Category: Business

(NEW YORK) — Tech billionaire Elon Musk, who has vowed to dismantle thousands of federal regulations as the co-head of a new Department of Government Efficiency, or DOGE, says the nation’s financial security depends on it.

The U.S. risks “strangulation by regulation” as it hurtles toward “bankruptcy super fast,” Musk said in a pair of posts on X this month.

Musk’s general concern about the nation’s multi-trillion dollar debt reflects worry among many economists, and his slash-and-burn rhetoric mirrors that of close ally President-elect Donald Trump.

The ambitious cuts championed by Musk, however, could imperil an array of federal protections that safeguard against harm in just about every corner of American life, regulatory experts told ABC News.

Regulations ensure air and water remain free of toxic pollution, workers receive safety gear and overtime pay, drugs undergo rigorous testing and corporations steer clear of ripping off customers.

“Revoking regulations or refusing to endorse them will endanger people’s lives,” Michael Gerrard, a law professor at Columbia University who specializes in environmental regulation, told ABC News. “I’m very worried.”

In response to ABC News’ request for comment, the Trump transition team touted the involvement of Musk and his plans for streamlining U.S. government.

“Elon Musk and President Trump are great friends and brilliant leaders working together to Make America Great Again. Elon Musk is a once in a generation business leader and our federal bureaucracy will certainly benefit from his ideas and efficiency,” Brian Hughes, a transition spokesperson, told ABC News.

DOGE, the commission co-led by Musk and entrepreneur Vivek Ramaswamy, plans to recommend a “vast reduction” of federal regulations, the two leaders said in a joint op-ed in The Wall Street Journal last week.

Such regulatory cuts would diminish the workload of government agencies, allowing for a significant reduction of federal workers and department budgets, the DOGE leaders said. They recommended a mandate that all federal workers come to the office five days a week, which they claimed would trigger a wave of resignations.

“Now is the moment for decisive action,” Musk and Ramaswamy said, but the pair did not identify specific regulations that they would like to cut.

Musk did not immediately respond to ABC News’ request for comment. Neither did Ramaswamy.

The promise of regulatory cuts may prove more compelling as a declaration of war against the status quo than a nitty-gritty elimination of individual rules, experts said. They pointed to significant legal hurdles faced in unwinding government regulations, as well as the lack of direct authority available to DOGE, a non-governmental entity.

Plus, the experts added, many government regulations involve direct protections of importance to a swath of Americans.

Some experts pointed for instance to an air-quality standard put in place by the Biden administration in February. The regulation lowered the amount of particulate matter air pollution — commonly known as soot — allowable in the nation’s air.

The rule would prevent as many as 4,500 premature deaths and 800,000 cases of asthma symptoms, an Environmental Protection Agency study found. Those health benefits could translate into as much as $46 billion in savings by 2032, the agency said.

The Trump administration may seek to undo the rule as part of wider regulatory cuts, Gerrard said. On the campaign trail, Trump vowed to cut environmental regulations in an effort to ease the burden on businesses, but he did not mention this specific rule. Trump rolled back nearly 100 environmental regulations during his first term, including rules governing clean air, a New York Times analysis found.

Darren Riley, co-founder of an air-quality data startup called JustAir, who was diagnosed with asthma six years ago, said air safety should transcend party politics.

“We should take whatever precautions and procedures necessary to protect the air we breathe and the water we drink as a right to life,” Riley told ABC News.

Workplace safety marks another focus of federal regulation that could draw scrutiny from the Trump administration.

In July, the Biden administration formally proposed a heat-safety rule that would require workplaces with elevated heat risks to provide adequate water, rest breaks and control of indoor temperature.

Shae Parker suffered from dizziness and nausea during bouts of heat exhaustion while working this summer at a Speedway gas station in Columbia, South Carolina, she told ABC News. One year prior, record heat in the area caused similar symptoms during Parker’s shifts at Waffle House, but management failed to provide adequate air conditioning, she said.

Parker has traveled to Washington, D.C., to advocate for the heat safety rule, and she worries that the Trump administration may set aside the regulation.

“Trump really needs to set the heat standard, and if he doesn’t, it’s like he doesn’t care about the country,” Parker said. “He needs to take our lives seriously.”

Waffle House did not immediately respond to ABC News’ request for comment. Neither did 7-11, the parent company of Speedway.

Over three decades ending in the early 2020s, nearly 1,000 workers in the U.S. died from excessive heat exposure, amounting to about 34 deaths per year, an EPA study in June found.

