Business

Airbnb issues permanent global party ban in wake of string of shootings

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(NEW YORK) -- Short-term rental giant Airbnb has issued a permanent global ban on parties following a string of shootings that have broken out nationwide at properties it lists.

The company announced Tuesday that a temporary party ban it enacted in August 2020 over health concerns prompted by the COVID-19 pandemic is being officially codified into its policies.

While the company did not specifically cite the shootings that have occurred during parties at its listed properties, it said in a statement, "Over time, the party ban became much more than a public health measure."

"It developed into a bedrock community policy to support our Hosts and their neighbors," Airbnb said in its statement.

The San Francisco-based company said the ban is meant to "deter the very rare cases of Hosts who do not operate responsibly, or guests who try to throw unauthorized parties."

Airbnb said violations of its party ban will result in "serious consequences" for guests, including suspension of accounts or full removal from the platform.

In 2021, more than 6,600 guests were suspended from Airbnb over violations of its temporary party ban, according to the company.

Airbnb said that after the temporary ban was imposed, reports of parties dropped 44% year-to-year.

"Strong policies must be complemented by strong enforcement," the company said. "We've introduced a number of anti-party measures in recent years to enforce our policy and try, to the best of our ability, to stop both unauthorized parties and chronic party houses."

Despite the temporary ban, several shootings have occurred at Airbnb rentals across the country.

In April, two teenagers were killed and eight people were wounded when a barrage of 50 gunshots broke out at a Pittsburgh Airbnb rental house, where police said roughly 200 people were having a party. Some escaped the gunfire by jumping out of windows.

Airbnb responded to the Pittsburgh shooting by issuing a lifetime ban against the person who rented the house and filed a lawsuit against them. The company confirmed that an "unauthorized party" was thrown without the knowledge or consent of the house host, who specifically stated in the listing page that no parties were allowed and that any evidence of a party would result in a $500 fee.

The Pittsburgh shooting came just days after a 23-second running gun battle, in which up to 50 shots were fired, erupted during a teenager's birthday party at an Airbnb rental in Houston that left one person wounded, authorities said.

The Houston incident happened on the same day a shooting occurred at an Airbnb rental house in the Sacramento, California, suburb of Elk Grove that left an 18-year-old man dead, according to the Elk Grove Police Department. Police said the Airbnb rental was being used for a party at the time of the fatal shooting.

On June 11, four men were shot in a drive-by shooting on an Airbnb rental in Detroit that was being used for a bachelor party, police said.

The temporary party ban Airbnb imposed in 2020, also put a cap on the number of people allowed to occupy a home at 16. The company said the new policy removed the occupancy cap on some large homes that have ample room to accommodate 16 or more people, including castles in Europe and beachfront villas in the Caribbean.

"Amazing properties like these thrive on hosting multi-generational family trips and larger groups, and removing this cap is meant to allow those Hosts to responsibly utilize the space in their homes while still complying with our ban on disruptive parties," Airbnb said. "This decision was made based on feedback from the longstanding and trusted members of our global Host community, and it will take effect in the coming months."

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Top companies respond to ruling overturning Roe v. Wade

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(NEW YORK) -- Major U.S. companies, including Meta and JPMorgan Chase, on Friday said they will cover travel costs for employees who seek legal abortions outside their home state after the Supreme Court released a ruling that overturned Roe v. Wade.

Several corporations in recent weeks, including Amazon and Starbucks, had announced expanded health benefits to pay for travel fees incurred by workers seeking an abortion if the procedure is unavailable near where they live.

JPMorgan Chase, one of the nation's largest banks, informed U.S. employees that it will cover the costs of travel for those seeking an abortion who cannot access the procedure legally in their home state, according to a memo sent to employees on June 1 and obtained by ABC News.

The company will begin covering the travel next month, according to a company web page that details the policy. The JPMorgan Chase memo was first reported by CNBC.

A spokesperson for Meta, the parent company of Facebook, confirmed to ABC News that it plans to offer similar coverage of travel expenses for some employees seeking abortion.

"We intend to offer travel expense reimbursements, to the extent permitted by law, for employees who will need them to access out-of-state health care and reproductive services," a spokesperson said. "We are in the process of assessing how best to do so given the legal complexities involved."

Tesla, Citigroup, Apple and Salesforce are among the additional companies that in recent weeks expanded abortion coverage for employees to include costs for travel when necessary.

Meanwhile, rideshare companies Lyft and Uber have vowed to provide legal support for drivers if they face lawsuits for driving passengers to get an abortion.

"We believe access to healthcare is essential and transportation should never be a barrier to that access," a Lyft spokesperson told ABC News in a statement on Friday after the ruling. "This decision will hurt millions of women by taking away access to safe, and private reproductive healthcare services."

Lauren Hobart, the president and CEO of retailer Dick's Sporting Goods, said on Friday that the company will provide up to $4,000 to cover the cost of travel for employees — as well as their spouses or dependents — who must travel out of state for an abortion. The company refers to its employees as teammates.

"We recognize people feel passionately about this topic — and that there are teammates and athletes who will not agree with this decision," Hobart said in a statement. "However, we also recognize that decisions involving health and families are deeply personal and made with thoughtful consideration."

On Friday morning, the Supreme Court released a 5-4 vote that struck down Roe v. Wade, a 1973 decision that guaranteed a constitutional right to an abortion. In the opinion, Justice Samuel Alito called Roe "egregiously wrong from the start."

Some business leaders on Friday criticized the Supreme Court ruling and called on their peers to do the same.

Jeremy Stoppelman -- the co-founder and CEO of Yelp, which recently announced it will cover the travel expenses for employees seeking abortions -- on Friday slammed the decision.

"This ruling puts women's health in jeopardy, denies them their human rights, and threatens to dismantle the progress we've made toward gender equality in the workplace since Roe," Stoppelman said in a statement shared with ABC News.

"Business leaders must step up to support the health and safety of their employees by speaking out against the wave of abortion bans that will be triggered as a result of this decision, and call on Congress to codify Roe into law," he added.

Ellevest CEO Sallie Krawcheck, whose company makes an investing app targeted to women, said the ruling carries negative economic implications in addition to its effects on gender equity.

