in “reduced consequences for not paying your bills, which in turn will reduce access to credit and health care for those that need it most.”
(WASHINGTON) — Former President Donald Trump has proposed tariffs as the solution for a host of perceived ills: the decline of U.S. manufacturing, the arrival of undocumented immigrants and the costs of childcare, among others.
“To me, the most beautiful word in the dictionary is ‘tariff,'” Trump said this week during an appearance at the Economic Club of Chicago.
On the campaign trail, Trump has rarely mentioned the threat of a potential trade war, in which foreign nations could respond to tariffs by slapping U.S. imports with taxes of their own.
Economists who spoke to ABC News said Trump’s tariff proposals would all but certainly trigger a global trade war, diminishing sales for U.S. exporters, which account for about 10% of the nation’s economy. The disruption would likely trigger job cuts and slow the nation’s economic performance, economists added.
On the other hand, the move would bring more of the supply chain back to U.S. soil, economists said, and it would likely spur growth and hiring at some firms by protecting them from foreign competition. But the same experts cautioned that such benefits would be far outweighed by the consequences.
“The essence of a trade war is you impose tariffs and other countries respond by putting high tariffs on your exports. It’s tit for tat,” Douglas Irwin, a professor of economics at Dartmouth College who specializes in the history of U.S. trade policy, told ABC News.
“Tariffs are easy to impose but hard to remove,” Irwin added.
In response to ABC News’ request for comment, the Trump campaign pointed to a series of statements about tariffs made by Trump and his allies, including remarks from Trump Campaign Senior Advisor Brian Hughes.
“Time warp alert! Just like 2016, Wall Street and so-called expert forecasts said that Trump policies would result in lower growth and higher inflation, the media took these forecasts at face value, and the record was never corrected when actual growth and job gains widely outperformed these opinions,” Hughes said.
“These Wall Street elites would be wise to review the record and acknowledge the shortcomings of their past work if they’d like their new forecasts to be seen as credible,” he added.
On the campaign trail, Trump has promised a sharp escalation of tariffs during his first term. He has proposed tariffs of between 60% and 100% on Chinese goods.
Envisioning a far-reaching policy, Trump has proposed a tax of between 10% and 20% on all imported products. On Tuesday, he told the audience at the Economic Club of Chicago that such a tariff could reach as high as 50%.
Economists widely expect that tariffs of this magnitude would increase prices paid by U.S. shoppers, since importers typically pass along the cost of higher taxes to consumers. Trump’s tariffs would cost the typical U.S. household about $2,600 per year, according to an estimate from the Peterson Institute for International Economics.
Meanwhile, there could be a second wave of consequences if foreign countries were to impose retaliatory tariffs, economists said.
“You might see a dramatic decrease in U.S. exports, which could then have employment effects for people working in those sectors,” Kara Reynolds, an economist at American University, told ABC News. She pointed to the manufacturing and farming as industries especially vulnerable to a trade war.
For evidence of such an outcome, one need look no further than Trump’s first term, during which a slew of tariffs often induced a retaliatory response.
Tariffs imposed during Trump’s first term often induced retaliatory tariffs. The European Union and Canada responded to tariffs on steel and aluminum with tariffs of their own. Trump slapped tariffs on about $360 billion worth of Chinese goods, but China responded with tariffs on tens of billions of dollars worth of U.S exports.
Chinese tariffs on U.S. soybean exports caused a steep decline in sales to Chinese customers, dropping exports from $12.3 billion in 2017 to $3.1 billion in 2018, according to the Georgetown University Journal of International Affairs. In response, the Trump administration paid billions of dollars in direct aid to farmers to make up for the losses.
“He felt obligated to bail out the farmers,” Robert Lawrence, a professor of trade and investment at Harvard University’s Kennedy School of Government, told ABC News. “Now, we’re talking about potential actions on a much grander scale.”
Alongside retaliatory tariffs, many countries would seek suppliers in places where such tariffs are not on the books, Lawrence added.
“Trump is likely to isolate the U.S. and drive other countries to do business with each other,” Lawrence said. “This would have a very adverse effect.”
On the campaign trail, Trump has sharply disagreed with such fears, saying large-scale tariffs would rejuvenate U.S. manufacturing and propel economic growth.
At the Chicago Economic Club on Tuesday, Trump said tariffs would force companies to locate factories in the U.S. as a way of circumventing the tariffs, which in turn would boost domestic production and employment.
