Exxon Mobil and Chevron reported record profits in the second quarter of 2022, as the two largest US oil monopolies cashed in on unprecedented year-over-year increases in oil and gas prices during the months of April through June.
An Exxon sign [Photo by Brian Katt / CC BY-SA 4.0 ] Exxon, based in Irving, Texas, earned $17.9 billion in the quarter, more than three times what it earned in 2021, while Chevron, based in San Ramon, California, tripled its profits to $11.6 billion. Both companies nearly doubled year-over-year quarterly sales, with Exxon going from $67.7 billion to $115.6 billion and Chevron from $36 billion to $65 billion.
When added to the earnings of UK-based Shell, which announced record profits of $11.4 billion on Thursday, the three largest Western oil corporations raked in a collective $46 billion in the quarter. Industry analysts expect that when British Petroleum and the French oil company Total report quarterly earnings in the coming days, the five largest Western oil companies will have chalked up a combined quarterly record of $60 billion in profits.
There is perhaps no better demonstration of the deliberate policy of the ruling elite to attack the economic position of the working class than the price gouging of the oil companies—a major factor in the four-decade record inflation rate of more than 9 percent—combined with the Federal Reserve’s raising of interest rates to bring on a recession, drive up unemployment and undermine growing wage demands.
As the Wall Street Journal freely admitted, the historic profits are the result of oil companies and their investors exploiting both the economic downturn at the beginning of the coronavirus pandemic in 2020 and the US-NATO proxy war against Russia in Ukraine that began last February.
The Journal reported on Friday following the Exxon and Chevron announcements: “Oil and gas demand has roared back as countries have lifted pandemic quarantine measures. Western sanctions against Russian energy have pushed commodity prices even higher. Now, as the US economy is contracting, the oil industry’s lofty earnings have become a rare bright spot for investors.”
The oil companies seized on the pandemic slowdown to cut more than 3 million barrels per day of oil refining capacity, while no new investment has been committed to update and expand the conversion of crude oil and other raw hydrocarbons into gasoline, diesel, jet fuel and other energy products.
The oil monopolies intend to ride this wave of massive profits derived from chiseling the public for as long as possible. As Exxon Chief Executive Darren Woods told the Journal , although refining margins have fallen off recently, it could take years to bring more capacity online. “Demand recovers, and we don’t have the capacity to meet that, which has led to record, record refining margins. This will be a few-year price environment,” Woods said.
It is the nexus of a tripling of the global price of oil—driven primarily by the US-NATO elimination of Russia as a supplier to the world market—and the return of demand for gasoline that has driven up prices at the pump to record levels.
Between April and June, the average American crude oil benchmark was about $109 a barrel, an increase of 64 percent over the same period a year ago, according to Bloomberg. Although the cost of a barrel of oil has fallen somewhat since then, the price as of Friday was still around $100.
Meanwhile, the price of a gallon of gas in the US reached a national average record of just over $5 on June 14. On Friday, the national average for gas was $4.26, which is more than 35 percent higher than it was at the beginning of August 2021.
Record industry profits have lifted the Wall Street performance of the oil giants during a period of downturn in the investment markets. The S&P 500 Energy index is up 35 percent since the beginning of the year, while the broader index has fallen by 15 percent since January. Shares of Exxon Mobil have shot up by 46 percent, while those of Chevron have risen by 26 percent.
Mark Stoeckle, chief executive and senior portfolio manager at Adams Funds, expressed energy investor euphoria to the Wall Street Journal , saying, “If you ignored energy for the last seven or eight years, you were paid handsomely for doing so. Now, the landscape has changed.”
The New York Tim es reported that shareholders are demanding that oil companies not spend money on expansion. Faisal A. Hersi, an energy analyst at Edward Jones, told the Times , “After years of overspending, these companies have found religion and are focused on capital spending discipline. They’re going to try to grow production at that 1 to 3 percent rate, which is an acceptable rate for investors as long as they’re able to increase cash returns.”