"As CEO of a financial company built for women, by women — with a team of more than 80% women employees — I know the importance of being able to take control of our money, our choices, and our futures," Krawcheck said on Twitter.

"Reproductive health care access is a human rights issue, but as we've seen time and time again, that doesn't seem like it's enough to sway certain people with the power to uphold that right," she added. "How about this: Reproductive rights affect all of us — because it affects our economy."

The Supreme Court ruling comprises an attack on reproductive rights, said Roger Lynch, CEO of Conde Nast, which on Friday told employees it would bolster health coverage to include travel expenses for those seeking an abortion.

"Today, the U.S. Supreme Court overturned the constitutional right to abortion, allowing individual states to more aggressively regulate or ban the procedure altogether," he said in the memo to employees. "It is a crushing blow to reproductive rights that have been protected for nearly half a century."

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Retirees face threat from economy and market turmoil: Experts

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(NEW YORK) -- A market drop, a price spike and a looming recession -- this year has battered the finances of everyday Americans. But some can wait out the misery. Eventually, the market will likely improve, as will debilitating grocery and fuel costs.

Older people and retirees, however, lack the luxury of time. For them, the twin crunch of rising living costs and falling stock returns sounds an especially urgent alarm, straining their budgets while choking off supplementary funds from their portfolios, experts told ABC News.

Typically, financial advisors encourage older people to transition their holdings away from volatile assets like stocks to predictable assets such as bonds, since as one ages, the risk of a major downturn begins to outweigh the reward of sizable gains. Nevertheless, many older people and retirees retain significant stock holdings.

Fifty-nine percent of Americans aged 65 and older own stock either directly or through accounts like a 401(k), according to a Gallup poll updated in May. The share of older people invested in the stock market is slightly larger than the 56% measured in 2021 and the 55% in 2020, though the difference is not statistically significant, Gallup says.

Data on Fidelity’s 21.2 million 401(k) investors shows that -- as of late March -- more than a third of people aged 60-67 have at least 67% or more in stocks, the financial services firm told ABC News.

By necessity, some older people under financial stress need to sell stock to shore up their budgets, even if they stand to lose potential gains down the road by selling in a down market, experts said. But individuals should take steps to avoid such a choice, if possible, like drawing on other portfolio income like dividends or taking up additional work, they added.

“Market risk is particularly important if you need money soon, as is the case with many soon to retire or already living in retirement,” Rob Williams, the managing director of financial planning and retirement income at Charles Schwab, told ABC News.

“Markets, global-political risk, and inflation are clearly concerning many investors,” he added. “There’s a general fear.”

Retirees typically carry two types of exposure to the stock market: 401(k)s and other accounts sponsored by their employer as well as IRA and other brokerage accounts held away from their employer, Williams said. Americans largely rely on retirement funds, since the share of employers that provide pensions has declined in recent decades.

Oftentimes, investors peg 401(k) accounts to the S&P 500, which has fallen more than 20% so far this year. Investors flocked to funds that tracked the S&P because of its incredible run during bull market that began in 2009 and lasted more than a decade.

Meanwhile, the tech-heavy Nasdaq -- which also drew considerable investment due to years of outsized returns -- has fallen nearly 30% over that period, and the Dow Jones Industrial Average has dropped about 16%.

Difficult times for the market and the economy may continue, experts said. The Federal Reserve last week raised borrowing costs significantly, hiking its benchmark interest rate 0.75%, the largest increase since 1994. Additional rate hikes will likely follow, Federal Reserve Chair Jerome Powell said.

In theory, the moves should slash inflation by slowing the economy and eating away at demand. But the strategy also risks tipping the economy into a recession.

Even though such economic prospects pose a challenge for older people and retirees, they shouldn’t panic, experts said. “At some point, the business cycle and the market cycle play out,” Mona Mahajan, senior investment strategist at Edward Jones Investors, told ABC News. “You’ll get a down year in equities. Volatility should be expected if you're exposed to equity markets.”

Whenever possible, older people and retirees should try to weather the potential downturn without a major sell off, experts said.
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“It's always better to be in the market than trying to time yourself in and out of the market,” Mahajan said. “Investors are notoriously poor at picking market bottoms -- or tops, for that matter.”

But older people who rely on their portfolios for regular income will find it more difficult to weather a downturn, said Williams, the managing director at Charles Schwab. For them, it’s of paramount importance that they diversify their holdings, so their day-to-day finances do not depend on volatile assets or segments of the market, he said.

“The less time you have to recover, the more critical it is to have a diversified allocation that limits exposure to individual securities or sectors of the market and with exposure to a mix of cash, bonds, and stocks,” he said.

Older people also benefit from a portfolio that provides alternative sources of income beyond gains in stock price, Williams said. “Investment income in the form of interest and dividends can create a floor of cash flow to avoid having to sell investments, in particular in bear markets,” he added. Dividends from U.S. companies held for at least 60 days are taxed at the capital gains rate, which runs anywhere from 0% to 20%, depending on one's tax bracket; as opposed to the higher tax rate for personal income.

To be sure, the economy may avert a recession altogether. And the stock market may have fallen nearly as far as it will go, since many investors have already acted in anticipation of additional rate hikes from the Fed.

For now, older people can draw solace from the possibility that the worst in markets has already passed, said Mahajan, the senior investment strategist at Edward Jones.

“In our view, we’re closer to the bottom than we are to the top,” she said.

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How to save money on gas as prices continue to climb

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(NEW YORK) -- The price for a gallon of gas continues to surge.

As of Thursday morning, AAA said it costs an average of $4.60 for a gallon of gas, meaning filling up a small car of gasoline will likely cost you more than $50.

Patrick De Haan, GasBuddy's head of petroleum analysis, told ABC News in March that "gas prices continue to go up and defy expectations," with the cost per gallon already surpassing predictions heading into Memorial Day.

So how can you keep the pain at the pump to a minimum? Here's what the experts say:

Change the way you drive

Most cars achieve optimal fuel economy around 55 mph, according to GasBuddy. Driving too fast or too slow won't give you the most bang for your buck.