“We’re going to have thousands of companies coming into this country,” Trump said. “We’re going to grow it like it’s never grown before, and we’re going to protect them when they come in because we’re not going to have somebody undercut them.”
Economists said higher tariffs could expand certain areas of U.S. manufacturing that face stiff competition from abroad, but the policy also risks raising input costs and slowing output at U.S. producers that import their raw materials.
Trump’s tariffs decreased U.S. employment by 166,000 jobs, according to a study from the nonprofit Tax Foundation, which cited an increase in import costs for U.S. employers. A separate study from the U.S.-China Business Council estimated up to nearly 250,000 lost jobs as a result of the tariffs.
“It certainly would make the U.S. more self-reliant, but it would come with far greater costs,” Lawrence said.
(NEW YORK) — President-elect Donald Trump sharply criticized the rising price of groceries throughout his campaign, even delivering an address outside his New Jersey home in August alongside a table covered with cereal boxes, coffee grounds and ketchup.
A wave of consumer discontent appears to have helped lift him back into the Oval Office, but Trump now faces the task of how to ease voters’ frustration.
Food inflation soared to a peak of more than 10% in 2022, but price increases have slowed to about 2%, U.S. Bureau of Labor Statistics data shows.
Still, the yearslong bout of rapid inflation has sent food prices soaring more than 25% since President Joe Biden took office.
Typically, prices do not fall across the board unless the economy slows or even tips into recession, which would reduce consumer demand but also impose economic hardship, some economists told ABC News.
Still, Trump could enact policies that may slow the rise of grocery prices, or even lower the cost of some household staples, economists added.
“Prices on different items absolutely could come down,” Michael Faulkender, a professor of finance at the University of Maryland’s Robert H. Smith School of Business, told ABC News.
In response to ABC News’ request for comment, the Trump transition team said in a statement that Trump intends to fulfill the commitments he made during the campaign. But the transition team did not specifically address the issue of grocery prices.
“The American people re-elected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail. He will deliver.” Karoline Leavitt, a spokesperson for the transition team, told ABC News.
Increase oil production
On the campaign trail, Trump often responded to concern about prices with a three-word mantra: “Drill, baby, drill.”
Trump, who has downplayed human-caused climate change, vowed to bolster the oil and gas industry by easing regulation and expanding output.
In theory, increased oil production could lower food prices since gas makes up a key source of costs throughout the supply chain, whether a firm is growing crops or transporting them to a seller, economists said.
“Energy is a big input cost for food,” David Andolfatto, an economist at the University of Miami, told ABC News. “That should put downward pressure on food prices.”
While such a move could prove beneficial, increased oil output under President Joe Biden coincided with the surge of inflation in recent years. Since oil is sold on a global market, a surge in domestic production may not lower prices for U.S. consumers as much as some may expect.
The U.S. set a record for crude oil production in 2023, averaging 12.9 million barrels per day, according to the U.S. Energy Information Administration, a federal agency.
A further uptick in oil production risks accelerating the nation’s carbon emissions and worsening the impact of climate change, which would carry costs down the road, Luis Cabral, a professor of economics at New York University, told ABC News.
“We can’t simply look at the benefits,” Cabral said, acknowledging the potential for lower food prices. “There are also important costs in terms of emissions and climate change.”
Bolster antitrust enforcement
To address high food prices, the Trump administration could crack down on market concentration, a term economists use to describe the dominance of a given industry by a handful of firms, some experts said.
They pointed to the market power of large corporations as a cause of rapid price increases, saying companies use their outsized role in the market to raise prices without fear of a competitor offering a comparable product at a more affordable price.
“Whenever there are fewer players in an industry, prices tend to be higher,” Cabral said. “Supermarkets aren’t an exception.”
Grocery store profit margins surged in 2021 and rose even higher two years later, even after price increases had begun to cool, a Federal Trade Commission study in March showed.
In February, the Federal Trade Commission sued to block the merger of supermarket chains Kroger and Albertsons, which would amount to the largest supermarket merger in U.S. history. The proceedings are ongoing, and will likely stretch into the Trump administration.
Some economists cast doubt over the potential benefits of antitrust, saying the recent bout of inflation coincided with an uptick in production costs during the pandemic. “It’s hard to argue that it’s therefore some kind of profiteering,” Faulkender said.
