(WASHINGTON) -- A showdown between the nation's major airlines, the FAA and AT&T and Verizon appears to be cooling after both telecom giants agreed at the last minute to pause a portion of their 5G-C rollout on Wednesday.
"At our sole discretion we have voluntarily agreed to temporarily defer turning on a limited number of towers around certain airport runways as we continue to work with the aviation industry and the FAA to provide further information about our 5G deployment," AT&T said in a statement Tuesday.
Verizon followed AT&T saying, "We have voluntarily decided to limit our 5G network around airports. The Federal Aviation Administration (FAA) and our nation's airlines have not been able to fully resolve navigating 5G around airports, despite it being safe and fully operational in more than 40 other countries."
CEOs from American, United, Delta and seven other major carriers warned of "significant" disruptions in the country's aviation system if the 5G rollout continued as planned.
Aviation officials are concerned that the frequency used for 5G may interfere with airplanes' radio altimeters -- devices used by pilots to measure the distance between the aircraft and the ground in order to land.
In the letter, U.S. airline leaders wrote to government officials Monday asking that the wireless carriers not deploy 5G within two miles of runways at certain airports.
"This will allow 5G to be deployed while avoiding harmful impacts on the aviation industry, traveling public, supply chain, vaccine distribution, our workforce and broader economy," the CEOs wrote.
The FAA warned pilots won't be able to use radio altimeters to land at 88 airports closest to Verizon and AT&T's 5G towers. Earlier this month, the FAA and wireless carriers agreed to implement "buffer zones" around 50 airports across the country to try to mitigate the issue.
Airline officials, however, said this is not enough. United Airlines said the current plan will have "devastating" impacts on its operation, impacting an estimated 1.25 million of the carrier's passengers and at least 15,000 flights.
"We won't compromise on safety – full stop," United said in a statement.
Captain Dennis Tajer, an American Airlines 737 pilot and a spokesperson for the Allied Pilots Association, also called the rollout "unsafe."
"We're not going to fly the airplane unless it's safe," Tajer told ABC News. "But putting that added distraction of other systems going wrong close to the ground is not the way you run a safety culture."
The telecom giants have insisted 5G-C Band technology is safe and has been proven in more than 40 other countries, albeit at much lower power levels than what's planned in the U.S.
In a statement, AT&T made clear its frustration with the federal government, writing in part: "We are frustrated by the FAA's inability to do what nearly 40 countries have done, which is to safely deploy 5G technology without disrupting aviation services, and we urge it do so in a timely manner. We are launching our advanced 5G services everywhere else as planned with the temporary exception of this limited number of towers."
When asked why the FAA did not act over the past two years, White House press secretary Jen Psaki said, "There will be lots of time to look back and see how we got here. And I know many of you will do that. And, of course, that is understandable. But right now, over the next 24, or less than 24 hours, what we're focused on is trying to come to a solution that will minimize travel -- you know disruptions to passenger travel, cargo operations -- on our economic recovery."
President Biden thanked Verizon and AT&T for the delay, saying in a statement, "This agreement will avoid potentially devastating disruptions to passenger travel, cargo operations, and our economic recovery, while allowing more than 90 percent of wireless tower deployment to occur as scheduled."
The president said the agreement "protects flight safety and allows aviation operations to continue without significant disruption and will bring more high-speed internet options to millions of Americans."
ABC News' Mina Kaji, Mary Bruce and Sarah Kolinovsky contributed to this report.
(NEW YORK) -- Microsoft Corp. announced plans on Tuesday to acquire gaming giant Activision Blizzard Inc., the maker of immensely popular franchises including "Call of Duty" and "Warcraft," for $68.7 billion.
The companies jointly announced news of the all-cash deal on Tuesday, which involves tech giant Microsoft purchasing the controversy-marred gaming company for some $95 per share. When the transaction closes, Microsoft will become the world's third-largest gaming company by revenue -- behind only Tencent and Sony -- Microsoft said in a statement Tuesday.
The deal comes as the gaming industry has become one of the fastest-growing sectors in the entertainment industry, and as Microsoft seeks to accelerate its mobile, PC, console and cloud gaming as well as prepare for the mainstream adaption of the metaverse.
"Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms," Satya Nadella, chairman and CEO of Microsoft, said in a statement. "We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all."
The announcement also comes as Activision Blizzard has been rocked by accusations of fostering a culture of sexual harassment and gender discrimination.
Bobby Kotick will continue to serve as CEO of Activision Blizzard, and once the deal closes, the Activision Blizzard business unit will report to Microsoft Gaming's CEO Phil Spencer.
"For more than 30 years our incredibly talented teams have created some of the most successful games," Kotick said Tuesday. "The combination of Activision Blizzard’s world-class talent and extraordinary franchises with Microsoft’s technology, distribution, access to talent, ambitious vision and shared commitment to gaming and inclusion will help ensure our continued success in an increasingly competitive industry."
The transaction has been approved by the board of directors for both Microsoft and Activision Blizzard, but remains subject to the latter's shareholder approval, the companies said. It is expected to close in fiscal year 2023.
(WASHINGTON) -- It's peak citrus season in the U.S., but Florida orange groves had a bitter yield of the beloved sweet and tart winter fruit.
The U.S. Department of Agriculture reported that orange crops are projected to be down for the second consecutive season, which could send prices that were already high due to the pandemic, even higher.
The historically low production could be 16% less than last season's final count, the USDA found.
Growers in the Sunshine State are forecast to harvest 44.5 million boxes of fruit from the 2020-21 season, according to the USDA, down1.50 million boxes from the December forecast.
The current USDA forecast looks at 17.5 million boxes of non-Valencia oranges (early, mid-season, and Navel varieties) and 27 million boxes of Valencia oranges.
Only one year since 1947 has yielded fewer oranges, according to the USDA; 2017-2018 when Florida crops were battered by Hurricane Irma.
(CLEVELAND) -- Over the last few decades, it has been considered taboo to reveal tattoos, piercings or even unconventional hair colors in a professional work setting, but one woman is challenging that idea after showing off her full sleeves of arm tattoos in her company headshot and going viral on LinkedIn.
"As soon as it started going viral, I thought, 'I know how this works. If I put myself out there, and it's something that is controversial, I should be prepared,'" Jessica Leonard said.
Leonard, 36, received over 30,000 reactions and nearly 3,000 comments on her LinkedIn post, which showed a two side-by-side images -- one of her posing in a suit jacket and one of her exposing her tattoos.
