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Americans Are Worried About Credit Card Bills

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Americans Are Worried About Credit Card Bills

Americans are worried about credit card bills due to coronavirus, according to WalletHub’s new Coronavirus Money Survey, released Wednesday. The survey, which follows WalletHub’s report on the “States Most Aggressive Against the Coronavirus,” illustrates some of the ways in which COVID-19 has impacted Americans’ lives and spending habits. The complete survey results can be found at http://bit.ly/2Ujnv9A.

Below are additional highlights Around 67 million Americans think they will have trouble paying their credit card bills due of the report, along with a WalletHub Q&A included in a news release.

Key stats:

• Coronavirus is a huge source of stress. Coronavirus is now the top stressor in America, above money problems, which has traditionally topped the list.

• Many Americans have started saving extra. 158 million Americans are saving more money during coronavirus, rather than spending more.

• Spending habits have changed differently for women and men. The top category women have spent less on due to coronavirus is travel. For men, it’s entertainment events, such as concerts, sports and movies.

• Travel has halted. 94 million Americans have cancelled or plan on canceling travel plans due to the coronavirus.

• Touching cash is scary. More than six in 10 people believe it is possible to contract the coronavirus from money.

Should credit card companies forgive late payments during the coronavirus pandemic?

“Yes, credit card companies should give relief to affected customers, just like they’ve done during major natural disasters in recent years,” WalletHub CEO Odysseas Papadimitriou said in the release. “Roughly 67 million Americans anticipate having trouble paying their credit card bills because of the coronavirus. Their struggles could easily ripple through the economy if left unaddressed, especially considering the more than $1 trillion in credit card debt currently owed by U.S. consumers.”

How are consumers reacting to the coronavirus financially?

“We’ve seen a lot of panic buying as a result of the coronavirus, with people purchasing things like toilet paper en masse, largely because they don’t know what else to do. Furthermore, 94 million Americans have cancelled or plan to cancel travel plans due to the coronavirus,” WalletHub analyst Jill Gonzalez said in the release. “Less apparent, however, is the panic saving that people are engaged in right now. Around 158 million Americans, or roughly 63% of adults, say they are saving more, as opposed to buying more, as a result of this crisis. If there’s a bright side to all of this, people saving more money than usual might just be it.”

How are consumers feeling emotionally?

“The coronavirus is now the top stressor in America, above money problems and the 2020 election,” Gonzalez said. “This is significant because money problems have for years been our top stressor, according to the American Psychological Association, with politics creeping up the list lately. It just goes to show how quickly the pandemic has come to dominate the public consciousness, not just in the U.S. but around the world.”

Is President Trump right to consider sending relief money directly to Americans?

“President Trump is absolutely correct to consider sending direct-relief checks to American households. In fact, it’s the only way to fight an economic crisis like this. Other measures such as payroll tax relief will help some businesses, but a lot of workers won’t see any benefit,” Gonzalez said.

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Business

Trumps Wants a Bigger Stimulus Check

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The White House made renewed calls to Congress to come up with a second bigger stimulus check. This time, President Donald Trump wants Republicans to go beyond their skinny proposal and issue a bigger relief package. This includes a bigger stimulus check for Americans.  

RELATED: Is a Second Stimulus Check Still Happening?

On Wednesday, Trump urged Republicans to support a bigger COVID-19 relief bill. He tweeted: “Democrats are “heartless”. They don’t want to give STIMULUS PAYMENTS to people who desperately need the money, and whose fault it was NOT that the plague came in from China. Go for the much higher numbers, Republicans, it all comes back to the USA anyway (one way or another!).”

Stimulus Check Update

Press Secretary Kayleigh McEnany clarified the tweet during Wednesday’s press briefing. She said the president referred to the $500 billion “skinny bill” GOP Senators passed last week. Last Thursday, the Senate voted on a Republican bill on a $500 billion stimulus package. Democrats opposed it en masse, saying it did not contain enough to help everyone. The measure didn’t pass, getting only 52 votes (it needs 60 to pass). McEnany said Trump thinks that the relief amount was too little, and it “didn’t include direct payments.” The President “wants more than the $500 billion and he’s very keen to see these direct stimulus payments.”

In particular, the President looks to favor bigger stimulus checks for American households. While both parties are discussing sending a new batch of $1,200 stimulus checks, he wants a bigger amount. Trump said on Wednesday: “I’d like to see it be very high because I love the people. I want the people to get it.” The president did not say how much higher the stimulus checks should be. He did say “I like the larger amount. Some of the Republicans disagree, but I think I can convince them to go along with that.”