The Journal also said the oil companies have no plans to invest their record profits in new technologies in “the oil patch” but will stick with policies that “reward investors and strengthen their finances.” The five Western oil monopolies have spent a combined $20 billion in share buybacks since the beginning of the year, with plans to spend even more in the second half of 2022.
Chevron “lifted the upper end of its share-repurchase program this year to as much as $15 billion, up from $10 billion,” the Journal reported.
According to the New York Times , Exxon spent $6 billion on buybacks in the first half of the year and said on Friday it was “on track” with a plan for $30 billion in buybacks in 2022 and 2023, a target that it tripled once the present bonanza got going in the early months of the year.
Democrats in Washington D.C., such as Senator Elizabeth Warren of Massachusetts, have made noises about corporate “manipulation,” denouncing the handing over of billions of dollars to investors through share buyback programs instead of investing those funds in expansion or the hiring of more workers. Warren, who has repeatedly called herself a “capitalist to my bones,” has been working with the Biden administration on toothless legislation to tax share buybacks, which are expected to reach a record $1 trillion in 2022.
The Fed's Urgent WARNING: Prepare for Economic Collapse
The Biden administration is leading the campaign to deny economic reality just as it is on COVID. At a press conference after the GDP figures were announced, Yellen said economists and most Americans had a definition of recession that included job losses and mass layoffs, private sector activity slowing considerably and “family budgets under immense strain,” and that is “not what we’re seeing right now.”
JOE BIDEN’S ‘GREEN AMERICA’ WHICH TRANSLATES TO MASSIVE PROFITS FOR BIG OIL. IT’S BIDENOMICS UP CLOSE!
https://mexicanoccupation.blogspot.com/2022/06/corporatist-joe-biden-and-bid-oil.html
The top 25 oil corporations made a combined $205 billion in profits in 2021. Since the beginning of 2022, the five largest oil companies—Shell, ExxonMobil, BP, Chevron and ConocoPhillips—have enjoyed a 300 percent increase in profits over the first quarter of 2021. ConocoPhillips, for example, earned profits of $4.3 billion between January and March, an increase of 375 percent over the previous year.
VIDEO
Ralph Nader: Biden's First Year Proves He Is Still a "Corporate Socialist" Beholden to Big Business https://www.youtube.com/watch?v=2jTIUtjkDss&t=28s
Hauser also didn’t like the prevalence of Big Law talent on the Department of Justice team, which signaled to him that the Biden administration could go soft on corporate malefactors. Alexander Nazaryan
In an effort to burnish her “left” credentials in sections of the Democratic party, Senator Elizabeth Warren wrote an op-ed piece in the WSJ this week that partially lifted the lid on what is really taking place.
She noted that the aggressive rate hikes by the Fed are largely ineffective against the inflation spike and warned that the interest rate hikes were aimed at “dampening demand.” If the Fed hiked too much or too abruptly, she wrote, “the resulting recession will leave millions of people… with smaller paychecks or no paycheck at all.”
Warren pointed to the remarks of former Democratic treasury secretary Lawrence Summers, who recently told the London School of Economics: “We need five years of unemployment above 5 percent to contain inflation—in other words, we need two years of 7.5 percent unemployment or five years of 6 percent unemployment or one year of 10 percent unemployment.”
But always anxious to ensure that the working class remains corralled within the confines of the Democratic party, Warren praised the actions of the Biden administration and said it recognised that the US had “many tools for fighting inflation that wouldn’t make the economy smaller and Americans poorer.”
Such claims ignore two facts: that the limited measures of the administration will do little or nothing to bring down prices, and that Biden has declared he stands four-square behind the actions of the Fed.
Elizabeth Warren Seemingly Blames ‘Big Corporations’ for Current State of Economic Affairs JOSEPH PREZIOSO/AFP via Getty 2:21
Sen. Elizabeth Warren (D-MA) is setting her focus on “big corporations” rather than Democrat policies as Americans grapple with 41-year high inflation and experience two consecutive quarters of negative economic growth.