The proposed regulation is in the midst of a public comment period as part of the rule-making process. That phase ends in December, leaving little time for finalization and implementation of the measure before Trump takes office. The Trump administration may very well abandon the rule, experts told ABC News.

“Workers will be on their own when it comes to heat,” Debbie Berkowitz, a former official in the U.S. Occupational Safety and Health Administration under then-President Barack Obama, told ABC News.

For his part, Musk previously said DOGE would incorporate feedback from everyday people about which regulations it would recommend cutting. “Anytime the public thinks we are cutting something important or not cutting something wasteful, just let us know!” Musk said in a post on X earlier this month.

Musk has also said that the nation’s worsening debt will force an increased portion of U.S. tax payments to go to interest payments on such borrowing, rather than to government services.

William Buzbee, a professor of administrative law at Georgetown University who focuses on environmental regulation, said the outcome of Musk’s efforts remains highly unclear. But he will likely face legal pushback as well as backlash from people who would be impacted by the potential rollback of a given regulation.

“The bottom line is, yes, the Trump administration is quite clearly planning to go in a deregulatory direction,” Buzbee said. “It won’t be easy.”

Copyright © 2024, ABC Audio. All rights reserved.

(NEW YORK) — Walmart, the world’s largest retailer, is rolling back its diversity, equity and inclusion policies.

This brings it in line with several major corporations that have reviewed their operational practices after facing considerable pressure from conservatives.

No longer considering race and gender as a way to increase diversity when it offers supplier contracts, is an example of the retailer’s reported rollbacks, according to the Associated Press.

The company said it didn’t currently have quotas and didn’t plan to going forward; however, it planned to stop collecting demographic data when determining financing eligibility for grants.

In a statement to ABC News, Walmart said, “Our purpose, to help people save money and live better, has been at our core since our founding 62 years ago and continues to guide us today. We can deliver on it because we are willing to change alongside our associates and customers who represent all of America.”

“We’ve been on a journey and know we aren’t perfect,” the statement continued, “but every decision comes from a place of wanting to foster a sense of belonging, to open doors to opportunities for all our associates, customers and suppliers and to be a Walmart for everyone.”

Walmart will also be “reviewing grants to Pride events to make sure it is not financially supporting sexualized content targeting kids,” the retail giant told AP.

The changes also extend to Walmart’s sizable third-party marketplace.

For example, those third-party retailers would no longer be able to list and sell “sexual and transgender products aimed at minors,” the company said. An example is chest binders for young people who may be using the products as part of their gender-affirming care.

The world’s largest retailer confirmed the changes on Monday.

They were first announced in a post on X by conservative political commentator Robby Starbuck.

He said that he had been in touch with the Arkansas-based corporation about a story he was doing about “wokeness,” which turned into “productive conversations” — and, ultimately, led to reversals in Walmart’s approaches to DEI.

Other changes that Starbuck listed in his announcement included: discontinuing racial equity training through the Racial Equity Institute, no longer participating in the Human Rights Coalition’s Corporate Equity Index (a national benchmarking tool for LGBTQ individuals) and eliminating the use of Latinx (a gender-neutral word for anyone of Latin descent).

He also stated that Walmart will be eliminating the use of the phrase “DEI” altogether.

“This is the biggest win yet for our movement to end wokeness in corporate America,” wrote Starbuck, who has also gone after companies including Boeing, Lowe’s, Tractor Supply and Deere & Co.

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(NEW YORK) — Throughout the country, once bustling business districts have turned into ghost towns. The pandemic has shown that many jobs can be done remotely. Now some major U.S. cities are breathing new life into empty office buildings by converting them into housing. Notable cities that are part of this trend include New York, Austin, Cleveland, San Francisco, and Boston.

The office vacancy rate is 20.1% in the U.S., according to Moody’s. That’s a 30-year high, with more than 900 million square feet of office space empty — enough to fill New York City’s One World Trade Center 300 times.

Amazon, Citigroup, Walmart, and UPS are among the major companies now requiring employees to spend more time in the office. Some companies are pulling out all the stops to entice workers back. Amenities may include massage rooms, health care services, and on-site personal gyms.

However, most experts agree that hybrid and remote work is here to stay. “Companies don’t need office space in the way that they needed office space 10 years ago, 20 years ago, 50 years ago,” Evan Horowitz, executive director of The Center for State Policy Analysis at Tufts University, said. “Remote work has just transformed that landscape.”