"I did get some comments where people felt like they needed to advise me or others to still be careful about tattoos, because there is still judgment out there," she said. "And you certainly don't want to close any professional doors by being too forward."
After roughly two years of heightened lifestyle and work changes, ranging from the ongoing COVID-19 pandemic to "the great resignation," Leonard's post proves that the concept of what is deemed acceptable in a professional setting is rapidly changing. With one in four Americans working remotely last year, according to Upwork's "Future of Workforce Pulse Report," a tattoo or piercing in view doesn't seem to hold as much weight as it did before.
Leonard, a Cleveland, Ohio, native, said she was initially nervous about posting the tattoo photo, but her boss actually gave her the confidence boost she needed.
"'Loud and proud' is what he said," Leonard said, recalling her conversation with her boss. "I read the text message aloud and I was literally brought to tears. And then my husband got a little emotional about it too. It was such a shocking response to have that kind of inclusion from someone that you work for, and just overall acceptance of who I am. I felt so moved."
After being in public accounting for nearly 14 years, Leonard said she was ready for a change. Although she loved her former firm and they never had an anti-tattoo policy, she never felt like she could divulge her tattoos in internal or client meetings, as she was fearful that work or promotional opportunities could be at stake. She especially felt that way when she went to a women's conference and received some comments at dinner.
"I found it a little surprising," she said. "I came without a jacket on and that's when the conversation turned. I thought, 'That's weird. We just came out of a conference talking about women empowerment, and now I'm kind of being told that I can't be a leader because of my tattoos.'"
Last September, Leonard decided to leave the more traditional firm she worked at and take a position as a partner at Evolution Capital Partners, a small business private equity firm in Cleveland. When it was time to take headshots, she said she had the photographer take some photos with her jacket on for LinkedIn and the company website and some photos showing her tattoos to keep for herself. It was her manager that encouraged her to post both online.
"It is the content of one's character that is most important to us," said Jeffrey Kadlic, founding partner of Evolution Capital Partners. "Authenticity and transparency are cornerstones of the culture we are working to create. We see Jess for who she is and embrace all of her because she shares our core values and is a tremendous talent. At the end of the day, that is all that really matters."
Leonard said she is very proud of her ink and not shy in talking about it. Some of her more fun tattoos include Harry Potter-themed art while others hold deeper meanings. One is in memory of her nephew who passed away from brain cancer at just 4 years old.
"I actually had a father reach out to me who is in public accounting," she said. "He asked me very pointed advice about advising his daughter on getting tattoos -- maybe in places that could be easily covered -- because, as a father and as a professional, he was guiding her in that way. After seeing my post, he said he would consider having another perspective."
Leonard said many people have approached her with positive feedback, and some have said they feel ready to get more tattoos or piercings, especially since many are working from home.
"I think everyone needs to go where they feel comfortable in their skin," she said. "They shouldn't feel like they work in an environment where it's hindering them as an individual. There are a lot of places you can work where you're not going to feel that."
"I hope this will resonate or help someone who may have experienced judgment or bias in the past," Leonard added. "There are leaders that are super inclusive and accepting, and if you haven't found them, just know they exist and they are out there. I'm glad I could inspire at least one person in my network."
The 10 richest men in the world doubled their fortunes during the COVID-19 pandemic, a report published Monday by advocacy group Oxfam said, highlighting how the global health crisis has deepened the divide between the haves and have-nots as well as the need for policy intervention to address these "deadly" inequities.
While the wealth of the world's 10 richest men more than doubled -- increasing from approximately $700 billion to $1.5 trillion between March 2020 and November 2021 -- the incomes of approximately 99% of people around the globe fell during that time, and more than 160 million people have been forced into poverty, the Oxfam report added.
The poverty and economic justice advocacy group calculated the wealth gains of the ultra-elite based on Forbes' real-time data on billionaires. The richest men were Elon Musk, Jeff Bezos, Bernard Arnault & family, Bill Gates, Larry Ellison, Larry Page, Sergey Brin, Mark Zuckerberg, Steve Ballmer and Warren Buffett.
Information on the falling incomes of the global 99% was taken from World Bank data, Oxfam said in its methodology.
The calculations also indicate that the wealth of the world's billionaires has increased more since COVID-19 began than it has in the last 14 years.
"Billionaires have had a terrific pandemic. Central banks pumped trillions of dollars into financial markets to save the economy, yet much of that has ended up lining the pockets of billionaires riding a stock market boom," Oxfam International Executive Director Gabriela Bucher said in a statement Monday accompanying the latest report.
Bucher added that if the 10 richest men in the world were to lose 99% of their wealth, they would still be richer than 99% of all the people on this planet.
The wealth of the world's billionaires tends to be more tied up in stocks than their less-wealthy counterparts. In the U.S., the wealthiest 1% of households in the U.S. own more than half of all the publicly traded stock in the market, according to Federal Reserve data, and the bottom 50% of households own less than 1%.
While the pandemic recovery in the labor market and economy as a whole is still sputtering, the stock market has rallied sharply since March 2020 in part due to monetary policies enacted by the Federal Reserve -- leading to massive, often untaxed, wealth gains for the rich and leaving the poor who don't own any market shares behind.
Oxfam said this stark inequality is killing people because of lack of access to health care, hunger and more. The group is advocating for a tax on the ultra-rich to address these deadly inequities.
Bucher added that taxation is one of the key ways to start "righting the violent wrongs of this obscene inequality."
The report calling for a new tax targeting the world's wealthiest comes after an investigation into the taxes of billionaires, published by the nonprofit news organization ProPublica last year, found that the ultra-wealthy are able to use legal loopholes to avoid paying taxes on wealth gains.
The ProPublica report published tax documents of the wealthy and said that while the median American household paid 14% of their income in federal taxes, the wealthiest 25 Americans had an average so-called "true tax rate" of just 3.4% of the amount their wealth grew each year between 2014 and 2018. This was in large part due to keeping their reported income, and thus reported income tax, to just a fraction to what their net worth actually is and storing most of their wealth in stocks -- which are only taxed once they are sold.
The Oxfam report cited these differing tax rates and is advocating for billionaires to pay taxes every year on their wealth increases -- whether these gains are realized or not (i.e. whether a billionaire sells the stock after it rises in value or holds onto it to avoid paying taxes on those gains).
While the idea of a billionaires tax has gained momentum in Washington and beyond in recent years, especially over the pandemic, it has faced an uphill battle in implementation. Critics call these type of taxes on unrealized gains unconstitutional based on the definition of income.