“It’s time for Congress to do its part to get our economy on a sounder footing, and the Inflation Reduction Act would do exactly that—bringing down costs for families and stopping giant corporations with massive profits from skipping out on the bill at tax time,” Warren said on Thursday:
She followed up with a similar sentiment on Friday, placing the blame on “big corporations” in a tweet to her 6 million Twitter followers.
“When giant corporations have all the power, they wriggle their way out of paying taxes. They gobble up smaller competitors. They jack up prices just because they can. I’m fighting to put power in the hands of working people, where it belongs—and I’m in this fight all the way,” she added:
Warren’s remarks coincide with news of the U.S. Gross Domestic Product (GDP) shrinking 0.9 percent in the second quarter this year, marking two consecutive quarters of negative economic growth under Democrat leadership — a reality many use as a marker for a recession:
The economy contracted by 1.6 percent in the first quarter. Many Americans consider two straight quarters of recession to be the marker of a recession. Economists, however, rely on the determination of the National Bureau of Economic Research (NBER) to say when a recession starts. The NBER has a more complex and subjective definition of recessions and typically does not declare a recession until several months after it has begun.
Like President Biden, Warren appears to be wilfully ignoring the impact Democratic policies have had on the economy during their reign in Washington, DC, over the last year and a half — from dismantling American energy independence to spending trillions of dollars:
This is not the first time the Massachusetts Democrat has rerouted blame for the current state of economic affairs. Earlier this month, Warren blamed 41-year high inflation on Russian President Vladimir Putin, the coronavirus, and corporate monopolies:
US economy starting to move into recession The US economy has taken another significant step towards recession with economic output contracting for the second quarter in a row, a situation often referred to as a “technical recession.”
When the first quarter results were released, they were generally passed off as having no real significance, the result of a statistical aberration. But the latest data indicate they were the start of a trend.
The Wall St. street sign is framed by the American flags flying outside the New York Stock exchange, Friday, Jan. 14, 2022, in the Financial District. (AP Photo/Mary Altaffer) The official definition of a recession in the US is determined by the National Bureau of Economic Research (NBER) and it will not make a determination for some time. But whatever it decides, the data for the last two quarters indicate a significant slowdown over the past six months. In the December quarter of 2021, the US economy was growing at an annualised rate of 6.9 percent.
Breaking down the data, there were a number of results which point to the underlying trends. Consumer spending, which accounts for around two thirds of total economic output, grew by only 1 percent for the quarter, down from the 1.8 percent increase in the first. Consumer spending growth is now at its lowest rate since the start of the pandemic.
Real wages are falling, with real disposable income falling by 0.5 percent for the quarter, the fifth straight quarterly fall.
The biggest drag on growth was the drop in business inventories, which cut 2 percent off the headline result. Earlier, Walmart, America’s biggest retailer, reported that it was cutting prices in a bid to clear out inventories that had built up because of falling demand. Business investment was also down.
There is a concerted attempt to deny that recession is taking hold. Earlier this week, US Treasury Secretary Janet Yellen said the US economy was not in recession and she would “be amazed” if the NBER declared it was.
One of the bases for such assertions is the low unemployment rate of 3.6 percent. How can there be a recession if the jobless rate is at a 50-year low? This ignores the fact that hirings are starting to be cut back by major corporations and rising unemployment is generally one of the last indicators to emerge if there is a downward trend.
Furthermore, there also seems to be a repeat of the COVID playbook: continually deny reality by pointing to the low unemployment rate and somehow underlying economic conditions will cease to exist.
But a key factor in what is continually referred to as the “tight labour market” is the death of more than one million people—many of them of working age—and the millions who have been impacted by COVID and are unable to work for periods because of immediate infection, the need of others to drop out of the workforce to take care of family and loved ones, and the growing impact of Long COVID in reducing the labour supply.