House Problem Solvers Caucus

Two days ago, the bipartisan House Problem Solvers Caucus proposed a compromise $1.5 trillion stimulus package. Chief of Staff Mark Meadows says that the plan was “very thoughtful.” I’m probably more optimistic in the last 72 hours than in the last 72 days,” Meadows said. He also said that if Democrat House Speaker Nancy Pelosi is willing to stay in session, a bill might pass soon. Meadows thinks the biggest obstacle remains “the amount of money that is outlined for state and local help.” 

In  a press release, the caucus states: “Having seen no progress on a new COVID-19 relief package in four months, and in recognition of Americans’ increasing suffering, the Problem Solvers Caucus (PSC) has developed a comprehensive, bipartisan framework to meet the nation’s needs for the next 6-12 months, that can pass both chambers of Congress and be signed into law by the President.” 

Several Democrats have already rejected the plan, saying the plan needs more money. 

Encouraging Signs

Top Democrats in Congress, however, are warming up to the President’s call for a bigger stimulus. House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer said in a statement that the White House’s pronouncements were encouraging. In a joint statement, they said: “We are encouraged that after months of the Senate Republicans insisting on shortchanging the massive needs of the American people, President Trump is now calling on Republicans to ‘go for the much higher numbers’ in the next coronavirus relief package.” 

“We look forward to hearing from the President’s negotiators that they will finally meet us halfway with a bill that is equal to the massive health and economic crises gripping our nation. By the end of the week, 200,000 Americans will have died from the coronavirus. The lives and livelihoods of the American people depend on Republicans abandoning their obsession with doing as little as possible while the coronavirus rages through our nation,” they said. Pelosi also committed that the House will remain in session until Congress passes another coronavirus relief bill. 

While there is no definite timetable nor a clear agreement on the budget yet, Trump has helped advance the talks where a deal must be made. If there is a time for compromise, it has to be now. Otherwise, it will take an election for much-needed help to arrive.

Watch this as White House Chief of Staff Mark Meadows is optimistic a Covid-19 relief package is still possible:

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Economy

Average Income in US Was Highest in 2019

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The highest average income in US levels in 2019 before coronavirus changed everything. According to a 2019 government survey released by the US Census Bureau yesterday, U.S. average household income was at its highest levels in 2019, while poverty levels fell. Assistant division chief Trudi Renwick of the U.S. Census Bureau noted the increase in income. He said, “We do see in the data that we have an increase in employment, that we have an increase in earnings, and those would all tend to push median household income up.” Adjusted for inflation, this means that US 2019 average incomes are the highest since 1967.

RELATED: Biden Talks Labor, but Assures Wall Street of Status Quo

Median Household Income by Year

Data from the U.S. Census Bureau, real median household income jumped 6.8% from $64,324 in 2018 to $68,703 last year. This is the highest median income recorded since 1967, the year when the agency started recording data. The poverty rate went down to 10.5%, a drop of 1.3 percentage points from the year before. More important, it was the fifth consecutive annual decline in poverty rates. It also stands as the lowest rate recorded since 1959, when the agency started tracking. 

David Deull, principal economist at IHS Markit said “It was a pretty banner year for households, and really across the income distribution, we got a lot of eye-popping figures in this release.” He described 2019 as the “late-stage expansion high watermark benchmark.” 

The report also has its concerns. The number of people without health insurance also hit increased levels. The agency also said that uninsured Americans rose 0.3 percentage points to 9.2%. From 28.6 million, those without insurance rose to 29.6 million, including more children. 

The data helped show the employment picture. More people availed employer-provided coverage in 2019 compared to 2018. This meant growth in employment rates, as Medicaid coverage shrunk as well. Private healthcare covered 67.4% of people, while Medicare and Medicaid covered 35.4%. 

The Boom in the Last Five Years 

The data may seem outdated right now, especially with the damage caused by Covid-19. Still, it helped establish benchmarks on income, poverty, and health coverage before Covid-19. Before the pandemic, the US enjoyed a five-year economic boom. Without coronavirus, the gains could have carried over to 2020 and beyond.  

Coronavirus in particularly affected jobs. In 2019, the jobless rate was at 3.7%. When the impact of the virus hit the US, stores, and businesses had to shut down, along with it 22 million jobs. By April 2020, the height of the pandemic, the jobless rate zoomed to 14.7%. Recently, the job market has opened, albeit slow, and is at 8.4%. 

