The Trump administration last week revealed details of a $16 billion aid package for farmers hit in the U.S.-China trade war, with key provisions meant to avoid large corporations scooping up big payouts at the expense of small farmers. According to a report released yesterday by the nonprofit Environmental Working Group (EWG), most of the $8.4 billion given out so far in last year’s farm bailout went to wealthy farmers, exacerbating the economic disparity with smaller farmers, the Washington Post reported. An EWG analysis found that the top one-tenth of recipients received 54 percent of all payments. Eighty-two farmers have so far received more than $500,000 in trade relief. The top 1 percent of recipients of trade relief received, on average, $183,331. The bottom 80 percent received, on average, less than $5,000, EWG said. The Agriculture Department said that the program is designed to provide a level of support that’s proportionate to a farm’s size and success.
The Labor Department released a final rule to make it easier for small businesses to band together to create joint 401(k) retirement plans for workers, the Wall Street Journal reported. The rule, which takes effect Sept. 30, broadens the ways companies could join together to offer retirement accounts. Under the rule released yesterday, companies in different industries — for example, landscaping companies and real-estate firms — could create a joint plan as long as they are located in the same state or metropolitan area. The rule also would clarify that similar companies — for example two landscaping companies — located in different regions of the country could join together. Such arrangements, often called multiple-employer plans, are currently limited to employers with an affiliation or connection, such as a common owner or being members of an industry trade group. The rule means local chambers of commerce are more likely to sponsor retirement plans for companies affiliated with them.
U.S. senators are gearing up for a battle over how to fix the pensions of about 1.3 million retirees and workers in trucking, mining and other industries, The Wall Street Journal reported. These workers are covered by multiemployer pension funds. The Democratic-controlled House of Representatives approved a $48.5 billion package that offers forgivable loans to the most troubled plans. Senate Democrats introduced the same legislation, but its proposal is unlikely to gain the necessary votes from Republicans. The growing need for new capital is setting the stage for a showdown in the coming months after a government plan to address the issue missed its deadline last year. Many of the retirement funds have less than a decade of benefits left. Moreover, the government insurance program that backstops these pensions has warned it expects to run out of money by 2025.
The U.S. government will pay American farmers hurt by the trade war with China between $15 and $150 per acre in an aid package totaling $16 billion, with farmers in the South poised to see higher rates than in the Midwest, Reuters reported. The assistance, starting in mid-to-late August, follows President Donald Trump’s $12 billion package last year that was aimed at making up for lower farm good prices and lost sales. U.S. farmers have been among the hardest hit in the year-long trade war between the world’s two largest economies. Shipments of soybeans, the most valuable U.S. farm export, to top buyer China sank to a 16-year low in 2018. Democrats criticized the move, saying farmers needed fair trade instead of a bailout. Agriculture Secretary Sonny Perdue argued that U.S. farmers were disproportionately hurt by the trade dispute and that the new round of aid was justified. In the new aid package, the U.S. Department of Agriculture said it would pay farmers according to geographic location rather than by crop — a change from last year. Farmers in the cotton-growing Mississippi Delta states stand to be the greatest beneficiaries of the program. The average county payment rate is about $95 per acre in Alabama, $87 in Mississippi and $70 in Louisiana. Payment rates were lower in the Midwest, with a $69-per-acre county average in Illinois, the country’s top soybean producer, and a $66 average in Iowa, the top corn- and hog-producing state. The program covers 29 commodity crops, including soybeans, corn, wheat, sorghum and upland cotton. It also covers dairy and hog farmers, as well as farms that grow 10 specialty crops — including almonds, pistachios, walnuts, cranberries and fresh sweet cherries.
Gross domestic product figures due Friday may show business investment posted the first decline in three years, Bloomberg reported. Uncertainty from the yearlong U.S.-China tariff war compounded weakness stemming from slowing global growth and falling oil prices. GDP rose 1.8 percent on an annualized basis in the second quarter, according to the median projection of analysts, which would be the slowest since 2017. Net exports and inventories probably took a substantial bite in the April-June period, unwinding gains from the first quarter and reflecting fluctuations in companies’ stockpiles — before and after various Trump tariff deadlines. Together, those items undercut what likely was the strongest increase in consumer spending since 2014. Continued solid gains in jobs and wages prevented growth from sinking into the doldrums — at least for now. The GDP report is unlikely to make much difference in a widely anticipated Federal Reserve move next week to cut interest rates by a quarter point. But the data will provide more detail on the state of the U.S. economy to help frame the central bank’s thinking on whether to follow up with additional easing this year, as investors are predicting. While the 1.8 percent growth estimate isn’t far below the average rate during a relatively tepid expansion, it would still be the weakest since Trump took office in the first quarter of 2017. And it would mark a sharp decline from the 3.1 percent pace at the start of 2019.