Statements aimed at covering up the situation are one thing, but objective reality is another.
Wall Street Journal (WSJ) writer Greg Ip noted that whether a recession is eventually declared, “the message from the latest economic data is just as sobering: The recovery is, effectively, over.”
He pointed out that “key indicators of economic activity have ground to a halt.”
“Total spending by households and businesses didn’t grow in the second quarter after averaging 6 percent annualised growth in the prior six quarters,” he added.
In another article, the WSJ cited remarks by James Knightly of the financial giant ING, who said a downturn was “really only a matter of time” because of the pressure on households from inflation and equity markets in conditions where “the housing downturn [is] really gathering pace now.”
The Biden administration is leading the campaign to deny economic reality just as it is on COVID. At a press conference after the GDP figures were announced, Yellen said economists and most Americans had a definition of recession that included job losses and mass layoffs, private sector activity slowing considerably and “family budgets under immense strain,” and that is “not what we’re seeing right now.”
Family budgets “not under immense strain?” One can only ask what planet Yellen is living on.
President Biden issued a statement shortly after the data were released saying it was no surprise the economy “is slowing down as the Federal Reserve acts to bring down inflation.”
The inducement of a slowdown and recession is the deliberate policy of the Fed, not to bring down inflation—its measures will not reduce the price of food or gas or untangle global supply chains—but are aimed at supressing the growing wages movement of the working class.
The objective of the Fed is widely known in ruling economic and political circles, but is kept under wraps, covered over by the mantra of the need to fight inflation, lest its exposure further fuel the mounting anger in the working class.
In an effort to burnish her “left” credentials in sections of the Democratic party, Senator Elizabeth Warren wrote an op-ed piece in the WSJ this week that partially lifted the lid on what is really taking place.
She noted that the aggressive rate hikes by the Fed are largely ineffective against the inflation spike and warned that the interest rate hikes were aimed at “dampening demand.” If the Fed hiked too much or too abruptly, she wrote, “the resulting recession will leave millions of people… with smaller paychecks or no paycheck at all.”
Warren pointed to the remarks of former Democratic treasury secretary Lawrence Summers, who recently told the London School of Economics: “We need five years of unemployment above 5 percent to contain inflation—in other words, we need two years of 7.5 percent unemployment or five years of 6 percent unemployment or one year of 10 percent unemployment.”
But always anxious to ensure that the working class remains corralled within the confines of the Democratic party, Warren praised the actions of the Biden administration and said it recognised that the US had “many tools for fighting inflation that wouldn’t make the economy smaller and Americans poorer.”
Such claims ignore two facts: that the limited measures of the administration will do little or nothing to bring down prices, and that Biden has declared he stands four-square behind the actions of the Fed.
In the US, the world’s biggest economy, the GDP figures were announced just days after the International Monetary Fund revised down its estimate for growth and warned that the global economy was “teetering” on the brink of recession.
In the world’s second largest economy, China, growth in the June quarter was only 0.4 percent, narrowly avoiding a contraction, with estimates for growth over the next months being revised down.
The third key driver of the world economy, the euro zone, is on the edge of recession, with warnings of a major downturn by its leading economy, Germany, by the end of the year due to cuts in Russian gas supplies as a result of the US-led war in Ukraine.
On Thursday, the Commerce Department reported that the US economy shrank for the second quarter in a row, bringing it into a “technical recession.”
The economic contraction is being accompanied by a series of layoffs that threatens to become a torrent as the economy slows further. This month, more than 30,000 layoffs occurred in the technology sector alone. Last week, Ford announced 8,000 layoffs, heralding a further bloodbath in the auto industry.
Amid the swirl of economic data, it is always necessary to understand that these numbers are the abstract expression of underlying social and class forces, that “the economy” is not some kind of machine, but is based on definite social relations and operates through them. This is particularly necessary when considering the latest economic data.