AAA recommends reducing your speed if your trip takes you on the highway.

"Aerodynamic drag causes fuel economy to drop off significantly as speeds increase above 50 mph," the group says.

Experts also said it is key to remember to accelerate gradually and ease up on the brake -- braking suddenly or speeding up fast is hard on fuel economy. Cruise control can help you maintain the proper speed and save fuel.

Don't skip the repair shop

Making sure that your car is properly maintained will ensure a problem with the vehicle isn't using up more fuel than it should.

The biggest red flag is if the "check engine" light is illuminated.

In that case, "take your car to the repair shop as soon as possible," AAA says. "This indicates a problem that is causing excessive emissions and likely reducing fuel economy."

Another thing to stay on top of, according to experts, is your tires.

If your tires are underinflated, you won't maximize your fuel savings.

Avoid idling and turn off that air conditioner

Even if it is cold out, do not idle your car for long periods. It does nothing but waste fuel.

"If your car will be stopped for more than 60 seconds, shut off the engine," AAA recommends.

On the flip side, if it is hot out, try to minimize your use of air conditioning.

Keeping your windows down for a breeze will save you more fuel than running your AC.

Take advantage of apps that track prices

Many people use the app Waze for directions, but it also has a gas feature that can show you the nearest gas stations along with prices.

Gas stations near major exits and in bigger cities tend to be more expensive.

The app GasBuddy is another resource constantly updating gas prices in real-time. In addition, you can get alerts on deals sent to your phone.

Another app to check out is Gas Guru. It aims to help you find the cheapest gas prices with information straight from the oil price information service. The app lets you search by fuel grade and amenities as well.

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Diesel prices could lead us into the next recession, experts say

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(NEW YORK) -- While many Americans have noticed sky-high gasoline prices, the lesser-known increase in diesel costs could be what drives the U.S. economy into a recession, experts told ABC News.

Oil prices, which on Wednesday afternoon stood at $105 per barrel, are likely to remain high through November, when they’ll moderate to around $100 per barrel, according to the U.S. Energy Information Administration (EIA).

Elevated diesel prices could persist even longer as heightened demand for diesel outlasts that for gasoline, experts said. Since nearly all products that people consume rely on trucks, trains, and other modes of transportation that use diesel fuel, the already-inflated prices for many goods will prove difficult to dial back in light of those elevated diesel costs, they said.

“No one really notices diesel prices in the U.S. because it’s really only used by industries,” said Damien Courvalin, head of energy research and senior commodity strategist at Goldman Sachs. “But that diesel represents a piece of your plane ticket, a piece of that box of cereal… that price is folded into aggregate inflation.”

The nationwide average price for a gallon of diesel stands at $5.81, which marks a staggering 80% increase since a year ago, when a gallon cost $3.22, according to AAA data. In California, the average price of a gallon of diesel is just below $7 per gallon, AAA data shows.

‘Diesel is my biggest concern’

While gasoline demand may decline leading into a recession, diesel demand often remains elevated, experts said. “In the pandemic we didn't see diesel demand fall off the way we saw gasoline fall because we all ordered things off of the internet,” said Denton Cinquegrana, chief oil analyst at market research firm OPIS.

Many facets of U.S. industry rely on diesel-fueled transportation of goods, experts said. Typically, overall consumer demand drops during a recession. But diesel demand could remain at high levels in the lead up to a recession, especially in light of the prevalence of e-commerce and home delivery, experts said.

“Diesel is, quite frankly, my biggest concern, even more so than gasoline,” Cinquegrana said. “You could make behavioral changes when it comes to gasoline -- you could carpool to work, some of us have the ability to work from home."

But with diesel, high costs elevate the prices of everyday goods, since the higher cost of transportation is often passed down to consumers. In turn, consumers restrain their spending habits at grocery and other retail stores, slashing demand and exacerbating an economic slowdown, experts said. Consumer spending accounts for about 70% of U.S. gross domestic product.

“Those trucks run on diesel, and those costs get passed on to the consumer -- that's why the price of eggs, the price of milk, beer, go up,” Cinquegrana said. “It’s the price of diesel that kind of breaks the back of the economy eventually.”

Refineries are nearing capacity

The fundamental issue behind the high prices of both gasoline and diesel: demand is high and supply is constrained. Currently, U.S. refineries are producing about a million barrels less per day than they were pre-pandemic, according to the EIA.

In recent years, energy companies have slowed oil expansion in response to a call for fiscal discipline from shareholders. The rise of renewable energy alternatives has also posed a challenge for long-term investment in oil extraction.

While President Joe Biden is set to travel to Saudi Arabia next month, a prospective oil deal likely won’t help the U.S. in the short term.

“Their oil is in the ground,” said Courvalin, the head of energy research at Goldman Sachs. “None of us use that, we need refined oil -- it needs to go through the refining process to get what we consume.”

Last week, Biden sent a letter to major oil refinery companies calling on them to take “immediate actions” to increase output. The letter accused the companies of taking advantage of the market environment to reap profits while Americans struggle to afford gas. It mentioned the possibility of Biden invoking the Defense Production Act, which requires companies to produce goods deemed necessary for national security.

But experts told ABC news that U.S. refineries are already near full capacity, and it would take a prolonged period to build new ones. Refineries are “very complex, highly regulated, and very expensive to build," the EIA said. "Building new refineries to increase capacity is not something that can be done in a short time frame."

“You have to realize that up until recently, nobody was screaming for more refining capacity in the world,” said Bob McNally, president of Rapidan Energy Group, a consulting firm. "In fact, if anything, refining capacity was starting to look like horses in buggies did in 1908.”

Biden should ‘go further’

The Biden administration’s short term response to the crisis has involved the release of oil from strategic reserves and a call for a gas tax holiday. The long term response has centered around a transition to clean or low carbon energy, but Cinquegrana criticized this proposal as “not appreciating how difficult an energy transition is.”

“What we really need is that higher investment - we talk about refining capacity: if there is none, then I cannot increase gasoline supply,” Courvalin said. “There is nothing the policy can do at this stage.”

