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The COVID-19 pandemic and resulting lockdowns put a mark on everything from the way we shop to the way we work. And while the threat of COVID-19 has receded considerably since then, some of the changes it wrought may be here to stay. Not all of the adjustments prompted by the pandemic are necessarily bad ones, though. The following pandemic-era habits are actually worth retaining…
Gael F. Cooper
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When electioneering, the best pledges are catchy enough to get stuck in a voter’s head. During this election, “no tax on tips” seems to be the phrase fitting that bill.
Both presidential candidates are embracing the promise to exempt workers from paying taxes on their tips. But the problem with no-tax-on-tips proposals, experts say, is that they’re clearly a bid for votes rather than a substantive solution to address the fundamental needs of tipped workers.
“This wouldn’t help very many workers, and it could actually be very harmful to millions more, with the real benefits of this policy change going to employers and the wealthy at the expense of working people,” says David Cooper, researcher from EPI Action, a nonpartisan research and advocacy organization.
On June 9, former President Donald Trump made a promise to end taxes on tips in front of service workers in Las Vegas. Last weekend, in Las Vegas, Vice President Kamala Harris made a similar pledge. It’s no coincidence that both candidates made the announcement in Las Vegas — leisure and hospitality is the dominant industry in the metro area, Bureau of Labor Statistics data shows.
On Monday, White House press secretary Karine Jean-Pierre said that President Joe Biden also supports eliminating taxes on tips for service and hospital workers, as well as raising the minimum wage.
The policy is undeniably appealing for tipped workers and the unions that represent them. After all, who doesn’t want a tax break when they can get it? Experts say the message to voters may be effective, but the policy is less likely to be.
“I’d say, thumbs down to the policy proposal; it’s bad tax policy,” says Kyle Pomerleau, a senior fellow studying federal tax policy and reform at American Enterprise Institute, a right-leaning think tank.
Tipped workers are some of the most visible workers: They’re taking your coffee order, cutting your hair, serving your meals in restaurants, delivering your groceries and ridesharing you around town. And yet, the Budget Lab at Yale University estimates there are only about 4 million workers in tipped positions in 2023 — about 2.5% of the entire U.S. workforce.
The most typical tipped work is in the service and hospitality industry. Tipped workers also tend to be younger than the rest of the working population — 20 to 34 years old, according to Yale Budget Lab.
In order to qualify as a tipped worker, you must earn more than $20 per month in tips. In tipped positions, workers must receive a subminimum wage, also known as a cash wage, of $2.13 per hour. A subminimum wage is combined with tips in order for workers to earn at least the federal minimum wage of $7.25 per hour. If an employee earns a subminimum wage plus tips less than $7.25 per hour, an employer must make up the difference.
There’s also something called tip pooling that’s often done in restaurants; it’s where the front of the house (servers and bartenders) share their tips with each other, as well as with the back of the house (such as cooks and dishwashers). In this scenario, all employees who receive pooled tips — including the workers who earn the tips — must make at least the federal minimum wage, according to the Department of Labor.
It’s unclear how often restaurants properly adhere to wage rules because tipping is notoriously underreported. Although, that’s less of an issue now since most people pay electronically and don’t leave cash tips as often anymore, says Howard Gleckman, senior fellow in the Urban-Brookings Tax Policy Center at the Urban Institute.
Median weekly wages, including tips, are $538 among tipped workers, compared to a median of $1,000 among non-tipped workers, according to 2023 estimates by Yale Budget Lab. Many tipped workers earn so little they already aren’t required to pay federal income taxes; Yale Budget Lab estimates this is the case for about 37% of tipped workers.
It’s likely only a small sliver of the tipped worker population would get the tax advantage that Trump and Harris propose — and that’s without knowing what specific income limits would be set by either candidate’s plan.
“Think about somebody who is a server at ‘Bob’s Diner’ — it has a $9.95 special and [the server] is going to get two bucks,” says Gleckman. “If you’re a server at some fancy downtown steakhouse where dinner is $200, you’re going to get 40 bucks, right? So for those higher income servers, this [policy] can make some difference. But for most people, it won’t really matter at all.”