The researchers at Oxfam, meanwhile, view a tax on the rich as an imperative and obvious way to address the "deadly inequality" wrought by the pandemic.
"One of the single most powerful tools we have to address this level of egregious and deadly inequality is to tax the rich," Abby Maxman, the chief of Oxfam America, said in a statement Monday. "Instead of lining the pockets of the ultra-wealthy, we should be investing billions of dollars into our economy, our children and our planet, paving the way for a more equal and sustainable future."
(NEW YORK) -- Some automakers tout engine performance, cutting-edge technology or exclusivity to attract buyers. Japanese automaker Subaru has a different approach.
In 2019 the company transformed 10,000 square feet of the Javits Convention Center in New York into a state-of-the-art immersive exhibit where Yellowstone's Old Faithful geyser and Denali's snowcapped peak were the focus -- not the company's sport utility vehicles.
Deer, foxes and muskrats can be spotted along the walking trails at Subaru's Indiana facility, the sole U.S. manufacturing plant to be designated a backyard wildlife habitat by the National Wildlife Federation. Materials on site are either reused, recycled or repurposed and in 2004 the plant achieved zero landfill status -- another industry first.
"Business has to have a purpose besides selling cars and making money -- it has to make our society better," Thomas Doll, president and CEO of Subaru of America, Inc., told ABC News. "We pride ourselves that we have that community aspect."
Subaru, a longstanding partner of the National Parks Foundation, has given more than $68 million to organizations working to conserve national parks and helped fund projects to protect over 85 million acres in 400 national parks. The company also donates millions of dollars to various charities such as Make-A-Wish and ASPCA as part of its "Share the Love" event, now in its 14th year. Shelter puppies are often the stars of Subaru's auto exhibits and the marque has helped find homes for more than 74,000 rescue animals across the country.
"Subaru's support of various causes attracts a certain type of buyer and really does contribute to their success," Ed Kim, president and chief analyst of AutoPacific, told ABC News. "Subaru customers are among the most affluent."
Industry watchers agree that Subaru could do even more to protect national parks and the planet: Build more EVs. Owners who are eager for an all-electric Subaru will have to wait until later this year, when the Solterra SUV enters production.
"We're a small company but we're not afraid of EVs," Doll said.
Slower road to electric vehicles
The small automaker decided early on to tap into potential markets that were overlooked by mainstream brands, according to Kim.
"It was the first auto brand that actively marketed to the LGBTQ community when no one else was doing that," he said. "It attracted a lot of LGBTQ customers and became a brand for people who identified with a more progressive mindset."
Karl Brauer, executive analyst of iSeeCars.com, said Subaru's aggressive push as a lifestyle utility automaker -- one that also offered standard all-wheel drive for its vehicles -- was prescient and helped boost sales.
"Subaru made off-road vehicles a core component of its entire brand image a decade or more ahead of the industry," he told ABC News. "The company decided what it wanted to be and it's worked really well. It's cultivated a fairly specific and loyal customer base."
The company, though, has been surprisingly slow to bring an electric vehicle to the market. Subaru currently only makes one hybrid -- the Crosstrek plug-in. In November, it debuted the Solterra, an AWD, emissions-free ute that was developed in partnership with Toyota. The Solterra gets an estimated range of more than 220 miles and produces 215 horsepower from its front and rear electric motors. Sales begin in mid-2022.
"It's a technically advanced EV that's versatile and has a lower center of gravity and better handling," Doll said.
Federal regulations are going to require that Subaru participate in the electric world, according to Stephanie Brinley, an automotive analyst at IHS Markit.
"The company can't sit out that part of the market," she told ABC News. "That's the reality."
Added Kim: "The mindset of a Subaru customer is so perfect for electrification. They'd be more than happy to pay more for a hybrid or an EV."
Chip shortages and younger drivers a challenge
The lack of EVs, however, has not caused the company to lose sales nor customers, according to Brauer. What has? The ongoing global chip shortage. Subaru of America delivered 51,146 vehicles in December, a 19.5% plunge from a year ago. In 2021 the brand sold 583,810 vehicles, a 4.6% drop compared to 2020.
"It's not a demand problem, it's a supply problem. We're trying to recover from this microchip shortage which is much worse than ," said Doll. "Retailers are sold out essentially -- each dealer has six cars on average. We have car lines that are sold out. It pains me ... but there is nothing Subaru can do. We're not going to produce cars without certain chips or build a car and park it until a chip comes in."
Kim noted that all automakers are still struggling to build vehicles and stock showrooms as consumer demand soars.
"The chip shortage is real," he said. "Subaru is suffering like almost everyone else. The product is sought after but Subaru doesn't have the means to build cars without all these chips."
Subaru has another obstacle to conquer this year: Getting young drivers to buy its newly revamped BRZ sports car, a slinky, lightweight rear-wheel drive coupe that's geared toward male drivers in their late 20s and early 30s. Even Doll has questioned how much longer true performance cars, like the BRZ and WRX sedan, can survive in the U.S. But scuttling production of either car is not on the table -- for now.
"The BRZ and WRX are gateways to the brand," said Doll. "And we're definitely committed to the manual and expect 85% of customers to buy the manual in the BRZ."
In fact, performance cars and Subaru's rally racing history have brought dedicated enthusiasts to the brand, who learned about these conveyances from video games and internet groups.
"So many U.S. enthusiasts wanted the WRX -- they were screaming for this car -- but it took a while for Subaru's U.S. division to bring these models to the country," said Kim. "This is a fantastic performance car with a tremendous legacy in rallying."
He added, "These buyers skew very heavily male and are not political. There is a cultural divide between Subaru's regular lineup versus its performance lineup."
Charitable causes, puppies, conservation, AWD -- all these factors have solidified Subaru's position in the hyper competitive automotive industry, according to Brinley. Now Subaru has to accept that it is no longer a niche automaker.
"A lot of customers connect and identify with the brand," she said. "The constant challenge for Subaru is brand authenticity."
(NEW YORK) -- Dogecoin rallied Friday after Tesla CEO Elon Musk tweeted the carmaker would now accept the cryptocurrency as payment for merchandise.
Originally started as joke poking fun at exuberance in the crypto market, Dogecoin surged some 10% by Friday afternoon in the wake of Musk's early morning tweet.
Musk's five-word message -- "Tesla merch buyable with Dogecoin" -- garnered more than 270,000 likes on the platform and sparked a spirited, meme-filled debate in the comments section.