The Biden administration has called for a federal gas tax holiday which would temporarily pause the federal gasoline tax of 18.4 cents per gallon on gasoline and 24.3 cents per gallon on diesel fuel.

“On the one hand, yes, it does reduce prices at the pump,” Courvalin said of the potential holiday. “But when you look at it from a commodity perspective, it also means we are still not balancing, just subsidizing what we are running out of.”

The American Petroleum Institute sent the White House its own 10-step proposal to alleviate supply shortages. Their recommendations ranged from lifting development restrictions on federal lands and waters to revising the NEPA permitting process.

“I would go even further,” McNally comments on the letter, “reversing the ban on cross-border pipelines, removing the prospective risk of onerous regulation of oil and gas companies and investment and so forth until we can legislate a proper climate change policy.”

Some of the major energy companies agree.

“In the short term, the US government could enact measures often used in emergencies following hurricanes or other supply disruptions -- such as waivers of Jones Act provisions and some fuel specifications to increase supplies,” ExxonMobil suggested in a statement to ABC News.

“Longer term, [the] government can promote investment through clear and consistent policy that supports U.S. resource development, such as regular and predictable lease sales, as well as streamlined regulatory approval and support for infrastructure such as pipelines," the company added.

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Ohio State University granted trademark for the word 'THE' on merchandise

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(COLUMBUS, Ohio) -- Ohio State University was granted a trademark to use the word "THE" on apparel and merchandise to promote its athletic teams.

The U.S. Patent and Trademark Office had previously rejected Ohio State's application, claiming the trademark appeared to be for a "merely decorative manner" and as an "ornamental feature" that didn't function as a trademark that would differentiate the items from others, the Associated Press reported.

The USPTO did not immediately respond to ABC News' request for comment on the approval.

In a statement to ABC News, the university said "THE" was used by students at the school for years and that it worked hard to "protect the university's brand and trademarks because these assets benefit students and faculty and support our core academic mission of teaching and research."

Ohio State said that the school's trademark and licensing program generates more than $12.5 million a year in revenue and funds university scholarships and programs.

The university filed its patent application in August 2019, months after fashion designer Marc Jacobs filed to use the word "THE" on his products. The USPTO also struck down Jacobs' application.

Jacobs and the school reached an agreement last year that allows both to use "THE" on their respective products.

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Biden calls on Congress, states to suspend gas taxes

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(WASHINGTON) -- President Biden on Wednesday called on Congress to suspend the federal gas tax for three months and asked states to suspend their own gas taxes or provide commensurate relief to consumers.

The federal government charges an 18.4-cent tax per gallon of gasoline and a 24.4-cent tax per gallon of diesel. Suspending the tax for three months -- through the end of September, will cost about $10 billion, the White House said.

"I fully understand that the gas tax holiday alone is not going to fix the problem," Biden said in remarks delivered from the South Court Auditorium. "But it will provide families some immediate relief, just a little bit of breathing room, as we continue working to bring down prices for the long haul."

But the idea may not get the reception Biden is looking for from lawmakers on Capitol Hill.

House Speaker Nancy Pelosi, D-Calif., was noncommittal on the issue in a statement she released after Biden's announcement. "We will see where the consensus lies on a path forward for the President’s proposal in the House and the Senate," the statement read.

Sen. Joe Manchin, D-W.Va., told ABC News on Wednesday that he's not on a "yes" vote as of now.

"Now, to do that and put another hole into the budget is something that is very concerning to me, and people need to understand that 18 cents is not going to be straight across the board -- it never has been that you'll see in 18 cents exactly penny-for-penny come off of that price," Manchin said.

Biden specifically called on companies to make sure that "every penny" of those savings are passed through to consumers.

"This is no time for profiteering," he said.

Biden on Wednesday also called on the industry to use profits to refine more oil and gasoline and lower prices at the pump.

"My message is simple to the companies running gas stations and setting those prices at the pump: this is a time of war, global peril, Ukraine," Biden said. "These are not normal times. Bring down the price you are charging at the pump to reflect the cost you are paying for the product to it now. Do it now, do it today. Your customers, the American people, they need relief now."

The administration has been putting public pressure on oil companies to help Americans at a time of financial need.

"Companies, of course, are beholden to their shareholders, but they really need to be beholden and conscious of customers, and their fellow neighbors, and their fellow citizens, just like this administration's doing," another senior administration official told reporters. "And we hope that that's the spirit that CEOs of these companies will take."

Energy Secretary Jennifer Granholm is scheduled to meet with oil company executives Thursday, during which they will press executives to ensure they'll pass on the savings if the gas tax holiday is enacted.

"We are encouraging these oil and gas companies to invest, to help their fellow citizens, to help their own workers," Granholm told reporters at the daily White House press briefing. "We need them to come to the table."

When asked about the apparent lack of support for the gas tax holiday from lawmakers, Granholm said there will be ongoing discussions.

"I would hope that both sides of the aisle are listening to their constituents about getting relief," she said. "I think the citizens will be the loudest voice in the room."

On Wednesday, Biden also called on state and local governments to provide "relief" to Americans by suspending their state gas taxes or provide other remedies, like delaying planned tax and fee increases, or even consumer rebates or relief payments.

State gas taxes average about 31 cents per gallon of gasoline, according to the U.S. Energy Information Administration.

Researchers at the University of Pennsylvania's Wharton School recently found that the suspension of gas taxes in Maryland, Georgia and Connecticut were, in fact, "mostly passed onto consumers at some point during the tax holiday in the form of lower gas prices," but that the lower prices "were often not sustained during the entire holiday."

In Maryland, 72% of the tax savings were passed on to consumers; in Georgia, 58-65% were, and in Connecticut, 71-87% were, according to their analysis.

When asked why Biden wants the federal tax suspended for three months specifically, the official said the president wanted to balance the need of "the unique moment that we're in" -- particularly during the summer driving season -- with the fact that the tax provides important revenue for the government to pay for highways and other transportation projects.

"The purpose of this suspension," the official said, "is really to address the unique moment that we're in, and with a particular focus on the summer driving season and the pain that families are feeling at the pump right now, while recognizing that on a longer-term basis, the gas tax is an important source of revenue for federal infrastructure."

