The Finance 202: U.S. wealth just hit a new record, even as more people steal in order to eat

The numbers gild an increasingly dire reality for those beneath the apex of American affluence. The latest evidence, in case any was needed: Retailers report a sharp rise in people shoplifting food, as federal support for those struggling and out of work runs dry.

The uptick is higher than in past economic downturns, Abha Bhattarai and Hannah Denham report, and there’s another distinguishing feature: “What’s being taken — more staples like bread, pasta and baby formula.”

One in eight Americans say they often or sometimes haven’t had enough food to eat in the past week, triple the number before the coronavirus pandemic, my colleagues recently reported. Fully a quarter of jobless Americans with children say they have gone hungry.

The situation is primed to deteriorate further. Per Abha and Hannah: “With food aid programs like SNAP and WIC being reduced, and other federal assistance on the brink of expiration, food banks and pantries are being inundated, reporting hours-long waits and lines that stretch into the thousands.” And federal food programs face a year-end expiration date, too: “The largest among them, the Farmers to Families Food Box, has provided more than 120 million food boxes during the pandemic and is already running out of funding in many parts of the country.”

At the Capitol Supermarket, in downtown Washington, thefts have more than doubled, my colleagues report. “People will say, ‘I was just hungry.’ And then what do you do?” manager Joo Park says.

The urgency hasn’t reached enough lawmakers less than two miles away in the Capitol itself. More below on the ongoing mess hobbling congressional progress toward new emergency relief, as some Senate Republicans object to a bipartisan effort.

But the disconnect could owe partly to the fact that most members of Congress are, relative to most of their constituents, very rich: More than half are millionaires, according to an analysis by the Center for Responsive Politics. That puts them on the rarefied side of a wealth gap that is grooving ever deeper into the economy.

The divide is nothing new. “In almost every economic cycle since 1975, the incomes of the wealthiest American families have grown faster than those of the middle class, according to recent analysis by Rand economist Kathryn Edwards and Rand mathematician Carter Price,” Andrew Van Dam writes. “Unequal income growth has caused most earners — the bottom 90 percent — to earn a total of $2.5 trillion less over that time than they would have if income had been distributed as equitably as it was in 1975, researchers found.”

The benefits of the stock market’s gains concentrate heavily at the top of the wealth ladder without registering for those at the bottom:

The other major driver of the record U.S. wealth, rising housing prices, is likewise boosting the already-prosperous. Low interest rates and the desire for extra square footage have drawn more buyers from the white-collar, work-from-home crowd.

The demand they are generating is driving up home prices, “making homeownership harder to attain for lower-wage workers and for some younger buyers,” the Wall Street Journal’s Nicole Friedman reported last month. “First-time buyers made up 31% of all primary-home buyers in the year ended in June, down from 33% the year before and the historical norm of 40%,” according to the National Association of Realtors.

Meanwhile, nearly 12 million renters will owe an average of $5,850 by January, as a federal eviction moratorium is set to expire at the end of the year, per Heather Long.

That and other safety-net protections are falling away just as the jobs recovery shows more signs of stalling out. New weekly unemployment claims rose to 853,000 last week, the first time that indicator of labor market stress crested 800,000 since early October. Economists say the Thursday report also brought troubling evidence of deeper scarring, as more people are spending longer out of work:

Even when workers return to the job, RSM chief economist Joe Brusuelas projects a “K-shaped wage environment next year where those workers with the capacity, skills and know-how to thrive in virtual environments will capture the lion’s share of wage growth during the initial phase of the recovery.”

“At the same time,” Brusuelas writes, “workers in service-sector and entry-level jobs will almost certainly face a restrained wage environment at best.”

Lawmakers may have to stay in Washington for Christmas: “Congressional bickering over a new economic relief package escalated as lawmakers traded blame and put negotiations over critical legislation on the brink of collapse,” Mike DeBonis and Jeff Stein report.