Major cities across the country, including Boston, Austin, and Chicago, are seeing office vacancies at or near record highs. In San Francisco, more than 22% of offices are currently empty, a significant increase from about 9% in 2019.

Some cities are now at risk of falling into what is known as the “economic doom loop.” High vacancy rates can cause property values to plummet, decreasing tax revenue. This decrease in revenue affects funding for essential services such as schools, police and sanitation, ultimately making these cities less desirable places to live.

Horowitz says Boston is more vulnerable to falling into an “economic doom loop” than other major cities because of its unique s tax structure.

“Boston is closer to crisis mode than other cities because it is so dependent on taxes from commercial real estate, twice as dependent as virtually any other city in the country,” Horowitz said. The loss of commercial tenants is having a ripple effect on area businesses.

When Dave Savoie bought his favorite bar and grill, Silvertone, in 2016 he said it was like a dream come true.

The downtown Boston establishment was popular with the business crowd. Office workers made up 50% of Savoie’s customers, but all that changed with the COVID-19 pandemic.

“I used to call them suits,” Savoie said. “You know, the office guys, the finance guys. And this was their place. [Now] they work from home. If people come to the city now, they work a maximum three days a week.”

It proved too much for Silvertone and, after 27 years, eight of them under Savoie’s ownership, the bar announced “last call” in May.

Boston’s Mayor Michelle Wu, who is up for reelection next year, is taking steps to address the situation. She is implementing tax breaks and zoning changes to transform unwanted office space into much-needed housing.

“We have about 500 housing units that are now in the pipeline to be converted out of formerly vacant office buildings,” Wu told ABC News. “We’re taking city buildings like libraries that need renovations and adding housing on top of that and making it faster than ever before through zoning and other city regulatory processes to get your building built and to get those shovels in the ground. The more that downtown is a residential, thriving, busy neighborhood, just like every other one of our neighborhoods, the more everyone benefits.”

The idea is that business districts will be reimagined as vibrant 24/7 neighborhoods that seamlessly blend work, living, dining and entertainment. This holistic approach aims to create a dynamic community where daily life and work coexist, fostering a rich, interconnected lifestyle.

“There are lots of ways to build a vibrant downtown that doesn’t involve the central role of office buildings,” Horowitz said. “It could be apartments, it could be lab space. There are lots of other things you can do with land that makes people want to go downtown and enjoy themselves.”

Many cities are already converting office space into housing, with Cleveland leading the way — 11% of its office inventory is currently undergoing this transformation. Similar projects are also taking place in Cincinnati, Houston, and New York, where the iconic Flatiron office building is set to be transformed into luxury condominiums. “This is a challenge that’s affecting every city in America,” Wu said. “And in Boston, we’re showing that it’s also an opportunity.”

That “opportunity” is something David Greaney is seizing on. At a time when many real estate investors are looking to sell their office buildings, Greaney and his firm Synergy are buying them up, at a deep discount. Synergy currently owns 35 properties in the Greater Boston area – four of them were bought in just the past 12 months.

Greaney says the worst is over in terms of office vacancies, and he is positive about the future of cities. “The great thing about cities is that cities evolve, and I certainly think that our cities will evolve,” Greaney said. “You may see more residential uses, more hospitality or institutional uses, but the office component of downtowns, I believe, will continue to be a very big factor.”

Working out of one of the same buildings Greaney recently bought, small business owners and brothers Michael and Emilio Ruggeri are betting on a comeback for Boston’s downtown.

For three decades they have been serving breakfast and lunch to the office crowd at their Archie’s NY Deli. Office workers accounted for nearly 80% of their business pre-pandemic, but that number has since dwindled to about 50%.

“We’ve been doing more deliveries,” said Emilio Ruggeri. “The construction guys have actually kept us going.”

They’ve also reduced their staff, trimmed their menu and shortened their hours to make ends meet, confident that things will turn around.

“I’m an eternal optimist,” said Michael Ruggeri. “The buildings are way too expensive to just stay empty. Someone’s going to take over the space, so we’re hopeful.”

Copyright © 2024, ABC Audio. All rights reserved.

(NEW YORK) — Tech billionaire Elon Musk has kept busy since Election Day, advising President-elect Donald Trump and receiving an appointment to co-lead a new government efficiency commission.

Musk has also found time to promote Trump in scores of posts on the social media platform X, formerly Twitter, which he owns. But such advocacy appears to have driven some X users to seek alternatives.