At present, US recovery is slow. Covid-19 infection numbers remain high, so businesses are hesitant to reopen in full. With 6,788,147 infected cases and over 200,000 deaths, declaring that the outbreak is under control is a long way off. A vocal minority also continues resisting safety measures such as masks. This is why the country has one of the highest infection rates worldwide. 

Unless a vaccine gets approved later this year, the economy may take longer to recover in full. Mere updates on vaccine trials already excite the stock market. News about possible vaccine approvals pushes industries to prepare for normalized operations. Stock prices on pharma, leisure, travel, and entertainment then go higher. 

U.S. Income Statistics

For now, census officials will assess the pandemic’s impact on the 2019 data. This early, they are beginning to that 2019 is the high point for the U.S. economy. 

“It is also sobering that this is likely one of the best reports we will see at least for a long time,” H. Luke Shaefer, director of the University of Michigan’s Poverty Solutions center said. He added, “No one yet knows the full impact of the economic and public health crisis that is consuming our lives today and disproportionately impacting the poorest American families.”

Watch this Introduction to Income and Poverty in the United States:

If it weren’t for Covid-19, do you think the US would be enjoying economic prosperity this year?

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Business

S&P 500 Index Will Hit 3,600

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Even with the recent tech sell-off, the S&P 500 index can still set a record high and reach 3,600 by year-end. This is what Goldman Sachs analysts wrote in a note issued last Friday, Sept 11.

RELATED: S&P 500 Hits Record All-Time High

Goldman Sachs Says S&P 500 Index Will Hit 3,600

Goldman analysts led by David Kostin said that they also see the S&P 500 index reach 3,800 by mid-2021. They attribute the optimism to the expected availability of Covid-19 vaccines by then. The company adjusted its target index by 20%, as it realizes the Index’s potential of getting back to the milestone.

Since the all-time high record of 3,520.25 set last August, the S&P 500 index has lost momentum. It especially dropped hard during the recent tech sell-off, losing as much as 2.5% in a single week. The drop is the index’s largest weekly fall in the last three months, giving fears to a crash. While it rebounded after that, the index is still 5% below the record. Last Friday, it closed at 3,340 points.

Recovery by 2021

Goldman Sachs wrote: “Despite the sharp sell-off in the past week, we remain optimistic about the path of the US equity market in the coming months. The Superforecaster probability of a mass-distributed vaccine by 1Q 2021 has surged to 70% and economic data show a continuing recovery.” They added: “We still expect the market will rise to 3,600 at year-end 2020 (+8%) and 3800 at mid-year 2021 (+14%) driven by improving earnings prospects and a declining risk premium.”

They have also noted the report of superforecasters on the availability of vaccines. Good Judgment estimates the probability of an available vaccine for all by the 1Q 2021 at 68%. This is 28% higher than the previous estimate of 40% three weeks ago.

US GDP fell at a record pace in the second quarter. Looking ahead at a full recovery, investors have targeted 2021 to achieve that. Economists believe that GDP will reach 6.4%, which will lead to S&P companies’ earnings to increase by 30%. In contrast, analysts project a loss of 20.3% in earnings for the same companies this year.

Experts believe that “equity risk premiums,” will fuel the rally. These are a combination of economic growth and investor confidence.

JP Morgan Is Optimistic As Well

Rival bank JP Morgan sees the same future for the S&P 500. Their team led by Dubravko Lakos-Bujas also thinks the S&P will reach 3,600 by end of the year, a 6% jump from present levels. They said that the index’s earnings recovery was “ahead of expectation” due to many factors. This includes the Fed’s support, the reopening of global economies, and long tech plays. They noted that tech companies are resistant to the pandemic’s economic impact. As a result, their profits “helped offset broader earnings weakness.” As such, JP Morgan predicts that the index’s earnings per share would hit $136 by the end of the year and $170 in 2021. These are higher than the consensus estimates of $130.19 and $166.39. Goldman Sachs also has the same prediction for 2020 at $170.

The biggest remaining threat to the economy is the US election uncertainties. A win by the incumbent may mean fewer policy changes, but it doesn’t guarantee confidence. A new administration may also shake foundations in its bid to clean the house.

A stimulus bill is also expected by Americans at this point. Every day that a bill isn’t passed, the probability of getting relief grows dimmer. The prospect of getting a stimulus package can help electrify the market, while a certain no can erode some confidence. Apart from affecting the market, this uncertainty can also swing the vote both directions.

Watch this as Heath Terry, Goldman Sachs lead tech analyst, joins CNBC’s “Squawk Alley” to discuss tech stocks after a previous week of losses:

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