A debate has now broken out in the media and financial commentary circles as to whether this “technical recession”—defined as two consecutive quarters of economic contraction—is a real one or not.
The key issue here is not one of definitions, but what are the essential class interests at work, particularly with regard to the policies of the US Federal Reserve, the key financial institution of the capitalist state.
Fed policies are always couched in various forms of jargon that cover up the real agenda through a series of mystifications aimed at making it appear the central bank somehow stands above class interests, regulating economic life in the interests of the population.
Amid the flurry of words, the essence of the present situation is this: The central bank, the guardian of the interests of the corporations and finance capital, has set out to engineer a marked slowdown, and, if necessary, a major economic contraction. The aim is to suppress the wage demands of the working class under conditions where inflation has risen to the highest level in four decades.
This assault is being waged through the mechanism of higher interest rates, which are being lifted at the fastest rate in decades under the banner of the fight against inflation. But interest hikes will not bring down gas prices or untangle supply chains. The objective is to bring about an economic contraction so that pay demands are suppressed.
The present policy agenda reprises that of Fed Chair Paul Volcker in the 1980s, when interest rates were lifted to record heights, inducing the deepest recession to that point since the Great Depression. Today’s Fed Chair Jerome Powell has expressed his admiration for Volcker on numerous occasions, making clear he is more than prepared to follow the same path.
Former US Treasury Secretary Lawrence Summers has insisted that containing inflation means inducing higher jobless levels for five years or a 10 percent unemployment rate for at least a year.
As with every other economic issue and statistic, inflation is embedded in the class structure of society, a historical examination of which reveals the origins of the present US and global spiral.
The global financial crisis of 2008, set off by the more than two decades of increasing financial speculation preceding it, led to the largest corporate and financial bailout in history. The US government handed out hundreds of billions of dollars in rescue packages, and the Fed began the policy of “quantitative easing”—injecting money into the financial system so that the speculation on Wall Street that had precipitated the crisis could continue.
And continue it did. After reaching a nadir in March 2009, the stock market went on a spectacular bull run. But it was based on a continuous supply of cheap money by the Fed.
In March 2020, as the COVID-19 pandemic struck, Wall Street and financial markets went into a meltdown, fearing that the imposition of necessary public health safety measures would impinge on the flow of profits extracted from the working class, and the stock market bubble would collapse.
Two key policies resulted. Under the banner of the “cure cannot be worse than the disease,” the necessary policy of COVID-19 elimination was rejected in the US and by governments around the world. At the same time, trillions more dollars were pumped into the financial system. In the US, the Fed doubled its holdings of financial assets from $4 trillion to $8 trillion virtually overnight, at one point spending a million dollars a second.
Herein are the origins of the global inflationary spiral. The refusal to undertake a global policy of COVID-19 elimination because of its potential impact on the stock markets had major consequences in the real economy, as the spread of COVID-19 led to a supply chain crisis.
The monetary system was expanded by the central banks, leading to still further asset speculation in 2020 and 2021. Another factor is the endless increases in military spending as billions are funneled into the proxy war against Russia in Ukraine.
In their drive to increase interest rates, Fed Chair Jerome Powell along with other central bankers continually refer to what they call the “tight labour” market, in which demand must be brought into balance with supply.
Under conditions where the deaths inflicted by COVID-19, ongoing infections and the growing impact of Long COVID have led to the withdrawal of millions from the workforce, the only way to lift the increase of the supply of labour above demand is through the imposition of unemployment.
And that process is already underway as a result of the interest rate hikes initiated by the Fed so far. The auto industry has indicated new hirings are at a standstill, and layoffs are set to follow. In the interest-rate sensitive sectors of high-tech, layoffs have already started with more to come.
In the face of the daily cuts in their standard of living resulting from the highest inflation in more than four decades, workers are compelled to undertake a struggle for necessary wage increases. But as they are driven into this fight, it is necessary for workers to understand what is at stake in order to better conduct the battle at hand.