Meanwhile, Tesla's website for merchandise and accessories (which doesn't sell its famous electric vehicles) on Friday showed updated checkout buttons next to some of its products for those wanting to pay with Dogecoin. Among products available for purchase with Dogecoin were Tesla's "Giga Texas Belt Buckle" and its "S3XY Mug."
For years, the so-called meme coin had been worth less than a penny. After the Musk's tweet on Friday, it was trading at around 19 cents -- a big leap compared with historical lows but still roughly one-third of its record value last May of over 60 cents.
It's not the first time a Musk tweet has been linked to swings in the crypto market. The price of Bitcoin nosedived last May in the wake of Musk's Twitter announcement that his company would no longer be accepting Bitcoin as payment due to its ties to fossil fuels -- a steep fall that dragged down other popular cryptos at the time as well. This saga came just months after a separate announcement that Tesla would accept Bitcoin as payment was linked to a sharp rally.
He has also long embraced Dogecoin both on Twitter and beyond, appearing as the character of the "Dogefather" during his "Saturday Night Live" appearance last May. In the comedy skit, Musk's character is repeatedly pressed with the question "What is Dogecoin?" before ultimately admitting it's "a hustle."
The billionaire has more than 70 million followers on Twitter and has been known to openly share his opinions in unfiltered ways that have sometimes landed him in court or in hot water with the Securities and Exchange Commission.
(NEW YORK) -- The sneaky sting of inflation is catching many Americans by surprise as soaring prices erode their savings and prompt major sticker shock at the supermarket, gas pump and seemingly everywhere they look.
Rapidly rising prices have become a major new wellspring of anxiety for American families. Some 3 in 10 Americans said everyday bills (15%) or inflation specifically (14%) was the single biggest concern facing their family right now, according to a Monmouth University poll released last month. This is nearly double the 16% of Americans naming rising prices or household bills as their biggest concern last July, and more than triple the 8% who named household bills as their top concern in August 2020.
Government data indicates consumer prices last month jumped at their fastest pace since 1982 -- the tail-end of an agonizing period in the U.S. economy when out-of-control inflation forced policymakers to orchestrate a steep correction that resulted in a recession and double-digit unemployment rates.
Many who remember this painful historical era are now retiring, and research reveals that peoples' expectations about inflation are mostly shaped by their experience of it. This results in a "substantial disagreement between young and old individuals in periods of highly volatile inflation," economists at the University of California, Berkeley, and the University of Chicago, wrote in a 2014 paper. It also suggests a majority of consumers are now unsure of how to navigate inflation or may be less aware of its broader dangers.
Here is how experts say inflation is eroding Americans' cash and how they can brace themselves for what might come next as policymakers seek to anchor in the surging prices.
Savings dissolving as those with no cushion get crushed by so-called 'cruelest tax'
Inflation, defined by the Federal Reserve as increases in the overall prices of goods and services over time, means that Americans are going to have to pay more money than they are used to for their essentials and other expenses.
While the ascending price tags can be a more obvious sting, rising inflation can also impact the value of savings accounts for those who have been able to practice financial prudence in building up a rainy day or retirement fund.
Many Americans were able to save over the course of the pandemic thanks to fiscal support and the fact that COVID-19 shuttered businesses and urged people to stay at home rather than spend on the services they used to go out for, according to Wells Fargo Senior Economist Sarah House.
"But that financial cushion is getting whittled away more quickly. Given these elevated rates of inflation, that savings isn't stretching as far," House told ABC News.
Chester Spatt, a professor of finance at Carnegie Melon University and former chief economist and director of the SEC's Office of Economic Analysis, added that rising inflation suggests that Americans' "spending power, potentially, is going to decrease quite substantially."
If inflation is rising at a clip of 7%, and your savings account offers interest rates of some 0.5% (or even an enviable higher-yield 1% rate), then "that spending power might decline by about 6%," Spatt told ABC News.
This means for those with $1,000 saved up, their financial buffer might actually be closer to $940 as inflation at its current pace eats into that money. For those with $10,000 saved up, they might expect to see about $600 seemingly evaporate from that nest egg -- without even touching it.
For Americans who are living paycheck to paycheck, the impacts of inflation can be even more devastating. Federal Reserve Chair Jerome Powell warned lawmakers on Tuesday that high inflation takes a toll "particularly for those less able to meet the higher costs of essentials," such as food, housing and transportation.
"People sometimes talk about inflation being kind of 'the cruelest tax' that really hurts poor people disproportionately, and I can see that certainly to be the case," Spatt told ABC News.
Ultimately, the historically high inflation we are seeing now is becoming impossible for consumers to ignore, House added.
"When you're seeing roughly 2% price increases, it's kind of running in the background, that 2% number is by design," House said of the past. "But when we are seeing 5, 6, 7% inflation, it's hard for consumers not to notice, and that begins to affect how they think about their decisions, including what they're asking for in terms of wages out of a job."
Asking for higher wages is generally a good thing, but during times of inflation, those who were working during the 1970s and '80s know it can also be linked to further skyrocketing prices -- and at the broader level, throw a wrench into efforts to rid inflation from the economy as a whole.
Policies to combat inflation have historically carried painful consequences
Inflation historically has been extremely difficult to eradicate, and past efforts to do so by the government and policymakers have sometimes been accompanied by painful consequences.
At the same time, the inflation we are seeing now is being fueled by vastly different circumstances than in the past, specifically supply-demand imbalances spurred by a global pandemic and the fiscal and monetary policies that buoyed the economy during the unprecedented health crisis.
As supply chains recover from pandemic shocks and reach of pandemic-era stimulus policies wanes, many remain hopeful that this will help ease inflationary pressures.
Economists also note that policymakers now have the lessons from the past to glean how best to respond to inflation.
During "The Great Inflation" period of the 1970s and early 1980s, the most-recent inflationary period that those on the cusp of retirement are warning their children about, inflation snowballed out of control as prices climbed and workers in turn asked for higher wages -- creating the economic phenomenon now referred to as the "wage-price spiral."
Wages are again increasing at headline-making rates, as major companies -- especially in the service industry -- report struggles to attract and retain staff.
"We are in a tight labor market," House told ABC News, meaning workers are "able to flex some of that clout a little bit more, and extract some more wage increases" from their employers.
"We're seeing this filter into inflation expectations to some extent; we're also seeing it filter into wages, and so I think that'll be key in the year ahead as to how much inflation comes down," House said. "We are expecting it to recede, given the unwinding of some of these pandemic distortions -- but I think now that we're seeing more pressure coming from wages in the labor market, it's going to be harder to cool off."