There’s another important distinction about tips and taxes: Even when workers don’t have a federal income tax obligation, workers and their employers must pay federal payroll taxes, which fund Social Security and Medicare programs. That also means they must continue to report tips, even if federal taxes on tips are eliminated; also, the proposals would not affect state income tax requirements.
Neither Trump or Harris has specified whether their proposals would apply only to the federal income tax. But if the No Tax on Tips Act, introduced by Sen. Ted Cruz (R-Texas), is any indication, the exemption would likely only apply to federal income taxes.
Tip earnings are hard to characterize since the amount varies drastically based on the type of service that workers provide, as well as local minimum wage laws. But the Tax Foundation offers an example: Say a server earns $19,000 per year in wages plus $15,000 in tipped income. Their adjusted gross income is $34,000. They take a standard deduction of $14,600, which leaves them with $19,400 in taxable income. Under this example they owe $2,096 in federal income taxes.
With a no-tax-on-tips policy in effect, their adjusted gross income is $19,000 since the $15,000 income in tips isn’t considered taxable. They take a standard deduction of $14,600, which leaves them with $4,400 in taxable income. Under this example, their tax liability is $440. It’s the difference of $1,656 from the previous example.
As the Tax Foundation points out, a cashier who makes the same $34,000 — without tips — would have the same $2,096 federal tax liability in either scenario, and so would be paying vastly more in taxes than the server under a no-tax-on-tips policy.
Suffice to say, tax and wage experts are unimpressed with the no-tax-on-tips proposal.
“This wouldn’t help very many workers, and it could actually be very harmful to millions more, with the real benefits of this policy change going to employers and the wealthy at the expense of working people,” says Cooper.
Here are some reasons why experts say exempting tips from taxes could have negative repercussions, depending on how the policy is structured.
Social programs and other tax benefits could be impacted
If a no-tax-on-tips proposal includes an exemption for the payroll tax in addition to the income tax, it could impact both worker eligibility for Social Security and Medicaid, as well as the solvency of the program itself, says Cooper.
This scenario isn’t necessarily likely. Even though Trump has not specified if his proposal would apply to both the federal income tax and the payroll tax, Cruz’s No Tax on Tips Act applies the exemption only to the federal income tax. It’s difficult to see Harris applying the exemption to the payroll tax.
But depending on how the law is written, no-tax-on-tips could make it more difficult for workers to get other tax benefits like the earned income tax credit or the child tax credit, experts say.
“If you’re a household with children, those credits phase-in with earned income, meaning that they are larger the more income you earn, up to a certain point,” says Pomerleau. “But if you were to structure this tax exemption as an exemption from adjusted gross income, it would directly interact with the earned income tax credit in the child tax credit and reduce those benefits for households.”
No matter what, says Pomerleau, no-tax-on-tips would add tax complexity for a population of tax filers that, generally, do not have access to accountants to help them through the process. That could result in more workers not filing taxes or not being able to access the benefits they are eligible for.
High earners could find a loophole
A tax exemption on tips leaves open the possibility of exploiting the system. Some in high-income positions like lawyers, for example, could restructure how their earnings are reported to avoid paying taxes on a portion of their income.
“You could envision a lot of scenarios where this would be really grossly abused by highly paid individuals,” says Cooper.
The Harris campaign told The Washington Post that, under her plan, the tax exemption would only apply to workers who earn below a certain threshold in select industries. This would prevent high earners in nontraditional tipping positions from gaming the system. There is currently no bill from Democrats in Congress that matches Harris’ plan.
Trump’s proposal and the No Tax on Tips Act from congressional Republicans doesn’t narrow industry eligibility or impose income limitations.
It could reduce employers’ need to raise wages
The tax benefit presents a double whammy benefit to owners: a tax benefit that appeals to workers and an opportunity to save money by shifting the pay burden from owners to consumers.
“It’s a win-win for restaurant owners, hotel owners, like, for example, Donald Trump,” says Gleckman. “But it’s much more ambiguous and much riskier for tip workers, particularly low-income workers.”
Cooper says this policy won’t incentivize employers to raise raises for workers because there’s a tax benefit inherent to the job. But it could incentivize businesses to reclassify certain positions as tipped occupations.