Workers are not just in a conflict with individual employers, but are engaged in a political struggle in which the union bureaucracy functions as the chief enforcer of the demands of the capitalist state and its agencies.
Moreover, the fight for wage increases, necessary as that is, is a struggle against the effects of much deeper-going problems. A review of the economic history of the past period shows that every measure taken by the ruling class to deal with an economic crisis led inevitably to its eruption in a new and more malignant form.
Thus the “solution” to the financial crisis of 2008 set up the conditions where in 2020 rational scientific measures to deal with COVID-19 were rejected, lest their implementation lead to a financial market collapse. But the “let it rip policy” that ensued has now led to an inflationary spiral which the leading agencies of finance capital are determined to “resolve” by making the working class pay, if necessary through mass unemployment.
This signifies that starting with the fight against the effects of the ongoing economic breakdown, the working class must develop a strategy which comes to grips with the underlying cause of the crisis, and that means the struggle for an independent socialist perspective directed at ending the profit system and replacing it with socialism, a higher form of social and economic organisation.
Similar to the Schumer-Manchin bill, Biden’s plan would have provided a $625 billion tax cut for the wealthiest Americans living in blue states — paid for by working and middle class Americans.
Democrats Latest Plan: Target Middle Class Americans with IRS Audits, Keep Billionaire Loopholes Open Drew Angerer/Getty Images 4:44
A bill backed by Senate Majority Leader Chuck Schumer (D-NY) and Joe Manchin (D-WV) would unleash the Internal Revenue Service (IRS) on middle class Americans while keeping tax loopholes open for billionaires and their multinational corporations.
The plan, which Schumer and Manchin have agreed to, would massively bulk up IRS audits and criminal investigations to the sum of tens of billions of dollars — nearly all of which will be dedicated to going after middle class Americans squeezed by inflation.
The Wall Street Journal editorial board details the scheme:
The bill earmarks $45.6 billion for “enforcement,” including “litigation,” “criminal investigations,” “investigative technology,” “digital asset monitoring” and a new fleet of tax-collector cars. The result will be far more audits, civil suits and criminal referrals . [Emphasis added]
The main targets will by necessity be the middle- and upper-middle class because that’s where the money is . The Joint Committee on Taxation, Congress’s official tax scorekeeper, says that from 78% to 90% of the money raised from under-reported income would likely come from those making less than $200,000 a year. Only 4% to 9% would come from those making more than $500,000 . [Emphasis added]
The IRS knows the super-wealthy employ lawyers and accountants who make litigation time-consuming and risky . It also knows that Democrats would howl if the agency pursues fraud in the earned-income tax credit program, despite what the IRS has estimated are $18 billion in improper payments each year. [Emphasis added]
At the same time, tax provisions hugely benefitting billionaires and their multinational corporations would go untouched .
The Schumer-Manchin plan includes billions in green energy tax credits that would be swooped up by billionaires to cut their corporations’ annual tax burdens. Jeff Bezos’s Amazon notoriously employs this strategy to pay close to zero in corporate income taxes.
Breitbart News’s John Carney writes:
Amazon’s tax bills were part of the inspiration for a minimum tax. The company faced no federal corporate income tax liability in 2017 and 2018 . In the years since, it has had an effective tax rate that is just a fraction of the 21 percent rate put in place by the Trump administration’s tax reforms. According to the calculations of Matthew Gardner of the Institute on Taxation and Economic Policy, over the past four years Amazon’s effective aggregate tax rate was just 5.1 percent . [Emphasis added]
…
While the alternate minimum tax would prevent companies from using deductions for capital investments or stock-based compensation, it continues to allow them to use tax credits , Daniel Bunn of the Tax Foundation told us. In fact, the bill includes hundreds of billions of dollars worth of new tax credits aimed at fostering green technology adoption. And Amazon plays in beast mode when it comes to using tax credits to reduce its tax bill . [Emphasis added]
Jeff Bezo’s retail giant said in its annual report that tax credits reduced the taxes it would have otherwise owed by $1.1 billion . The company has said that most of those tax credits are federal research and development credits, although it does not give much detail in its annual reports. The Manchin-Schumer tax bill would not touch this. Amazon will lose the benefit of the write-off for stock-based compensation, but the company will most likely at least partially offset that by using the green tech tax credits . The end result could be no change in Amazon’s tax rate . [Emphasis added]
President Joe Biden and House Democrats tried to pass a similar tax plan last year as part of the administration’s “Build Back Better” agenda that has failed to catch on in Congress.