As a result, House said she expects the Fed "to step in a little more aggressively" than they may have initially planned to help anchor inflation.
This will likely manifest in interest rate hikes, which the Fed has already signaled will likely occur three times in 2022, and a more rapid end to pandemic-era monetary policies that flushed financial markets with liquidity.
These actions can help cool off inflation and uncertainty, House said, because "it will send a signal to markets, to consumers, to businesses, that they are on top of that, that they are watching inflation numbers and they do not want to let this get out of hand, or at least further out of hand."
"That signal will help anchor inflation expectation and that can have an influence on further price setting, whether that's for goods, services or for labor," she added.
Looking back at history, the Fed was seen as initially behind the curve and slow to raise interest rates in the '70s to respond to inflation -- before announcing a shockingly sudden federal funds rate increase of almost 20% in 1980. Those who held bonds directly or through retirement accounts subsequently suffered huge losses, and real interest rates also soared. The move ended up having ripple effects that devastated the overall economy, as well as the stock market.
"The difference here is that we do have some forces that I think will help bring down inflation on its own," House said when comparing the present to late-'70s inflation, such as the waning pandemic-era fiscal support that boosted consumer demand and shifting patterns on how consumers are spending their money.
"It's a fine line for monetary policy to walk, between not choking off a recovery or an expansion and also not letting it overheat to the point where you have further pain down the road," she said.
There are also only so many tools at the Fed's disposal, she noted, saying the Fed can't manufacture semiconductor chips or do much to address the beleaguered global supply side of the equation.
In figuring out how to best anchor inflation without triggering an economic downturn, simply put, House said the Fed is "not in a very enviable position."
So how can Americans protect their hard-earned cash?
At the individual level, meanwhile, Carnegie Melon's Spatt warns there is very little consumers can do on their own to tackle inflation as a whole once it takes root in the economy.
"Individuals can, of course, try to make the best decisions that they can to watch out for themselves," Spatt said. "To the extent that they see opportunities for higher wages, obviously, they should go for those. To the extent that they see prices that haven't yet moved up, but they think are going to move up, they might want to lock in their purchases."
To protect their savings, Americans "might want to consider, or might be more open to, buying bonds or buying equities," Spatt added.
Uncertainty brought on by inflation has traditionally been bad news for the stock market, but at the same time stocks have also been a good source historically for investors looking to grow wealth over the longer term. While there is potential to guard against inflation with sound stock investments (and conversely to further deplete savings with investments that go down in value), going this route comes down to personal risk tolerance and financial goals.
Other savings vehicles that "may be a little bit better than bank accounts" in regards to inflation are inflation-protected government savings bonds, according to Spatt.
"At least in the near term, those [Series] I Bonds are offering extraordinary rates, about 7% because of the current levels of inflation," he added.
These are capped at relatively modest levels, he noted, but said he still views them as a "terrific kind of low-risk type of inflation hedge of a different kind than investing in equity."
Investors can also protect themselves from inflation by purchasing Treasury Inflation Protected Securities, or TIPS, which were not around during the '70s and also have interest rates adjusted for inflation.
The Treasury has a useful breakdown for Americans comparing I Bonds and TIPS on its website.
As inflation tightens its grip on the economy and previous assurances from policymakers that it is "transitory" have gone out the window, Spatt said Americans should now recognize "prices are going to change over time, and they're going to change adversely."
People should keep this in mind when doing their shopping and financial planning, and then assess based on individual needs, options and goals how they can best adapt to this ever-evolving economic reality.
At the broader level, however, Scott warned inflation's unwelcome return to the U.S. economy presents "a tremendous problem."
"When you think about the policies that may be followed to stamp out the inflation, they may actually bring the economy into recession; that may be necessary like it was in the 1980s," Spatt said. "It's not easy to knock it out of the economy; this is one of the lessons of the 1980s."
(NEW YORK) -- Martin Shkreli became infamous, and earned the nickname "Pharma Bro," after he hiked the price of a potentially lifesaving antiparasitic medication in 2015. On Friday, a federal judge ruled he should pay $64 million for his actions.
The judge said Shkreli should pay the financial penalty, equivalent to the profits from his scheme, and receive a lifetime ban from participation in the pharmaceutical industry.
Shkreli earned widespread condemnation in 2015 when he raised the price of Daraprim -- an anti-malaria medication often prescribed for HIV patients -- by 4,000% and initiated a scheme to block the entry of generic drug competition so that he could reap the profits from Daraprim sales for as long as possible, the judge said.
Through his tight control of the distribution of Daraprim, Shkreli prevented generic drug companies from getting access to the quantity of Daraprim they needed to conduct testing demanded by the Food and Drug Administration. Through exclusive supply agreements, Shkreli also blocked access to the two most important manufacturers of the active pharmaceutical ingredient for Daraprim.
Through these strategies, the judge said, Shkreli delayed the entry of generic competition for at least 18 months. Shkreli and his companies profited over $64 million from this scheme.
“Envy, greed, lust, and hate, don’t just separate, but they obviously motivated Mr. Shkreli and his partner to illegally jack up the price of a life-saving drug as Americans’ lives hung in the balance,” said New York Attorney General Letitia James, whose office sued with several other attorneys general and the Federal Trade Commission.
Shkreli is currently serving a seven-year prison sentence after being convicted of securities fraud in August 2017 related to his work at hedge funds MSMB Capital Management prior to founding Turing Pharmaceuticals. He had called the trial a "witch hunt" and blamed his increase in the cost of Daraprim for making him a target of federal investigators.
In May 2020, Shkreli petitioned for an early release from prison, saying he wanted to research a potential cure for COVID-19. The request was denied.
Last week at CES, General Motors CEO Mary Barra introduced the Chevrolet Silverado EV, which the company claims can go up to 400 miles on a single charge when equipped with the larger available battery. Scot Hoskisson, lead program manager for electric pickup trucks at GM, says they’re targeting some truck-like performance numbers too.
“Our goal towards mass adoption of EVs isn't simply to create an electric truck,” says Hoskisson. “It's that we wanted to create a truck that has all of the capability and more of today's pickup trucks that just happens to be a zero emissions electric [vehicle].”