One such app, Bluesky, has drawn attention as a possible X rival and has amassed a total of 20 million users to date. Its growth accelerated in the aftermath of the election, when Bluesky added one million users in a single week.

Launched by former Twitter CEO Jack Dorsey, Bluesky has attracted some prominent users in recent days, including comedian Ben Stiller, author Stephen King, and pop star Lizzo.

Here’s what to know about Bluesky, and how to join:

What is Bluesky?

Bluesky is a text-oriented social media platform on which users can post messages as long as 300 characters. Like X, the messages posted on Bluesky appear on a newsfeed displayed to users. The app is available on iOS and Android.

The platform operates on an open framework, meaning that users can post their messages to a server tailored for specific interests or communities. The system design resembles that which is used on another text-first app, Mastodon, as well as the decentralized platform Discord.

Bluesky began in 2019 as a venture at Twitter overseen by Dorsey, and was launched as an independent company in 2022, the year after he left Twitter.

Development of the site started after a 2020 tweet from Dorsey announcing Twitter’s plans to fund a decentralized social media platform, Bluesky said in a blog post. The eventual leaders at Bluesky were among those who sent direct messages to Dorsey in response to his post, the blog added.

Who owns Bluesky?

The board of directors at Bluesky features Dorsey as well as Jeremie Miller, the founder in the late 1990s of a free instant messaging service called Jabber.

Bluesky’s CEO is Jay Graber, who formerly founded an events-oriented social media site called Happening and worked as a software engineer on a cryptocurrency called Zcash, according to LinkedIn. She also serves on the Bluesky board.

The company is owned by Graber as well as “the Bluesky team,” the Bluesky website says.

While Bluesky has retained a traditional corporate structure featuring a board and chief executive, the company said it aspires to take control of content away from a top-down entity and return it to creators.

“Traditional social networks are often closed platforms with a central authority,” the website says. “There’s a small group of people who control those companies, and they have total control over how users can use the platform and what developers can build.”

Dorsey criticized Musk’s leadership at Twitter on Bluesky last year, saying that things “all went south” at the platform after Musk’s acquisition, CNBC reported.

Is Bluesky a viable alternative to X?

The steady growth of Bluesky has made it a destination for an increasing number of celebrities, elected officials and government entities. But the platform remains much smaller than X or the Meta-owned competitor, Threads.

Bluesky boasts roughly 20 million users, which amounts to less than 10% of the 229 million daily active users disclosed by Twitter in a June 2022 earnings report. X’s user data is no longer publicly available since Musk took the company private.

In July, Meta CEO Mark Zuckerberg announced that Threads had exceeded 175 million monthly active users.

How do you join Bluesky?

During Bluesky’s initial years, users could only join the platform if they received an invitation. The policy aimed to limit the app’s user base as it underwent testing.

In February, however, the platform made itself available to all users. Individuals or organizations can navigate to the platform and follow instructions to create an account.

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(NEW YORK) — If you are nearing retirement, you will soon be able to stash even more money into your nest egg — if you can afford it.

The Internal Revenue Service announced that the maximum amount individuals can contribute to their 401(k) or similar plans in 2025 will increase to $23,500, up from $23,000 for 2024.

The federal government already lets those 50 and older make extra contributions so that they can save more as they near retirement age. This is known as a “catch-up” contribution.

In 2025, the standard catch-up contribution will stay the same, with a max of $7,500, according to the IRS.

But starting next year, workers ages 60 to 63 will be able to make “super” catch-up contributions, up to $11,250 annually, which is an additional $3,750.

That means they can potentially contribute up to $34,750 in total, each year, to a workplace retirement account.

The substantially higher catch-up contributions are part of SECURE 2.0, which President Joe Biden signed into law in 2022 as part of a $1.7 trillion omnibus spending package.

“While anything that encourages more investing is generally a good thing, I’m afraid this rule change probably won’t make a big impact, ” Bankrate’s Senior Industry Analyst Ted Rossman, told ABC News. “There has to be a very small population between the ages of 60 and 63 who were maxing out their accounts and can now go higher.”

In 2023, just 14% of retirement plan participants maxed out their 401(k) limits, according to Vanguard Research.

Even those who have always maxed out their retirement savings contributions may need to reallocate funds as they age and start to face extra expenses, like sending children to college or caring for aging parents.

Aside from 401(k) plans and similar employee-sponsored plans, the limit on annual Individual Retirement Account contributions is unchanged next year, at $7,000, while the catch-up contribution for people 50 and older will remain $1,000.