That plan would have targeted an additional nearly 600,000 working and middle class Americans earning less than $75,000 a year with IRS audits. Of those new IRS audits, more than 313,000 would have targeted the poorest of Americans who earn $25,000 or less a year.
Similar to the Schumer-Manchin bill, Biden’s plan would have provided a $625 billion tax cut for the wealthiest Americans living in blue states — paid for by working and middle class Americans.
John Binder is a reporter for Breitbart News. Email him at jbinder@breitbart.com. Follow him on Twitter here .
JOE BIDEN = SLUT FOR WALL STREET, OR ANYONE WITH A BIG BRIBE! JUST ASK THE SLUT HOW WELL HE DID OFF BLACKROCK!
VIDEO
Ralph Nader: Biden's First Year Proves He Is Still a "Corporate Socialist" Beholden to Big Business https://www.youtube.com/watch?v=2jTIUtjkDss&t=28s
Hauser also didn’t like the prevalence of Big Law talent on the Department of Justice team , which signaled to him that the Biden administration could go soft on corporate malefactors. Alexander Nazaryan
THIS POS LAWYER HAS NEVER OPENED HER FAT MOUTH THAT LIES DID NOT POUR OUT!
Democrats in Washington D.C., such as Senator Elizabeth Warren of Massachusetts, have made noises about corporate “manipulation,” denouncing the handing over of billions of dollars to investors through share buyback programs instead of investing those funds in expansion or the hiring of more workers. Warren, who has repeatedly called herself a “capitalist to my bones,” has been working with the Biden administration on toothless legislation to tax share buybacks, which are expected to reach a record $1 trillion in 2022.
15 Signs That A Day Of Reckoning Has Arrived For The U.S. Auto Industry
DRAMATIC Increase In Foreclosure Filings +150%
In the face of the daily cuts in their standard of living
resulting from the highest inflation in more than four
decades, workers are compelled to undertake a struggle for
necessary wage increases. But as they are driven into this
fight, it is necessary for workers to understand what is at
stake in order to better conduct the battle at hand.
Credit Card Debt Jumps Most in 20 Years as Inflation Soars Peter Dazeley/ Getty images 1:38
American households increasingly relied on their credit cards this spring as prices rose at the fastest rate in four decades.
Credit card balances jumped $46 billion in the second quarter of the year. Compared with a year ago, balances are up 13 percent, the largest increase in more than 20 years, according to data released Tuesday by the Federal Reserve Bank of New York.
Credit card balances typically rise in the April through June period. This year’s increase was driven by the highest rate of inflation in 40 years. The Consumer Price Index was up 8.6 percent in the quarter compared with a year earlier, the biggest increase since the fourth quarter of 1981.
Gasoline prices, which rose to record highs in the period, are also driving up spending. Food prices were up 10.4 percent compared with a year ago, the most inflation since 1979. Consumers are also spending more on services and travel. Total consumer spending rose 1.1 percent in June, 0.3 percent in May, and 0.5 percent in April.
Incomes have not kept up with inflation. Real average weekly wages fell one percent in June, 0.9 percent May, and were flat in April. Weekly earnings in June were 4.4 percent below the year-earlier level after adjusting for inflation.
Despite the increase, credit card balances remain slightly below their pre-pandemic level, the New York Fed said.
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