“The worsening situation came as multiple lawmakers appeared to be pursuing conflicting goal, with little time to sort out disagreements. The House passed a spending bill Wednesday to fund the government for one week and avoid a shutdown deadline Friday night. The Senate must pass an identical bill — and have Trump sign it — to avoid a shutdown, but as of Thursday afternoon, lawmakers still weren’t sure how to do that with unanimous consent.”

Checking in on the leaders:

• House Speaker Nancy Pelosi (D-Calif.): “She suggested that discussions over emergency legislation could stretch beyond Christmas, even though multiple critical programs expire at the end of this month and there are fresh signs the economy is weakening.”
• Senate Majority Leader Mitch McConnell (R-Ky.): “His staffers told leadership offices in both parties that McConnell sees no possible path for a bipartisan group of lawmakers to reach an agreement on two contentious provisions that would be broadly acceptable to Senate Republicans.”

Meanwhile, the bipartisan group of lawmakers still doesn’t have an actual bill: “The group has only issued the framework of an agreement, leaving many of the thorniest details unresolved. Discussions were set to continue throughout the day Thursday.”

Traders continue to weigh stimulus negotiations: “The Dow Jones Industrial Average closed lower by 69.55 points, or 0.2 percent, at 29,999.26. The S&P 500 dipped 0.1 percent to 3,668.10. The Nasdaq Composite outperformed with a 0.5 percent gain, closing at 12,405.81 as Netflix and Apple each rose more than 1 percent,” CNBC’s Fred Imbert and Pippa Stevens report.

“Verizon and IBM each fell at least 1 percent to lead the Dow lower. Industrials dragged down the S&P 500, pulling back by 0.9 percent.”

Airbnb is shining in its debut: “Airbnb’s stock opened at $146 per share — more than double the figure the company set for its IPO the night before. It is the largest tech IPO of the year, closely followed by delivery company DoorDash and cloud company Snowflake, according to data from S&P Global Market Intelligence,” Rachel Lerman reports.

“Airbnb’s soaring stock market debut comes at the tail end of a year that has been both disastrous and triumphant for the short-term-rental company.”

The first Americans could start receiving inoculations as soon as next week: “Federal advisers endorsed the Pfizer-BioNTech coronavirus vaccine, making it all but certain the Food and Drug Administration will authorize the vaccine on an emergency basis within hours or days, kicking off an unprecedented effort to inoculate enough Americans to stop a rampaging pandemic,” Laurie McGinley, Carolyn Y. Johnson and Joel Achenbach report.

“The committee voted yes, 17 in favor, four against and one absention. Panel members did not have an opportunity to explain their votes, but at least two dissenters objected to inclusion of 16- and 17-year-olds, given what they described as the low risk of severe disease in that age group and how few had participated in the trial.”

• At least 15,582,000 cases have been reported; at least 291,000 have died. 
• CDC director offers stark prediction: “The novel coronavirus will kill more people in the United States every day for the next two to three months than died in the attacks on 9/11 and Pearl Harbor, Centers for Disease Control and Prevention director Robert Redfield said,” Katie Shepherd reports.
• Vaccine candidate fails to trigger immune response: “One of the coronavirus vaccines the United States made a big bet on, from heavyweight drugmakers Sanofi and GSK, is going back to the drawing board after it failed to trigger a promising immune response in older adults,” Carolyn Y. Johnson reports.
• MTA Borrows $2.9 Billion from the Fed: “New York’s Metropolitan Transportation Authority has turned to short-term borrowings to close the budget gaps created by the pandemic and it seized on the chance to borrow from the Fed before the little-used credit line expires at the end of the month. The agency has warned that it will have to slash subway and bus service by 40 percent and chop commuter rail service by half if it doesn’t receive aid from Washington,” Bloomberg News’s Amanda Albright, Michelle Kaske, and Danielle Moran report.
• Boston conference likely linked to as many as 300,000 U.S. cases: “The February conference took place at a time when there were few U.S. cases and most places had not yet adopted restrictions on large gatherings,” Katie Shepherd reports.