The company says the Silverado EV will be available with 664 horsepower and 780 lb-ft of torque in the top-spec “RST” trim. That model, as well as it’s corporate cousin, the GMC Hummer EV, is set to retail in excess of $100,000. GM also showed off a base “work truck” trim for the Silverado, which the company says will start under $40,000. Hoskisson believes the market will respond to the new truck, even if it shares almost nothing in common with the existing, gas-powered Silverado.
“We believe that the Silverado EV is a re-imagined full-size electric pickup truck. And because of that, we believe it has some compelling advantages in the marketplace.”
GM says it's investing thirty five billion dollars into electric vehicles by 2025, with plans to sell nothing but EVs by 2035. A big part of that is going to be the company's new specially designed electric platform, that it's calling "Ultium.”
"A ground-up EV has a lot of advantages over a regular gasoline-converted vehicle," says Chad Kirchner, Editor In Chief of EV Pulse. “A ground-up EV means that Chevrolet and General Motors can put the batteries as structural elements in the floor.”
In the past, automakers would commonly adapt existing vehicle platforms to accommodate electric powertrains. But there were tradeoffs to that approach: batteries often ate into luggage space, and electric range could be paltry. Kirchner says when you design a car to accommodate batteries from the start, “it’s just easier to package.”
Packaging is a big deal for the pickup truck market, in particular. Traditional pickups lack trunks, which means owners miss out on valuable lockable storage space. EV trucks don’t have engines, which frees up the front of the vehicle for a front-trunk, or “frunk.”
The Silverado EV makes use of the extra space with what its calling an “eTrunk.” Same goes for the F-150 Lightning, though Ford calls its version a “Mega Power Frunk.”
The Rivian R1T gets plenty of frunk space too, plus, because there’s no transmission to take up space under the floor, the Rivian gets what the company calls a “gear tunnel.” Essentially, it’s a tube-shaped storage compartment that slots in between the back seats and the bed of the truck. Rivian will even sell you a portable kitchen that runs off the truck’s battery, complete with an electric stove - and even a kitchen sink.
There’s another reason so many automakers are committing to electric trucks: Americans love pickups. Ford sold over 700,000 F-series trucks in 2021, making it the best selling vehicle in the country for the 44th year in a row. Ram and Chevy were right behind it, both selling more than half a million pickups last year. In fact, a traditional sedan doesn't even crack the list of the top five best selling vehicles in the country. Kirchner says there's a good reason for that.
“Truck makers long ago learned that they can make a lot more money offering a family car experience with a bed, which is what a modern pickup truck ultimately is,” he says. “Why have two cars in the driveway when you can have one that does everything?”
Rivian was the first of this new wave of EV trucks to start making deliveries earlier this winter, but others are close behind. Ford announced last week that it’s doubling production of its electric F150 "Lightning" to meet demand. As for that Hummer EV?
“They only sold one, but there was one Hummer EV sale in Q4 of 2021,” says Kirchner, joking that “it’s probably [GM CEO] Mary Barra’s personal car, but they shipped one.”
The energy around electric trucks comes at a crucial moment for the auto industry. Back in 2020 California governor Gavin Newsom signed an executive order requiring all new cars sold in the state to be zero emission by 2035. The European Union is working on similar legislation.
“You’re going to start seeing these trucks, like, soon,” says Kirchner.
But it’s not exactly a smooth road ahead. A global semiconductor shortage has delayed production across the auto industry, especially at General Motors. The Indiana factory that makes the gasoline Silverado halted production multiple times last year on account of the chip shortage, and sales ended up dropping thirteen percent. The electric Silverado isn’t set to hit dealers until 2023 - more than a year after Ford’s targeted date.
Plus, reliable public charging infrastructure is still being built out, which means that EV owners have limited options when it comes to charging on long journeys. A notable exception is Tesla. The company operates thousands of “Supercharger” stations around the world, which only work with Tesla vehicles. But Tesla has a different problem. The Cybertruck was originally planned to go into production in late 2021. But last year, after several delays attributed to the pandemic, the truck’s production date, along with some other key information like the price, quietly vanished off Tesla’s website.
“Will we see Cybertruck in 2022? I don’t know. Maybe,” says Kirchner, adding: “maybe aliens will invade.”
Hear ABC News Radio's Mike Dobuski report on the EV truck market:
(NEW YORK) -- More rainy days and extreme rainfall likely will hurt global economies, according to new research from the Potsdam Institute for Climate Impact Research.
"This is about prosperity -- and ultimately about people's jobs," Leonie Wenz, a lead scientist, told ABC News. "Economies across the world are slowed down by more wet days and extreme daily rainfall, an important insight that adds to our growing understanding of the true costs of climate change."
"We know from previous work that flooding associated with extreme rainfall can damage infrastructure, which is critical to economic productivity, and also cause local disruptions to production," said Wenz, adding that the new findings also suggest everyday disruptions caused by more rain will have "a disruptive effect on businesses, manufacturing, transportation."
The analysis, conducted by a team of scientists who examined 40 years of data in more than 1,500 regions across the globe, shows that as wet days go up, economic growth goes down.
"Intensified daily rainfall turns out to be bad, especially for wealthy, industrialized countries like the U.S., Japan or Germany," Wenz said. But smaller, more agrarian economies can see some benefits.
More rainfall is occurring as the planet warms because warm air holds more water vapor. While global precipitation trends vary wildly, and are extremely complex because of factors including geography and terrain, extreme precipitation is increasing -- it's widely accepted by many climate scientists that regions already prone to intense rainfall events will see them more frequently.
"It's rather the climate shocks from weather extremes that threaten our way of life than the gradual changes -- by destabilizing our climate, we harm our economies," said Anders Leverman, a co-author of a study.
Some of those extremes can include devastating flooding that has massive consequences, Stamford University researcher Frances Voigt Davenport explained to ABC News in 2021.
"We're seeing that climate change increases extreme precipitation and makes the most extreme events bigger," said Davenport, adding that nearly one-third of U.S. flood damage from 1988 to 2017 -- costing roughly $73 billion -- resulted from long-term changes in precipitation.
Other recent extreme rainfall events have resulted from tropical cyclones or severe weather outbreaks, which cost the U.S. some $101 billion last year. Among the 10 costliest events from extreme rainfall, tropical cyclones and severe weather in the U.S., nine have happened since 2004.
Dr. Kai Kornhuber, a climate researcher from Columbia University, told ABC News in an interview how these extreme events have both direct and indirect consequences.
"Extreme rainfall," Kornhuber explained, "often leads to floods, and thereby can cause significant economic damage -- directly, by destroying property, and indirectly by disrupting supply chains, infrastructure and production sites."