Price-gouging ban
During the campaign, Vice President Kamala Harris proposed a federal ban on price gouging for food and groceries.
The plan could resemble price-gouging bans in place in 37 states, which prohibit a sudden spike in prices for scarce goods, the Harris campaign said. Those bans prohibit companies from exploiting a sudden imbalance between supply and demand by significantly hiking prices.
While Trump may be reluctant to adopt a policy put forward by his proponent, he could advance a price-gouging ban as a means of preventing acute price increases for specific goods.
For instance, egg prices have skyrocketed 30% over the year ending in October, U.S. Bureau of Statistics data on Wednesday showed. The spike owed primarily to an avian flu outbreak that has decimated supply. Last year, egg prices climbed more than 60% in response to a similar avian flu outbreak.
Economists who spoke to ABC News differed on the effectiveness of a potential price-gouging ban.
Some economists dismissed the policy as a flawed solution, since state-level bans usually get triggered only in the case of emergencies and, even then, often lack clarity about the type of company behavior that constitutes price-gouging.
“I don’t think a federal price-gouging ban would help at all,” Cabral said.
Andolfatto, of the University of Miami, said a price-gouging ban could lower food prices if it barred rapid price increases under some circumstances. However, those benefits may be outweighed by the downside, since such a ban could override the market signal delivered by prices, which help direct the distribution of goods to places where they are in short supply.
“These types of interventions have unintended consequences,” Andolfatto said.
(WASHINGTON) — Consumer prices rose 2.7% in November compared to a year ago, ticking upward from the previous month and potentially giving pause to the Federal Reserve as it weighs an interest rate cut expected next week. The reading matched economists’ expectations.
The fresh data marked two consecutive months of rising inflation, extending a bout of accelerated price increases that has reversed some of the progress made in lowering inflation earlier in the year.
The inflation gauge makes up the last piece of significant economic data before the Fed announces its next interest rate decision on Dec. 18. A finding of accelerated price hikes may give the Fed pause as it weighs interest rate cuts.
The inflation gauge makes up the last piece of significant economic data before the Fed announces its next interest rate decision on Dec. 18.
Core inflation — a closely watched measure that strips out volatile food and energy prices — increased 3.3% over the year ending in November, matching the previous month, the data showed.
Food prices rose 2.4% in November compared to a year ago, matching the previous month and marking slower price increases than the overall inflation rate.
Prices fell in November compared to a year ago for an array of household staples like cereal, rice, flour, bread, bacon and seafood.
Over that period, the price of eggs soared more than 37%, however, as a result of an avian flu that has depleted supply. Prices for sugar, butter and pork chops also rose faster than the overall inflation rate.
Inflation has slowed dramatically from a peak of more than 9% in June 2022, but price increases remain slightly above the target rate of 2%.
In recent months, the Fed has cut its benchmark rate three quarters of a percentage point, dialing back its yearslong fight against inflation and delivering relief for borrowers saddled with high costs.
The Fed is expected to cut interest rates by another quarter of a percentage point at its meeting next week, according to the CME FedWatch Tool, a measure of market sentiment.
Over time, rate cuts ease the burden on borrowers for everything from home mortgages to credit cards to cars, making it cheaper to get a loan or refinance one. The cuts also boost company valuations, potentially helping fuel returns for stockholders.
In theory, the policy eases access to funds, stimulates economic activity and boosts demand. But the promise of bolstered consumer strength risks increased prices.
Speaking at a press conference in Washington, D.C., on Thursday, Fed Chair Jerome Powell voiced optimism about the prospects for achieving a “soft landing,” in which the U.S. averts a recession while inflation returns to normal.
“We continue to be confident that with an appropriate recalibration of our policy stance, strength in the economy and labor market can be maintained with inflation moving sustainably down to 2%,” Powell said.
The trajectory of inflation could shift in the coming months. Some economists expect President-elect Donald Trump’s proposals of heightened tariffs and the mass deportation of undocumented immigrants to raise consumer prices.
When asked about the Fed’s potential response to Trump’s policies, Powell said the central bank would make its rate decisions based on how any policy changes impact the economy.
“In the near term, the election will have no effects on our policy decisions,” Powell said. “We don’t know what the timing and substance of any policy changes will be. We therefore don’t know what the effects on the economy will be.”
“We don’t guess, we don’t speculate and we don’t assume,” Powell added.