• UPS, FedEx officials promise to give vaccines VIP handling: “The largest U.S. package delivery companies are partners in the federal government’s Operation Warp Speed (OWS) vaccine program and each has specialized capabilities to handle fragile medical products – including Pfizer Inc’s mRna vaccine that requires shipment at sub-Arctic temperatures,” Reuters’s Lisa Baertlein reports. The shots will also take priority over holiday gifts.
• WarnerMedia’s streaming gambit won’t cause an industry shake-up: “WarnerMedia will likely be the guinea pig for the media industry — perhaps to the relief of its competitors. Even WarnerMedia CEO Jason Kilar doesn’t expect the competition to follow,” CNBC’s Alex Sherman reports.

• European Central Bank expands its stimulus efforts: “The move, which takes the ECB’s monetary stimulus this year above 3 trillion euros, equivalent to $3.6 trillion, underscores the rocky path ahead for the 19-nation eurozone economy. Europe has been hit much harder than the U.S. and other advanced economies as strict lockdowns have repeatedly closed businesses and hurt the south’s large tourism industry,” the WSJ’s Tom Fairless reports.

The president-elect encounters his first major fight with the party’s left wing: “Biden has endorsed canceling $10,000 in federal student debt per borrower through legislation, and insisted that chipping away at the $1.7 trillion in loan debt held by more than 43 million borrowers is integral to his economic plan. But Democratic leaders, backed by the party’s left flank, are pressing for up to $50,000 of debt relief per borrower, executed on Day 1 of his presidency,” the New York Times’s Erica L. Green, Luke Broadwater and Stacy Cowley report.

“More than 200 organizations — including the American Federation of Teachers, the N.A.A.C.P. and others that were integral to his campaign — have joined the push … Many economists, including liberals, say higher education debt forgiveness is an inefficient way to help struggling Americans who face foreclosure, evictions and hunger.”

SEC and CFTC to lose top officials: “The Securities and Exchange Commission top enforcement official, Stephanie Avakian, will step down this month after four years in the role, a move that allows the incoming Biden administration to put its own stamp on Wall Street policing,” the WSJ’s Dave Michaels reports.

• But Biden’s influence will be more muted at the CFTC: “The Commodity Futures Trading Commission said that Heath Tarbert will resign as chairman. … Tarbert’s plans said he would retain his seat until he decides on his next move. His term expires in 2024. That means Republicans will keep their 3-2 majority at the CFTC, possibly until 2022,” the WSJ’s Paul Kiernan reports.

Biden named Susan E. Rice and Denis McDonough to top jobs: McDonough, Barack Obama’s final White House chief of staff, will be Biden’s veterans affairs secretary and Rice, who was under consideration to be his running mate, will lead the White House’s Domestic Policy Council, Matt Viser and Alex Horton report.

• Not everyone is happy about the return of so many Obama-era officials: Some veterans groups are disappointed that McDonough never served in uniform. And some Black farmers and civil rights activists are angry that Biden tapped former agriculture secretary Tom Vilsack to reprise his role in the Biden administration, eschewing a historic move to pick a Black woman to lead the department. Rep. Marcia L. Fudge (D-Ohio) was reportedly under consideration, but instead was nominated to be housing and urban development secretary.

Biden and Vice President-elect Kamala Harris are named TIME’s 2020 Person of the Year: 

Criminal charges could await the president. “State prosecutors in Manhattan have interviewed several employees of President Trump’s bank and insurance broker in recent weeks, according to people with knowledge of the matter, significantly escalating an investigation into the president that he is powerless to stop,” the New York Times’s William K. Rashbaum, Ben Protess and David Enrich report. 

“The interviews with people who work for the lender, Deutsche Bank, and the insurance brokerage, Aon, are the latest indication that once Mr. Trump leaves office, he still faces the potential threat of criminal charges that would be beyond the reach of federal pardons. It remains unclear whether the office of the Manhattan district attorney, Cyrus R. Vance Jr., will ultimately bring charges. The prosecutors have been fighting in court for more than a year to obtain Mr. Trump’s personal and corporate tax returns, which they have called central to their investigation. The issue now rests with the Supreme Court.”