Congressional and White House negotiators reached a deal to increase federal spending and raise the government’s borrowing limit, securing a bipartisan compromise to avoid a looming fiscal crisis and pushing the next budget debate past the 2020 election, The Wall Street Journal reported. The deal for more than $2.7 trillion in spending over two years, which must still pass both chambers of Congress and needs President Trump’s signature, would suspend the debt ceiling until the end of July 2021. It also raises spending by nearly $50 billion next fiscal year above current levels. The agreement forgoes the steep spending cuts initially sought by the administration, providing for about $320 billion in spending over two years above limits set in a 2011 budget law that established automatic spending cuts, known as the sequester. President Trump announced the deal on Twitter late Monday, citing all four congressional leaders. He added: “This was a real compromise in order to give another big victory to our Great Military and Vets!” House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin negotiated the agreement for weeks, hoping to complete a deal before the House leaves Washington at the end of the week for August recess. Mnuchin had warned that the government could exceed its borrowing limit as soon as early September, before lawmakers return from recess. In a joint statement Pelosi and Sen. Chuck Schumer pledged that the House would bring the deal quickly to the floor. They stressed that the agreement increases both defense and domestic spending and said they had agreed to spending offsets that were part of an earlier bipartisan agreement. Senate Majority Leader Mitch McConnell said he was encouraged by the deal, adding that it “secures the resources we need to keep rebuilding our armed forces.” He said he intended to have the Senate vote on it before the chamber departs for recess. The deal marked a victory for congressional leaders and Mnuchin, who had stressed that without action, the government could exhaust its ability to keep paying its bills in early September.
The House voted yesterday to raise the federal minimum wage to $15 an hour by 2025, the New York Times reported. The bill would more than double the federal minimum wage, which is $7.25 an hour — about $15,000 a year for someone working 40 hours a week, or about $10,000 less than the federal poverty level for a family of four. It has not been raised since 2009, the longest time the country has gone without a minimum-wage increase since it was established 1938. The measure, which passed largely along party lines, 231-199, after Republicans branded it a jobs-killer, faces a blockade in the Senate, where Senate Majority Leader Mitch McConnell (R-Ky.) said he will not take it up. Only three Republicans voted for it, while six Democrats opposed it.
In some states, residents are finally getting what they’ve been missing since the financial crisis: a brand new bank. For Washington D.C., it’s been a long time coming — 20 years. “Especially in the DC market, there’s very few, I think maybe one or two community banks in DC proper,” says Keith Walters, chief technology officer at MOXY Bank, a mobile-first, minority-owned bank set to open before the end of the year. “The rest are branches of larger banks that through their own branch consolidation have left a void in those communities.
The Consumer Financial Protection Bureau said in a report that a bit more than one in four — to be specific, 28 percent — of consumers have had at least one debt in collections. The report, released Thursday (July 18), examined collections tradelines — information about a consumer account sent to a credit reporting company, generally on a regular basis — from 2004 to 2018. The data spanned debt buyer tradelines, representing debt bought from creditors that has been charged off by creditors and non-buyer tradelines, which attempt to collect on behalf of the original creditor. The percentage of consumers sampled with third party collections never went below 27 percent or above 34 percent. Peak levels — and levels of 33 percent and above — occurred after the financial crisis into 2013.
The number of speculative oil and gas companies in financial distress is starting to increase as investors lose interest, access to more credit is throttled and companies struggle to live within cash flows, according to a S&P Global Ratings report looking at the finances of exploration and production companies midway through 2019. Consolidation through mergers that lower costs may not prove to be a solution as oil and gas prices stay low, the credit rating agency said, and bankruptcy may be the only option, even for companies that declared bankruptcy during the 2015-2017 oil price trough. "After a relatively quiet 2018 for oil and gas defaults, the sector appears to be back in the spotlight this year with 10 rated oil and gas issuers downgraded to 'D' or 'SD' so far in 2019," Ratings said in a July 12 note. 'D' and 'SD' are for companies that are in default or have chosen not to make a debt payment, resulting in selective default. "While hydrocarbon price volatility throughout the first half of this year is partially to blame, the lower echelon of rated issuers is also struggling to meet market demands of operating within internally generated cash flow and is experiencing investor fatigue due to disappointing returns." Ratings said a small group of distressed companies, survivors of the 2015-2017 meltdown, may not escape financial trouble in 2019 as debt maturities loom and commodity prices stay low.