The gas tax revenue goes to the federal government's Highway Trust Fund, which provides for much of the government's spending on highways and mass transit.

Biden said his proposal wouldn't affect the Highway Trust Fund, and an administration official previously told reporters that Congress can fill in the $10 billion gap with "other revenues."

"I promise you I'm doing everything possible to bring the price of energy down, gas prices down," the president said.

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What is a gas tax holiday? The federal proposal could offer short-term relief for drivers

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(NEW YORK) -- For months, sky-high gas prices have bedeviled Americans. The nationwide average price for a gallon of gas stands just under an eye-popping $5 per gallon, AAA data shows.

But a significant policy change may soon offer drivers some relief. President Joe Biden on Wednesday called on Congress to pass a gas tax holiday that would run through the end of September.

Suspending the federal gas tax, which amounts to 18.4 cents per gallon, would almost immediately reduce the price drivers pay at the pump, experts told ABC News. But they cautioned that the policy would slash funds for maintaining roads and highways, while potentially worsening a supply-demand imbalance and pushing prices even higher in the long term.

“As a motorist, I’ll take any price reduction I can get,” said Patrick De Haan, an energy analyst at GasBuddy. “As an analyst, I think it could exacerbate imbalances that could lead to higher prices.”

What is the federal gas tax?

The federal gas tax, first imposed as a 1 cent per gallon tax in 1932, makes up a portion of the price that drivers see at the pump. The tax gradually increased over the decades after its enactment, reaching its current level of 18.4 cents per gallon in 1993. Since 1997, all revenue from the federal gas tax has gone to the Highway Trust Fund, the major source of federal funding for highways, roads and bridges.

The federal gas tax has never been suspended, though a gas tax holiday was proposed by presidential candidates John McCain and Hillary Clinton during the 2008 campaign.

How would a gas tax holiday work?

A federal gas tax holiday, which would require a law passed by Congress and signed by Biden, would suspend the tax for a temporary duration. The proposal put forward by Biden on Wednesday calls for a suspension through September.

A handful of states — led by both Democratic and Republican governors — have suspended their gas taxes as a means of delivering some financial relief for drivers. Biden on Wednesday called on states to suspend their gas taxes if they haven't already.

But the moves only reduce costs by a fraction of the price. In New York, for instance, Gov. Kathy Hochul this month suspended a tax of 16 cents a gallon. With the average price of a gallon of gas in New York standing at $5, according to AAA, the tax relief amounts to a 3.2% cost reduction.

Suspension of the federal gas tax would also reduce the cost of a $5 gallon of gas by less than 5%. Still, consumers would likely prefer some relief to no relief.

"I fully understand that a gas tax holiday alone is not going to fix the problem," Biden said on Wednesday. "But it will provide families some immediate relief, just a little bit of breathing room as we continue working to bring down prices for the long haul."

What are potential downsides of a federal gas tax holiday?

There are two main potential downsides to a federal gas tax holiday. First, it would deny the federal government a primary source of funding for maintaining roads and highways. U.S. roads received a D grade last year in a report from the American Society of Civil Engineers. Eliminating the federal gas tax would likely leave them even worse off, experts said.

Second, as the U.S. struggles with an imbalance between low oil supply and high demand, a federal gas tax holiday would partially undermine the role that heightened prices play in decreasing consumer demand. In theory, if gas prices remain high or go even higher, people will buy less gas, which should help bring equilibrium between supply and demand, thereby reducing prices.

But a gas tax holiday would almost immediately reduce the price, which could increase demand and worsen the supply-demand balance even further, said De Haan, the energy analyst at GasBuddy.

“It would cause a jolt potentially to demand at a time when it is difficult for refiners to keep up with demand now,” he said.

What happens next?

Biden's support for a federal gas tax holiday will likely boost momentum in Congress for a law to enact it. But the passage of such a measure remains uncertain.

One such law, the Gas Prices Relief Act, has been proposed by Sen. Mark Kelly (D-AZ). It would eliminate the gas tax through the end of the year, and specifically stipulates that the price savings should be passed along to consumers.

In addition to Kelly, seven senators have backed the bill. So far, no Republican senators have supported it.

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Kellogg announces split into three separate companies

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(NEW YORK) -- Kellogg has announced that it will separate into three different companies to create “greater strategic, operational, and financial focus” for each of the new firms that will be named at a later date.

Under the plans announced on Tuesday, Kellogg will separate its North American cereal and plant-based foods business -- which represent an estimated 20% of Kellogg’s net sales in 2021 -- from its global snacking brands, cereal and noodle brands and frozen breakfast brands.

"Kellogg has been on a successful journey of transformation to enhance performance and increase long-term shareowner value,” said Steve Cahillane, Kellogg Company's Chairman and Chief Executive Officer in a statement announcing the company’s plans. “This has included re-shaping our portfolio, and today's announcement is the next step in that transformation."

"These businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities,” Cahillane continued. “In turn, each business is expected to create more value for all stakeholders, and each is well positioned to build a new era of innovation and growth."

Kellogg expects these moves to be completed by 2023 and the headquarters for the three companies set to focus on their global snacking brands, their cereal brands and their plant-based food brands will remain unchanged.

Said Kellogg: “After several years of transformation and improving results, the Company believes it is the right time to separate these businesses so they may pursue their particular strategic priorities.”

After the announcement, Kellogg rose more than 6% in pre-market trading on Tuesday.

The global snacking company, which earned $11.4 billion in revenue last year, will be made up of well-known brands such as Pringles, Cheez-It, Pop-Tarts, Kellogg's Rice Krispies Treats, the Kellogg said. Sales at the snacking company last year also came from some cereal brands as well as frozen breakfast brands and the Eggo brand, the company added.

The cereal company accounted for $2.4 billion in sales last year through business in the U.S., Canada, and Caribbean, Kellog said. The cereal company sells brands such as Frosted Flakes, Froot Loops, Mini-Wheats, and Special K.

The plant-based company, which earned $340 million in revenue in 2021, will be anchored by the MorningStar Farms brand, which features an array of plant-based items such as chicken nuggets and sausage links, Kellogg said.