“The tipping system, as it currently exists, is rife with wage theft and discrimination,” says Cooper. “It opens up workers to abuse from customers and colleagues because they feel like they have to tolerate bad behavior, lest they put their kids at risk. So this [policy] would grow a system that is problematic in a lot of ways and spread it to more occupations. That’s not something that we should be incentivizing.”
The deficit would increase, although not substantially
Tax cuts lead to a decline in revenue, which could, over time, exacerbate the federal deficit; it’s currently about $1.52 trillion, according to the U.S. Treasury. The Committee for a Responsible Federal Budget estimates the cost of exempting tips from federal income tax would be $100 to $200 billion over a decade. If tips are also exempted from payroll taxes, the total could run to $250 billion.
If the policy makes tips exempt from the payroll tax, it would have broader repercussions for Social Security and Medicaid programs, experts say.
“These programs are already facing a fiscal shortfall and will need to be dealt with, in as little as ten years,” says Pomerleau. “If they were to remove $38 billion, potentially from the face of Social Security and Medicare, I would accelerate this problem.”
It could exacerbate tipping backlash
As the CRFB notes, what’s not included in its calculations are changes in tipping behavior, which could result in consumers giving less than they do now if they perceive tipped workers as getting an unfair tax advantage.
A backlash to tipping culture has already resulted in 7% lower tipping among service-sector workers from November 2022 to November 2023, according to a payroll analysis by Gusto, a payroll provider.
It could fuel worker resentment
On the flip side, excluding certain tipped jobs by field or income could stir the pot among workers and the unions that represent them.
Cooper says, “Why would we be giving preferential income tax treatment to this very small subset of workers when there are lots of other hard working, low-paid workers — people providing daycare, childcare, eldercare — that this would do nothing for?”
Gleckman says the policy violates a “cardinal rule of good tax policy,” which is to tax people making the same income at the same level. “I’m not sure I quite understand why a low wage worker somehow should enjoy more benefits than a low wage worker of another kind who’s getting the same income,” says Gleckman. “If you really care for a bunch of low wage workers, there are plenty of other things you could do.”
Despite criticism of the no-tax-on-tips proposal, it would benefit workers who are eligible. Adding limitations by industry and income could prevent the exemption from being a regressive one.
Shortly after Harris’ announcement, Culinary Union Local 226 in Nevada endorsed Harris for president and lauded the proposal without acknowledging Trump’s. The union, along with the Bartenders Union Local 165, represents 60,000 workers in Las Vegas and Reno. The Culinary Union argues that the tax exemption could help millions of workers that earn a subminimum wage.
“The fact that many companies pay tipped workers across the country $2.13 an hour is outrageous and ending taxes on tips for service and hospitality workers would significantly help millions of workers provide for their families, including in Nevada,” the union wrote in its press release endorsing Harris.
Businesses that employ tipped workers also support the plan. At least, Cruz’s plan, which would not limit the exemption by industry and income. Two of the biggest associations for the top tipped industries — the National Restaurant Association and the Professional Beauty Association — both endorsed Cruz’s proposal.
“Tipped employees are a critical part of the restaurant industry, and anything that strengthens their economic condition is a positive for them,” said Sean Kennedy, executive vice president of public affairs for the National Restaurant Association in a press release announcing Cruz’s bill. “The ‘No Tax on Tips Act’ would provide immediate tax relief for more than 2.2 million restaurant employees and their families, putting more money in their pockets at a time when we’re all feeling the squeeze of higher prices.”
During the campaign rally in Las Vegas last weekend, when Harris made her promise to end tax on tips, she also said she would raise the minimum wage. What she didn’t promise to do is eliminate the subminimum wage, which would have a bigger impact on tipped workers.
“Why not do something like raise the minimum wage if you really want to improve outcomes for tipped workers in the United States?” says Cooper.
The federal minimum wage for all workers has been $7.25 per hour since 2009. However, 30 states plus the District of Columbia have set minimum wages above that amount. Again, the federal subminimum wage is $2.13 per hour. Right now, 36 states have set minimum wages for tipped workers below the federal minimum wage of $7.25 per hour.
The tipped workers who earn the most, nationwide, are in Los Angeles ($16.78 per hour); Seattle ($17.25 per hour); and New York City, where tipped workers earn $15 per hour with the exception of delivery workers, who earn a minimum of $17.96 per hour.