(WASHINGTON) -- The latest government data on inflation indicates consumer prices are continuing their rapid rise as pandemic-battered supply chains struggle to keep up with rebounding consumer demand.
The consumer price index -- a measure of the prices Americans pay for a market basket of everyday goods and services -- jumped 7% over the last 12 months, the Labor Department said Wednesday. This marks the largest one-year increase since the period ending in June 1982, the DOL noted.
The index climbed 0.5% in December, a slight reprieve from the 0.8% seen in November.
The fresh data comes as economists and policymakers decide how to respond to inflation as data indicates it isn't going away on its own the way many initially proclaimed. Federal Reserve Chair Jerome Powell said Tuesday the Fed is prepared to raise interest rates faster than originally planned to respond to the climbing prices.
The rate of inflation's climb is "far outstripping the wage growth of most Americans and squeezing the buying power of households," Greg McBride, the chief financial analyst at Bankrate, told ABC News via email on Wednesday shortly after the report's release.
"The headline rate of inflation accelerated on an annual basis, hitting 7%, but did decelerate on a monthly basis for the second month in a row, owing to a decline in energy and slower increases in food prices," he added. "But core consumer prices are still rising at an outsized pace and have not shown signs of deceleration."
As a result, McBride said rate hikes and tapering of pandemic bond-buying programs from the Fed "are likely to begin as soon as March."
The so-called core index, or measure for all items except the more volatile food and energy indices, climbed 5.5% over the last year -- the largest 12-month change since February 1991. The core index spiked 0.6% in December, building on the 0.5% increase seen in November.
President Joe Biden reacted to the report in a statement later Wednesday, calling the slight dip last month in the data as "progress."
"Today’s report -- which shows a meaningful reduction in headline inflation over last month, with gas prices and food prices falling -- demonstrates that we are making progress in slowing the rate of price increases," the president said. "At the same time, this report underscores that we still have more work to do, with price increases still too high and squeezing family budgets."
After a steady march upwards all year, the gasoline index fell by 0.5% in December -- a modest dip that comes after rising 6.1% in both November and October. In December, the food index spiked by 0.5%, still an increase but a more modest one than the spikes seen in previous months.
Biden added that inflation is a "global challenge" and "appearing in virtually every developed nation as it emerges from the pandemic economic slump."
"America is fortunate that we have one of the fastest growing economies -- thanks in part to the American Rescue Plan -- which enables us to address price increases and maintain strong, sustainable economic growth," the president said. "That is my goal and I am focused on reaching it every day."
The energy index alone rose a whopping 29.3% over the last year (driven by hikes in the gas index) and the food index increased 6.3%.
Steep climbs in the prices for shelter, used cars and trucks largely pushed the index higher in December, the DOL said, but the indices for household furnishings, apparel, new vehicles and medical care also increased. The indices for motor vehicle insurance and recreation were among the few to decline last month.
Powell also said Tuesday in testimony before lawmakers that inflation poses a threat to the post-pandemic recovery of the labor market, where hiring has stalled in recent months and unemployment remains elevated compared to pre-pandemic levels.
The Fed chief vowed to take action, however, to prevent inflation from becoming "entrenched" in the economy.
"We know that high inflation exacts a toll, particularly for those less able to meet the higher costs of essentials like food, housing, and transportation," Powell told lawmakers on the Senate Banking Committee. "We are strongly committed to achieving our statutory goals of maximum employment and price stability. We will use our tools to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched."
(WASHINGTON) -- Tax season will begin early this year and is already forecast to be an especially "frustrating" one, the Internal Revenue Service has warned, as pandemic-era tax changes and staffing limitations squeeze the nation's tax agency.
The IRS announced that it will begin accepting and processing 2021 tax year returns on Monday, Jan. 24. This date is more than two weeks earlier than the start of last year's tax season, which the IRS said will allow more time to ensure everything runs smoothly amid the ongoing pandemic and programming changes introduced over the past year, including the Child Tax Credit.
Meanwhile, the deadline to file or request an extension this year is April 18.
"Planning for the nation's filing season process is a massive undertaking, and IRS teams have been working non-stop these past several months to prepare," IRS Commissioner Chuck Rettig said in a statement.
"The pandemic continues to create challenges, but the IRS reminds people there are important steps they can take to help ensure their tax return and refund don't face processing delays," Rettig added.
Some of the steps Americans can take include filing electronically and receiving their refund via direct deposit, Rettig said, and he also urged those who received an Economic Impact Payment or advance Child Tax Credit last year to pay extra attention when filing to ensure all forms are accurate in order to avoid delays. The IRS said that people who received these tax credits for children or stimulus payments in 2021 will need the amounts of these payments when preparing their tax returns. The IRS is mailing letters to recipients and they can also check amounts received on the IRS website.
People can still file 2021 returns even if they are awaiting the processing of previous tax returns, the IRS added.
Finally, Rettig urged that filers "should make sure they report the correct amount on their tax return to avoid delays."
The tax agency encouraged people to seek out online resources (such as information available on IRS.gov) before calling the IRS, saying that as a result of pandemic-era tax changes and challenges, the IRS phone systems received more than 145 million calls between Jan. 1 and May 17 of last year -- representing over four times more calls than in an average year.
The IRS commissioner warned Americans to expect some snags or delays this year, saying the understaffed and underfunded agency is doing the best it can given the challenges of processing over 160 million individual tax returns.
"In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs. This is frustrating for taxpayers, for IRS employees and for me," Rettig stated. "IRS employees want to do more, and we will continue in 2022 to do everything possible with the resources available to us. And we will continue to look for ways to improve. We want to deliver as much as possible while also protecting the health and safety of our employees and taxpayers. Additional resources are essential to helping our employees do more in 2022 -- and beyond."
Overall, the IRS said it anticipates most taxpayers will receive their refunds within 21 days of when they file electronically -- if they choose the direct deposit option and there are no issues with their return. The agency recommends against filing paper returns whenever possible to avoid delays and to get refunds faster, adding that the average refund last year was some $2,800.
(ATLANTA) -- When Michelle Lockhart was a teenager in Atlanta, she had to work two jobs -- as a camp counselor and fast-food worker -- to take care of her family.
She said her mother became disabled at that time due to a brain tumor, but it took months of cutting through red tape to qualify for desperately needed federal assistance.
If they had gotten more help then, "I could have focused on going to college and doing what people my age were doing: going to prom and enjoying their teen years," Lockhart, now 41, told ABC News.