The cereal company and plant-based company will both remain headquartered in Battle Creek, Michigan, Kellogg said. The global snacking company will maintain dual campuses in Battle Creek and Chicago, Illinois, with its corporate headquarters located in Chicago.

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Can higher interest rates be good?

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(WASHINGTON) -- The Federal Reserve's strongest weapon in its fight against skyrocketing inflation is raising interest rates.

In March, the Fed raised its target federal funds rate by 0.25%, the first rate hike in more than three years. At its May meeting, the central bank hiked rates by 0.50%, and in June it got even more aggressive, raising rates by 0.75%, the largest increase since 1994. The Fed is warning of potentially more rate hikes to come as it tries to cool consumer demand and drive prices down from a 40-year high.

That has resulted in higher interest rates on credit cards, home and auto loans, home equity lines of credit and small business loans. For borrowers, that means those products are only getting more expensive. But the Fed’s rate hike campaign is not all bad news. There is a silver lining for savers.

“Rising interest rates represent a turn of fortunes for savers as interest earnings are finally on the rise, and eventually those higher interest rates will help reduce inflation,” Greg McBride, Bankrate’s chief financial analyst, told ABC News. “This is the opposite of what savers have endured the past three years when interest rates fell and then inflation took off.”

Early in the pandemic, when the Fed was cutting interest rates to stimulate the economy, the average rate for a typical savings account was around 0.06%, according to the FDIC. Now, with the Fed's benchmark rate rising, banks are starting to follow suit, but don’t expect them to mirror those rate hikes exactly. What the Fed does with interest rates is only one factor banks consider when setting rates. They also take into account how much money customers have deposited and how much their competitors are offering.

Some banks, especially online banks, are starting to offer interest rates on savings accounts of 1% or more. But not all bank interest rates are created equal. McBride recommends doing some comparison shopping and considering switching banks to take advantage of the latest rate increase.

“You want to put your money where it will be welcomed with open arms and higher yields,” he said. “Online banks, smaller community banks, and credit unions offer higher yields than the large banks that already have a mountain of deposits.”

Fed Chair Jerome Powell predicts the central bank could raise rates another 1.75% over the remainder of the year to bring inflation down from its current 8.6% to the Fed’s target goal of 2%. Experts say if the Fed proves to be as aggressive as they’re expected to be, the top-yielding online savings accounts could top 3% by year-end.

In addition to high-yield savings accounts, McBride said if you’re willing to commit your money for a few years, then a certificate of deposit or I-bond, which are also seeing rates rise, could be better suited to your financial goals.

“Evaluate the time horizon for when the money is needed and then pursue the appropriate savings instrument,” said McBride. “Don’t chase the yield and end up locking yourself into something incompatible with your liquidity needs. If you’re evaluating where to put your emergency savings, then you’ll need a liquid account above all else.”

Wherever you choose to keep your money, experts agree you should always make sure you’re dealing directly with a federally-insured financial institution.

“There are plenty of online savings accounts that offer competitive yields, federal deposit insurance, access to the money when needed, and do not require a large balance in the account,” said McBride. “There is literally something for everyone.”

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Recession isn't 'inevitable' but inflation remains 'unacceptably high': Janet Yellen

ABC News

(NEW YORK) -- A recession is not "at all inevitable" as the Federal Reserve takes increasingly aggressive action to address sharply rising inflation, Treasury Secretary Janet Yellen said Sunday.

"I expect the economy to slow," Yellen told "This Week" anchor George Stephanopoulos. "It's been growing at a very rapid rate, as the economy, as the labor market, has recovered and we have reached full employment. It's natural now that we expect a transition to steady and stable growth, but I don't think a recession is at all inevitable."

"Clearly, inflation is unacceptably high," Yellen continued. "It's President [Joe] Biden's top priority to bring it down. And [Fed] Chair [Jerome] Powell has said that his goal is to bring inflation down while maintaining a strong labor market. That's going to take skill and luck, but I believe it's possible."

The current inflation rate, year-over-year, is at a 40-year high of 8.6%, according to the most recent data from the Bureau of Labor Statistics.

On Wednesday, in an effort to cool those rising costs, the Fed increased interest rates by three-quarters of a percentage point -- marking the largest rate increase since 1994. A higher interest rate increases borrowing costs for consumers and companies, potentially slowing inflation by decreasing demand.

"You say it's not inevitable, but I guess the question is: Is it likely?" Stephanopoulos pressed Yellen, citing data on consumer pull-back and slowing movement in the job market and noting that she, Biden and Powell were all wrong about inflation's lasting impact last year.

"Consumer spending remains very strong. There's month-to-month volatility, but overall spending is strong, although patterns of spending are changing and higher food and energy prices are certainly affecting consumers," Yellen said.

"But bank balances are high," she continued. "It's clear that most consumers, even lower-income households, continue to have buffer stocks of savings that will enable them to maintain spending. So I don't see a drop-off in consumer spending as a likely cause of the recession in the months ahead. And the labor market is very strong, arguably the strongest of the post-war period."

Yellen attributed inflation partly to Russia's invasion of Ukraine, saying the conflict had increased global prices on energy and food.

"It's important to recognize that the United States is certainly not the only advanced economy suffering from high inflation," Yellen said. "We see it in the U.K., we see it in France, Germany, Italy; and the causes of it are global, not local."

She said "energy prices spillover is really half of inflation," but that Biden has been working to keep oil prices from going even higher.

Gas prices remain at record highs after months of increases. The current national average is about $4.98 per gallon.

Yellen cited Biden's "historic" release of oil from the strategic petroleum reserve over six months in an effort to reduce prices -- though costs continue to climb.

"[Biden] stands ready to work and is encouraging producers of oil and refined products, gas, to work with him to increase supplies, to bring gas prices and energy prices down," Yellen said.

On Wednesday, Biden sent a letter to seven major oil refiners in the U.S., blasting them for posting record profits while consumers face record-high gas prices and calling on them to increase production.

The American Petroleum Institute fired back, with its CEO and president arguing it's "the administration’s misguided policy agenda shifting away from domestic oil and natural gas [that] has compounded inflationary pressures and added headwinds to companies’ daily efforts to meet growing energy needs while reducing emissions."