Other places have eliminated the subminimum wage practice altogether. So far six states have banned subminimum wages for tipped workers, including Alaska, California, Minnesota, Montana, Oregon and Washington.
“It is outrageous that over a million workers in this country are not guaranteed a fair minimum wage in 2024,” the Culinary Union 226 wrote in a release endorsing Harris’ proposal. “Employers across the nation need to take responsibility for paying a real minimum wage and Congress must ensure it.”
Beyond raising the minimum wage, there are other levers that could be pulled to help low wage workers, experts say. That includes expanding income supports like the child tax credit, the earned income tax credit or Medicaid.
Anna Helhoski
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An outbreak of salmonella linked to recalled cucumbers has sickened 449 people in 31 states and the District of Columbia, the U.S. Centers for Disease Control and Prevention said in an update.
The CDC is among the federal and state agencies investigating the outbreak, determining that cucumbers contaminated with salmonella made people sick. As of July 2, 449 people had been infected with one of two outbreak strains, with 125 hospitalized, according to a post on Wednesday by the agency.
People stricken in the outbreak reside in the District of Columbia and the following states:
That said, the true number of sick people is likely much higher than reported, as many recover without seeking medical help and are therefore never tested for salmonella, the CDC noted.
Two Florida growers have been identified as likely sources of some but not all of the illnesses: Bedner Growers of Boynton Beach and Thomas Produce of Boca Raton, the CDC stated. One of multiple salmonella strains identified in the outbreak was detected in untreated canal water used by Thomas Produce, and additional ones were detected in soil and water collected at the farms of both, the agency said. Their cucumbers are no longer in season nor on store shelves.
According to a notice published June 1, 2024, by the Food and Drug Administration, Fresh Start Produce Sales of Delray, Florida, recalled whole cucumbers shipped to retail distribution centers, wholesalers and food service distributors in 14 states.
The recall came after the Pennsylvania Department of Agriculture told the company a product sample tested positive for salmonella, Fresh Start stated at the time.
The organism can cause serious and sometimes fatal infections in the young, frail or elderly.
Healthy people infected with salmonella can experience symptoms including fever, diarrhea, nausea, vomiting and abdominal pain. In rare circumstances, the bacteria can get into the bloodstream and cause more severe infections.
Salmonella bacteria cause about 1.35 million infections, 26,500 hospitalizations and 420 deaths in the United States every year, with food being the source for most of the illnesses, according to the Centers for Disease Control and Prevention.
Most people recover without specific treatment and should not take antibiotics, the CDC noted.
After much speculation about when the U.S. will finally begin cutting its interest rates, the CME FedWatch tool reports a 100% chance that the U.S. Federal Reserve will cut its rates in September. Market watchers are pretty confident, with a 36% chance that the U.S. Fed will go right to a 0.50% cut instead of nudging the rate down. And looking ahead, the futures market predicts a 100% chance of 0.75% in rate cuts by December this year, with a 32% chance of a 1.25% rate decrease. The forecasts became stronger this week as the annualized inflation rate in the U.S. slowed to 2.9%, its lowest rate since March 2021. There are a lot of percentages here, but the gist is people are expecting big interest rate cuts.
Those probabilities should take some of the currency pressure off of the Bank of Canada (BoC) when it makes its next interest rate decision on September 4. If the BoC were to continue to cut rates at a faster pace than the U.S. Fed, the Canadian dollar would substantially depreciate and import-led inflation would likely become an issue.
Here are some top-line takeaways from the U.S. Labor Department July CPI report:
When combined with the meagre July jobs report, it’s pretty clear the U.S. consumer-led inflation pressures are receding. As the U.S. cuts interest rates and mortgage costs come down, it’s quite likely that shelter costs (the last leg of strong inflation) could come down as well.
Despite slowing U.S. consumer spending, mega retailers Home Depot and Walmart continue to book solid profits.
Here are the results from this week. All numbers below are reported in USD.
While Home Depot posted a strong earnings beat on Wednesday, forward guidance was lukewarm, resulting in a gain of 1.60% on the day. Walmart, on the other hand, knocked the ball out of the park and raised its forward guidance and booked a gain of 6.58% on Thursday.