New findings may renew the debate over whether lawmakers should be able to trade stocks: “New research from political scientists Jordan Carr Peterson and Christian Grose underscores why tighter regulations might be necessary. They found that members of Congress who own stock tend to vote in ways that benefit their portfolios and that these decisions can’t be explained away by other factors, such as ideology or constituent interests,” Christopher Ingraham reports.

“Peterson and Grose reached their conclusions after combing through U.S. House members’ stock holdings, as described in mandatory financial disclosures, and comparing their votes on four bills with ‘immediate and direct impacts’ on the stock market:

• The Financial Services Modernization Act of 1999.
• The Commodity Futures Modernization Act of 2000.
• The Emergency Economic Stabilization Act of 2008.
• The Auto Industry Financing and Restructuring Act of 2008.

“Peterson and Grose found parallels between lawmakers’ stock holdings and their votes, even after controlling for potential confounding factors. Lawmakers with large stakes in financial companies directly affected by the Financial Services Modernization Act, for instance, were about 1.1 percentage points more likely to support that bill than those with no stock in those companies.”

The goal is to create the jobs over the next 10 years and has raised $100 million in seed money: “A coalition of more than 30 chief executive officers from companies including Merck & Co., International Business Machines Corp. and Nike Inc. are backing a startup that will connect employers with Black workers,” the WSJ’s Khadeeja Safdar reports.

“Merck CEO Ken Frazier, one of the startup’s founders, said the nonprofit organization will focus on helping Black Americans without four-year college degrees, but with high school diplomas and other certifications, find and retain ‘family-sustaining jobs,’ or those earning $40,000 or more depending on the region. … The initiative is an acknowledgment by the CEOs that the efforts they undertook in recent years haven’t made a meaningful difference for Black Americans, according to Frazier.”

Amazon wants to train 29 million people to work in the cloud: The tech giant aims for the worldwide efforts to be retrained by 2025. “The online giant committed $700 million last year to reskilling 100,000 of its own workers in the U.S. The new effort will build on existing programs and include new ones in partnership with nonprofits, schools and others,” the WSJ’s Chip Cutter reports.

“Amazon’s latest initiative is geared toward those who aren’t already employed at the company. The idea, it says, is to equip people with the education needed to work in cloud computing as a number of employers seek to fill high-tech positions. Although some participants might find jobs at Amazon, it is more likely they would get hired at other companies, including many that use Amazon Web Services, the online retailer’s cloud division.” (Amazon chief executive Jeff Bezos owns The Washington Post.)

The federal government seeks a villain in Mark Zuckerberg: “Anyone who still thinks of the Facebook chief executive as the awkward Harvard undergrad portrayed in ‘The Social Network’ — sneaky and ambitious, sure, but also longing for human connection — might be startled to encounter the bare-knuckled operator portrayed in a pair of government lawsuits,” Craig Timberg and Drew Harwell report.

“The dramatic language, bolstered by damaging emails unearthed by investigators, paints Zuckerberg as Silicon Valley’s leading villain, one whom the public might be persuaded to loathe, as some already do. It’s particularly striking, coming two months after the Justice Department’s antitrust complaint against Google, which is long on charts, data and industry analysis but does not even name the company executives whose decisions led to the allegedly monopolistic actions.”

Gary Cohn shrugs off Goldman’s demand to pay back millions: “After refusing to return millions in pay to Goldman Sachs Group Inc., Cohn has come up with a workaround that lets him walk away with the upper hand: He’s giving the money away to charity,” Bloomberg News’s Sridhar Natarajan and Anders Melin report.

“The bank’s board had demanded its former president return more than $10 million as part of a broader punishment inflicted on senior leadership, including CEO David Solomon and his predecessor, to demonstrate accountability for the company’s involvement in the 1MDB corruption scandal. Cohn refused. … The resolution aims to be a face-saving end to the impasse that left Goldman waiting on one of its most prominent former leaders to participate in what was meant to be a unified act of contrition.”

• Fed Vice Chair for Supervision Randy Quarles gives a speech on the past, present and future of bank supervision