"How do you respond to that?" Stephanopoulos pressed.

"I don't think that the policies are responsible for what's happening in the oil market," Yellen said. "I think that producers were partly caught unaware of the strength of the recovery in the economy and weren't ready to meet the needs of the economy. High prices should induce them to increase supplies over time."

While long-term efforts to bring down the cost of gas are being debated, Stephanopoulos asked about the short term.

"Several in Congress are calling for gas tax holidays. Prices average around $5 a gallon. Is that on the table?" Stephanopoulos asked.

"President Biden wants to do anything he possibly can to help consumers," Yellen said. "Gas prices have risen a great deal and it's clearly burdening households. So he stands ready to work with Congress, and that's an idea that's certainly worth considering."

Yellen also said the administration is considering lifting some Trump-era tariffs on Chinese goods.

"We all recognize that China engages in a range of unfair trade practices that it's important to address," Yellen said. "But the tariffs we inherited, some serve no strategic purpose and raise costs to consumers. And so, reconfiguring some of those tariffs so they make more sense and reduce some unnecessary burdens is something that's under consideration."

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Juneteenth and its implications for the economy and generational wealth

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(NEW YORK) -- While June 19, 1865, is widely regarded as a day of liberation, its celebration for some simultaneously brings into question just how far that freedom goes.

For real estate entrepreneur Jude Bernard, Juneteenth is a reminder of generational wealth deprived.

"The whole story behind Juneteenth was that we were technically free, but we didn't know it and it was years before we actually truly got our freedom," Bernard told ABC News.

Bernard said Juneteenth can be used to highlight financial equality, which is the type of freedom many, like him, have fought for.

He used student loan funds to buy his first property 25 years ago with the goal of earning extra income on the side. Now, with an extensive portfolio, the investor is the founder and CEO of The Brooklyn Bank–a nonprofit focused on financial literacy and development for people of color.

"My mission is equality," he said. "The goal of the Brooklyn Bank is to pretty much bring the information to those that don't have it. So many times, us as a people, we miss out on opportunities. Not because we're not willing to learn, but because we don't even know what we don't know."

Reflecting on his upbringing as a first-generation Haitian-American in Flatbush, Brooklyn, Bernard said he feels "lucky" to have come across the information that has brought him to where he is today. He said that not having a "formal financial education" during his childhood encouraged him to share what may not be readily available in their communities with others.

Bernard said education is key to resolving economic inequality.

On Juneteenth, The Brooklyn Bank will be holding its first annual Black Money Forum in collaboration with personal finance app Stash. The free event will focus on “financial freedom, financial education, financial empowerment, and most importantly, changing the financial mindset," Bernard said.

"A lack of information keeps people on a treadmill," he said. "A lack of education, has people not saving and not passing wealth down to the next generation."

According to Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860-2020, the white to Black per capita wealth ratio is six to one. The paper, by researchers Ellora Derenoncourt, Chi Hyun Kim, Moritz Kuhn & Moritz Schularick, drew information from census data and tax records to analyze racial economic disparities over time and what steps should be taken to equalize them.

"So the average white American has six times the wealth of the average Black American. That's equivalent to Black Americans holding about 17 cents for every white dollar of wealth," co-author Derenoncourt, an economic historian and assistant professor of economics at Princeton University, told ABC News.

She said while much of the work on the racial wealth gap focuses on recent years–from the 1980s onward–, she sought to show the evolution of the gap since the Civil War to examine "the importance of American history for where the wealth gap is today."

In 1860, the white-to-Black per capita wealth ratio was 56:1, translating to the average Black American owning less than 2 cents to the dollar of every white American. Legal prevention of enslaved peoples to accumulate wealth exacerbated this gap and continues to severely constrain the ability to close it, she said.

Contrarily, in opening up the possibility for Black Americans to possess and bequeath capital, "emancipation was the single biggest closer of the racial wealth gap." Policies enacted afterward, however, did not go far enough to continue to resolve this disparity, according to Derenoncourt.

"One major thing that was lacking was any sort of reparations or provision of some form of capital to the formerly enslaved," she said. "W.E.B. DuBois called this a reckless experiment in emancipation, one that you've never seen in the history of humanity–to emancipate a people, but not provide them with any means for providing for themselves while the other group has had the opportunity to accumulate wealth and pass that wealth on to future generations."

"... I like to regard Juneteenth as not just a day off, but it's a freedom day," Bernard said. "A financial freedom day, where it's an opportunity to learn a little bit more about things that you need to gain the equality that we're supposedly entitled to."

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What the interest rate hike means for homebuyers

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(NEW YORK) -- A difficult year for many homebuyers became even tougher when the Federal Reserve dramatically raised borrowing costs this week in an effort to tame sky-high inflation, experts told ABC News.

For months, homebuyers have faced the dual challenges of skyrocketing mortgage rates and continued growth in home prices.

Since mid-March, when the Federal Reserve instituted its first rate hike of the year, the average 30-year, fixed-rate mortgage has jumped from 4.45% to 6.11%, according to Mortgage News Daily. Meanwhile, the median price for existing single-family homes rose 15.7% over the first three months of 2022 compared with the same period last year, according to data from the National Association of Realtors.

The Fed's decision on Wednesday to raise interest rates by 0.75%, its largest hike since 1994, will further increase mortgage rates and push many homebuyers out of the market, slowing home price increases but intensifying demand in the rental market, experts said.

"It's got a huge impact," Mark Stapp, a professor of real estate at Arizona State University, told ABC News. "It's going to bump a lot of people out of homebuying."

To be sure, rates for 30-year, fixed-rate mortgages do not move in direct correlation with the Fed's benchmark interest rate. Instead, mortgage rates trace the ups and downs of the yield on 10-year Treasury bonds, which responds to a host of indicators such as inflation and the outlook for the economy as well as interest rates.

Over the past week, as new inflation data showed a reacceleration of price hikes and observers expected the Federal Reserve to escalate its fight to dial back cost increases, mortgage rates increased more than they have over any week since 1987, according to a Freddie Mac survey released on Thursday.