In the early months of this year, 650 Black women across Georgia -- a demographic hit particularly hard by poverty -- will get some of that help. Payments of $850 per month will roll out over the next two years in one of the biggest guaranteed income experiments in the country. Some participants in the $13 million initiative may receive lump sum payments totaling the same amount they would have received over two years. For now, the process of inviting and selecting participants is ongoing.
The program will run alongside Atlanta's own basic income program which plans to serve about 300 residents that live below 200% of the federal poverty line. The initiative is currently working on making its first round of payments to the starting cohort of 25 participants, according to Mayor Keisha Lance Bottoms' office.
Guaranteed income programs like these have seen a resurgence in recent years amid attempts to address racial and economic equality and reduce poverty. The scope can be either targeted or universal. They have had successes, but some critics say these initiatives have to be multifaceted to work and address the nuances of poverty. Others claim it will stop people from working (though the claim has been debunked) or be too expensive to maintain.
As a community advocate and member of the Old Fourth Ward Economic Security Task Force, Lockhart said many of her neighbors continue to experience similar hardships, despite working day and night in an effort to escape poverty. many of her neighbors continue to experience similar hardships, despite working day and night in an effort to escape poverty.
"Everybody's on this hamster wheel," Lockhart said. "They're working two or three jobs … they're working low wage jobs, but they're still in poverty."
Burden on communities of color
Black residents in Atlanta are more four times as likely to be living under the federal poverty line than their white neighbors, with 46% of Black households earning below $25,000 a year, according to recent research by the Old Fourth Ward Economic Security Task Force.
Some 38% of Black women and 26% of Black men in the city are living in poverty, compared to 8% of white women and 5% of white men in the same city, the task force reports.
"We're working, we're tired, we're stressed," Lockhart said. "With an extra $850 a month, people will be able to enjoy the sunlight and will be able to spend more time with their babies."
Hope Wollensack, the executive director of the Georgia Resilience & Opportunity Fund, said the program is just the tip of the iceberg in terms of what is needed to address inequality.
"It'll take a multifaceted approach -- and probably many different policies -- to even begin to address the racial wealth gap," she said. "But we do know that stabilizing one's income can be a powerful tool not only to improve one's material circumstances in the short term and to improve quality of life and opportunities but also to enable individuals across the board to plan for the long term."
The program, called "In Her Hands," was shaped by discussions and surveys from community members that examined the causes of economic insecurity and wealth disparities in the city.
The project, run by the Georgia Resilience & Opportunity Fund, is an initiative from the Atlanta City Council, as well as the nonprofit cash assistance service GiveDirectly. It will begin rolling out in the Old Fourth Ward, the childhood neighborhood of civil rights leader Martin Luther King Jr., who was a fierce advocate for universal basic income as a way of addressing racial wealth inequities.
"We have economic insecurity that is pervasive and it's the result of decades of policies, if not more, that have made it harder for the majority of Americans to get ahead," Wollensack said.
The ability to access quality education, transportation and higher-paying jobs, the burden of childcare or predatory debt -- factors like these, Wollensack said, are also more likely to burden communities of color.
Poverty and food insecurity can impact a community's physical and mental health, and is considered one "of the most serious and costly health problems," according to the Food Research & Action Center, a national nonprofit research organization working to eradicate poverty.
'Hard to budget from zero'
Cash assistance and guaranteed income have been repeatedly proven to be a major force against poverty, according to researchers at the Columbia University, Center on Poverty & Social Policy.
Past studies and research has shown evidence that basic income experiments improved the happiness and health of its recipients and appeared to affect crime rates in the regions where it was implemented.
The program won't offer any financial literacy courses and advise how participants will use the money. Wollensack says that, in surveying and researching the community and its financial needs, people can be trusted to make the right choices using their resources, but don't have a lot of resources to start with.
"It's hard to budget from zero," Wollensack said. "In fact, we've seen oftentimes community members with some of the fewest resources are the most resilient and resourceful."
She added, "Instead of viewing communities that may have experienced cash shortfalls as a deficit, we actually know and believe that these communities were huge assets."
Lockhart said she expects to see the effects of the income boost almost instantaneously.
She says that when the COVID-19 stimulus reached the bank accounts of Old Fourth Ward residents, she saw a mood shift among her neighbors. She says people were out and chatting with neighbors, engaging with neighborhood businesses -- the weight of financial stress lessened for just a while.
"They want to get out and work. They want to start their own businesses. They want to spend more time with their children," Lockhart said "This will help slow people down a little bit so that they can focus and center themselves and center their energy right."
(NEW YORK) -- Bank of America announced Tuesday that it will slash overdraft fees -- the fines consumers pay when they make a purchase with their debit card but don't have enough money in their account -- from $35 to $10 starting this May.
The changes come in the wake of pressure from consumer advocacy groups that say these fees disproportionately impact vulnerable and low-income Americans.
A report released last month by the Consumer Finance Protection Bureau found that overdraft and non-sufficient funds fees remain lucrative for banks, reaching an estimated $15.5 billion in 2019. The CFPB also said fewer than 9% of consumer accounts pay 10 or more overdrafts per year, accounting for close to 80% of all overdraft revenue.
Moreover, despite a drop in fees collected, the CFPB said "many of the fee harvesting practices persisted during the COVID-19 pandemic."
In addition to reducing overdraft fees, Bank of America also announced Tuesday that it was entirely eliminating "non-sufficient funds fees," or the charges for a rejected transaction or bounced check.
The bank, which has 66 million consumer and small business clients, said it will have reduced overdraft fees by 97% from 2009 levels with these new changes.
Other major financial institutions including JP Morgan Chase and Capital One have cut or eliminated these fees that can seemingly catch customers by surprise at times, when something they think they are purchasing for only a few dollars can end up being closer to $40.
"Rather than competing on quality service and attractive interest rates, many banks have become hooked on overdraft fees to feed their profit model" CFPB Director Rohit Chopra said in a statement last month. "We will be taking action to restore meaningful competition to this market."
Bank of America's president of retail banking, Holly O'Neill, said the company has made significant changes to overdraft services over the last decade and now provides resources to help clients manage accounts.
"Throughout the process we have engaged our National Community Advisory Council (NCAC) for their guidance and feedback on our changes," O'Neill said. "These latest steps will further support our clients and empower them to create long-term financial wellness."
"We remain committed to taking actions that will further bring down overdraft fees in the future and continue to empower clients to drive positive changes to behavior pertaining to overdraft," she added.