Those limits apply to both traditional IRAs, which may offer a tax deduction depending on income, and to Roth IRAs, which don’t come with a tax deduction but do offer tax-free growth and withdrawals in retirement.

An aging population, coupled with fewer companies offering pensions, means that a smaller portion of the population overall is prepared for retirement.

The typical household headed by someone ages 55 to 64 has just $10,000 saved in a retirement account, according to an analysis of federal data by the Economic Policy Institute and the Schwartz Center for Economic Policy Analysis.

“Not to discourage investing at any age, but there’s a reason why Einstein said compound interest is the eighth wonder of the world,” Rossman said. “Investing is more powerful when you’re young.”

Still, catch-up contributions can be a valuable way to grow your retirement fund and enjoy the tax benefits.

Rossman said it’s also important to contribute regularly to your 401(k) and gradually increase your contributions. He suggested putting reminders in your calendar to increase your 401(k) contribution every year.

“The idea is that you’re less likely to miss the extra money if you do it gradually or if you do it in tandem with a pay raise,” Rossman said.

For instance, he said, if you’re currently contributing 5% of your salary, could you bump that up to 6% or 7% next year?

“Gradually dialing up your percentage makes it more likely that you’ll stick with the approach,” Rossman added, “and you won’t diminish your standard of living.”

Copyright © 2024, ABC Audio. All rights reserved.

(NEW YORK) — Bitcoin vaulted to a record high on Thursday, surging more than 3% in early trading and hurtling toward investors’ long-sought milestone of $100,000.

The price of bitcoin briefly exceeded $98,000 for the first time on Thursday morning, before retreating to about $97,600.

The value of the world’s most popular cryptocurrency has soared 31% since the reelection of former President Donald Trump, who is widely viewed as friendly toward digital currency.

By comparison, the S&P 500 has climbed 2.4% since Election Day, while the tech-heavy Nasdaq has increased 2.6%.

The run-up of bitcoin extended to other parts of the crypto industry. Ether, the second-largest cryptocurrency, jumped 8% in early trading on Thursday. Lesser-known litecoin rose nearly 6%, and dogecoin ticked up more than 2%.

On the campaign trail, Trump vowed to bolster the cryptocurrency sector and ease regulations enforced by the Biden administration. Trump also promised to establish the federal government’s first National Strategic Bitcoin Reserve.

Trump said he would replace Securities and Exchange Commission Chair Gary Gensler, whom many crypto proponents dislike for what they perceive as a robust approach to crypto regulation.

In July, Trump told the audience at a cryptocurrency conference in Nashville, Tennessee, that he wanted to turn the U.S. into the “crypto capital of the planet.”

“I’m calling it the ‘election dividend,'” James Butterfill, head of research at digital asset management firm CoinShares, told ABC News. “We went from being worried about a Democrat getting elected to what we’ve got: a Republican clean sweep.”

The recent rise follows a period of stellar returns that stretches back to last year. The price of bitcoin has soared more than 150% since November 2023. Over that period, the S&P 500 has climbed about 30%.

Those gains have been propelled, in part, by U.S. approval in January of bitcoin ETFs, or exchange-traded funds. Bitcoin ETFs allow investors to buy into an asset that tracks the price movement of bitcoin, while avoiding the inconvenience and risk of purchasing the crypto coin itself.

Options trading for bitcoin ETFs

On Tuesday, options on BlackRock’s popular iShares Bitcoin Trust ETF (IBIT) were made available for trading on the Nasdaq. The options, which provide a new avenue for bitcoin investors, allow individuals to commit to buy or sell the ETF at a given price by a specific date. While such investments typically come with additional risk, they can also make large payouts.

The price of IBIT jumped 3.1% on Thursday.

The newly available options may account for some of the rise in the price of bitcoin over recent days, Bryan Armour, the director of passive strategies research at financial firm Morningstar, told ABC News.

“The options add volatility on top of volatility, which has interested some of the crypto investors,” Armour said.

The crypto industry entered this year bruised after a series of high-profile collapses and company scandals.

FTX, a multibillion-dollar cryptocurrency exchange co-founded by Sam Bankman-Fried, collapsed in November 2022. The implosion set off a 17-month legal saga that resulted in the conviction of Bankman-Fried for fraud. In April, Bankman-Fried was sentenced to 25 years in prison.