Steep mortgage rate increases significantly elevate the monthly cost of homes, shutting out many buyers, decreasing overall demand, and affording leverage to the buyers who remain, experts said.

Mortgage rates will continue to increase at least moderately and could reach as high as 7%, some experts said.

"A month ago, I would've thought that 7% would be outlandish and it would be delusional to think they could go that high," Holden Lewis, a housing expert at personal-finance site NerdWallet, told ABC News. "Now I think okay, well, 7% might be possible."

"Every time I think they'll stop, they keep going up," he added.

At the outset of the year, when the rate for a 30-year fixed mortgage stood at 3.25%, buyers who could afford a $1,500 per month spend on the home principal plus interest, could borrow enough to afford a $345,000 home, Lewis said. At the current rate, roughly 6%, the same homebuyers can borrow about $250,000, reducing borrowing capacity by about $95,000, he added.

"As mortgage rates increase, the monthly payment you can afford can buy less house," he said.

The mortgage rate hikes disproportionately impact buyers on the fringe of the housing market, such as people seeking their first home, said D. Sam Chandan, a professor of finance and director of the Center for Real Estate Finance at New York University's Stern School of Business.

"We've seen a significant deterioration in housing affordability over the course of this year," he said. "In particular for the aspirational first-time home buyer in many markets around the country."

Forecasters expect a decline in home purchases this year, which should slow price increases, experts said. Total home sales are expected to drop 13.5% to 5.96 million units in 2022, according to Fannie Mae data released this month.

But the supply of homes will also likely decline, as sellers wait for a more favorable market, moderating the price relief expected from waning demand, Chandan said. Further, declining interest in the market for home purchases will spike demand and potentially raise prices in the rental market, he added.

In the short term, a possible rental price hike would coincide with a persistent rise in prices for essentials like fuel and groceries, straining household budgets, Chandan said.

"We find ourselves in a place where apartment rents are increasing faster than many families' incomes are growing," he said. "The deterioration in affordability for many income-constrained families is forcing a very tough choice in having to spend less on education, clothing, healthcare and food in order to pay rent."

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Revlon has filed for bankruptcy after 90 years in business

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(NEW YORK) -- Revlon has officially filed for bankruptcy.

The 90-year-old cosmetics giant announced on Thursday that the company voluntarily petitioned for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York.

Like many other companies, the company has been faced with ongoing global challenges that specifically point to supply chain and rising inflation issues, in addition to the brand's continued obligations to its lenders.

This legal proceeding was filed with the intention to allow Revlon to strategically reorganize its legacy capital structure and improve its long-term outlook.

"Today's filing will allow Revlon to offer our consumers the iconic products we have delivered for decades, while providing a clearer path for our future growth," said Debra Perelman, Revlon's president and chief executive officer, in a statement. "Consumer demand for our products remains strong -- people love our brands, and we continue to have a healthy market position. But our challenging capital structure has limited our ability to navigate macro-economic issues in order to meet this demand."

With court approval, the company said it could receive $575 million in debtor-in-possession financing from its existing lender base. In addition to its existing working capital, this will provide the company with more financial support for day-to-day operations, it said.

"By addressing these complex legacy debt constraints, we expect to be able to simplify our capital structure and significantly reduce our debt, enabling us to unlock the full potential of our globally recognized brand," said Perelman.

Revlon was founded in New York City in 1932 by brothers Charles and Joseph Revson and chemist Charles Lachman. In 2016, it was acquired by Elizabeth Arden and its portfolio brands.

Today, Revlon has grown to include cosmetics, skincare, fragrance and personal care. Some of the company's sister brands include Almay, Creme of Nature, celebrity fragrances from Britney Spears, Christina Aguilera and more.

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How to prepare for a possible recession

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(NEW YORK) -- A number of forces are putting pressure on the economy right now and that has Wall Street betting on a recession sometime in the next 12 to 18 months.

Consumer prices are at a 40-year high, the ongoing global health crisis continues to disrupt supply chains and Russia’s invasion of Ukraine threatens to create a world food crisis.

The war has also helped to push gasoline prices to record levels, taking an even bigger bite out of household budgets.

Add to the mix a tight labor market and a volatile stock market and those recessionary warning signs are starting to flash yellow.

The Federal Reserve is responding by hiking interest rates to combat stubbornly high inflation. The Fed is making it more expensive for businesses and consumers to borrow money in the hopes that it will reduce consumer demand and push prices lower.

But the Fed is walking a tightrope. It wants to slow the economy just enough to bring down inflation, but not so much that it tips the economy into a recession.

The textbook definition of a recession is a significant decline in economic growth that lasts months, even years. During a recession, a country’s overall economic output declines, the unemployment rate goes up, retail sales fall, businesses cut their spending and manufacturers produce less goods.

There is a self-fulfilling aspect to recessionary psychology. If everyone believes a recession is coming, then consumers and businesses will drastically cut back their spending, sending the economy into a tailspin.

Economists say the best way to prepare for a recession is not to retrench, but instead build resilience to protect your finances from an economic shock.

You can do that by ensuring a steady stream of income. Lock in a new job or ask for that raise now. With unemployment at its lowest level in nearly half a century, it’s a job seeker’s market. A recession could quickly change all that.

Build up your cash cushion. Try to have at least six months of living expenses covered in case you lose your job or for unexpected emergencies or anticipated expenses like college tuition.

That may mean changing your buying habits and spending more on the things you “need” versus the things you “want.”

If you’re invested in the stock market, now may be a good time to rebalance your portfolio. If you need your money in the next one to three years, you might want to consider moving some of your investments into cash or the relative safety of the bond market, a money market fund, or dividend paying stocks.

If your time horizon is three years or longer and you have a diversified portfolio, experts agree that the best thing you can do is ride it out.

They say the most effective way to meet your long-term financial goals is to stay invested, stay disciplined and don’t let your emotions get the best of you.

If there’s a silver lining, it’s that recessions don’t last forever and they’re usually followed by a period of strong growth. The so-called Great Recession, which was triggered by the housing collapse in 2007, lasted 18 months. It was followed by the longest economic expansion in U.S. history.

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