The surge of bitcoin since Election Day may continue for the foreseeable future, since past periods of momentum have been shown to propel the cryptocurrency, Armour said. But crypto investments remain highly volatile, he added, recommending that the asset make up no more than 5% of a person’s portfolio.

“It’s notoriously difficult to provide a value for bitcoin’s price,” Armour said. “It can go up; it can go down.”

“I would continue to keep any allocation small,” Armour added.

Copyright © 2024, ABC Audio. All rights reserved.

(New York) — Conspiracy theorist Alex Jones accused The Onion and Sandy Hook Elementary School families of “collusive bidding” and asked a bankruptcy court judge to halt the sale of his Infowars platform.

Jones, who defamed the Sandy Hook families by calling the 2012 massacre a hoax and the parents of the 20 first graders actors, called The Onion’s winning $1.75 million bid “sheer nonsense” because it’s half of what the losing bidder offered.

The Onion began a “systematic effort to confuse Mr. Jones’s personal public following with messages espousing gun control in a manner such that Mr Jones’s personal public following would be utterly confused and misled,” Jones said in an overnight court filing.

His request follows a similar push for an injunction by First United American Companies, which is affiliated with Jones through the sale of dietary supplements.

The plaintiffs nor the trustee immediately responded to Jones but the trustee has previously called the auction result legitimate and asked the court for approval.

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(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.

Copyright © 2024, ABC Audio. All rights reserved.

(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.

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(NEW YORK) — Americans’ credit card debt has hit a record high, the Federal Reserve of New York said in a report released this week.

Credit card debt climbed $24 billion over a three-month stretch ending in September, soaring to a level 8% higher than where it stood a year ago, the report said.

Debt holders may seek solace in a string of recent interest rate cuts at the Federal Reserve, which typically reduce borrowing rates for credit cards. But credit card interest rates have proven stubborn, leaving borrowers saddled with near record-high average payments even after the rate cuts.

The average credit card interest rate stands at 20.35%, just slightly below a record-high of 20.79% attained in August before the Fed began cutting rates, Bankrate data showed.

Credit card interest rates remain high, in part, because the Fed’s benchmark rate still stands at a historically high level, experts told ABC News. The incremental cuts in recent months have only partially reversed the previous escalation of rates meant to fight the nation’s worst bout of inflation in decades.

That high baseline rate has collided with a rise in the average credit card margin, or the borrowing cost that companies place on top of the benchmark rate to weather default risk, cover overhead costs and recoup profits, experts added.

“Credit card rates are high, and they’re staying high,” Ted Rossman, a senior industry analyst at Bankrate, told ABC News.

To set credit card interest rates, the industry relies on what’s called a “prime rate,” which is the rate paid by the most creditworthy borrowers. That rate is calculated by adding three percentage points to the Fed’s benchmark interest rate. The prime rate, which acts as a baseline for credit card rates faced by all borrowers, currently stands at 7.75%.

The prime rate remains historically high because the Fed has, so far, taken just a few, incremental steps toward dialing back a yearslong series of rate hikes. In recent months, the Fed has cut interest rates by three-quarters of a percentage point, but such relief offers little savings for credit card borrowers, experts said.

Policymakers at the Fed forecast another quarter-point cut next month, and cuts next year totaling one percentage point, but that will still leave interest rates at an elevated level, according to projections released in September.

“I don’t think the Fed wants a rapid fall in rates,” John Sedunov, a finance professor at Villanova University’s School of Business, told ABC News. “It wants to gradually ease rates back.”

The persistence of high interest rates has coincided with a rise in the margin charged by credit companies over and above the prime rate, some experts said.

The average margin charged by credit card firms reached an all-time high of 14.3% last year, according to a U.S. Consumer Financial Protection Bureau analysis of Federal Reserve data. The margin increased sharply from a rate of 9.3% in 2013, the CFPB found.

The rise in credit card delinquency owes, in part, to a decline in personal savings, as Americans have spent down pandemic-era economic stimulus and turned to credit card loans, Sedunov said.

“Banks may view the amount of risk in credit card lending as higher than it was a few years ago, even though the Fed is lowering rates,” Sedunov said.

Growth in credit card margins also stems from old-fashioned profit-taking on the part of credit card companies, some experts said.

Credit card profitability has increased over the past five years, and has outpaced the profitability of other business drivers at the companies that offer them, according to the CFPB report.

“Banks, especially large banks, are trying to make as much profit as they can,” Fariz Huseynov, a professor of corporate finance at North Dakota State University, told ABC News.

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