Walmart Chief Financial Officer John David Rainey told CNBC, “In this environment, it’s responsible or prudent to be a little bit guarded with the outlook, but we’re not projecting a recession.” He went on to add, “We see, among our members and customers, that they remain choiceful, discerning, value-seeking, focusing on things like essentials rather than discretionary items, but importantly, we don’t see any additional fraying of consumer health.”
Same-store sales for Walmart U.S. were up 4.2% year over year, and e-commerce sales were up 22%. The mega retailer highlighted its launch of the Bettergoods grocery brand as a way to monetize the trend toward cheaper food-at-home options, and away from fast food.
Kyle Prevost
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“Beating the Street is one of the first investing books I ever read, and it’s stayed with me because it makes stock investing accessible to beginners. There are many highly analytical and slightly scary books on investing, but Peter Lynch managed to make stocks exciting and approachable using simple, real-world examples drawn from his own experience as a high-performing fund manager. It’s an oldie but a goodie.”
—Aditya Nain, MoneySense contributor, author, speaker and educator about Canadian investments, personal finance and crypto
“This book feels like your [parents] sat you down and taught you everything you need to know about money, before you ever encountered any of it. It gives you the opportunity to take on the world, with easily digestible knowledge in your back pocket.”
—Reni Odetoyinbo, financial educator and content creator (Reni the Resource)
“A great book for anyone who wants to understand how the financial system works. I love that this book is incredibly practical. It breaks personal finance down in such an easy-to-understand way and helps you create systems around your finances that make things less stressful.”
—Reni Odetoyinbo
“This book teaches the basics of money management to young adults. It helps teach good financial habits for young people and their parents!”
—Shannon Lee Simmons, an award-winning Certified Financial Planner, speaker, bestselling author, Chartered Investment Manager, founder of the New School of Finance, the money columnist on CBC Radio’s Metro Morning and a financial expert on the concluded The Marilyn Denis Show
“This was the first personal finance book I ever read, after learning personal finance at my father’s knee. Thanks to his coaching, I have filed my own income tax returns every year since I was 16. And it still stands up. The literary conceit of the titular barber allows author David Chilton to walk through scary-sounding money concepts in a relatable way. There’s a reason it’s sold millions of copies.”
—Sandra E. Martin, two-time MoneySense editor (OG editor-in-chief Ian McGugan hired her in 1999, and she returned in 2019 as editor-in-chief), and currently The Globe and Mail’s standards editor.
“Let me give a shout-out to the book that changed my life: The Only Investment Guide You’ll Ever Need by Andrew Tobias. Until I plucked this book at random out of a box of discards while working a night shift in 1979, I was a university student who thought money was boring and inexplicable. Tobias changed all that. He was smart, funny and human. He made money fascinating. He also delivered a truckload of practical wisdom. I remain a fan of this personal-finance classic—now updated many times, not just for its sage advice but also for its big personality.”
—Ian McGugan, founding editor of MoneySense, and columnist for The Globe and Mail.
“If you’re looking for no-nonsense, clearly explained money tips, pick up this easy-to-read volume by Canadian writer and podcaster Preet Banerjee. He boils personal finance down to five rules: disaster-proof your life, spend less than you earn, aggressively pay down high-interest debt, read the fine print, and delay consumption. Do these five things and you’ll be in better financial shape than you are today.”
—Jaclyn Law, MoneySense’s managing editor
“I did all the ‘right’ things in my career. I went to business school and got a great corporate job. If I had just stayed on that path, money would have taken care of itself. Except I didn’t love the job. I was stuck. I needed something to crack my paradigm about what ‘right’ meant for me. This book did that. One transformational exercise was answering this question: ‘If you could do anything and knew you would be successful, what would it be?’ This was a light-bulb moment for me. My answer was to work in TV news, and I realized that it was just fear that was holding me back. As terrified as I was, I quit my job and pursued what I really wanted. I made less money than I would have in the business world, but the big switch was worth every penny.”
—Bruce Sellery, CEO of Credit Canada, host of Moolala on SiriusXM, the Money Columnist for CBC Radio
Stephanie Griffiths
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WELLINGTON, New Zealand — Kim Dotcom, founder of the once wildly popular file-sharing website Megaupload, lost a 12-year fight this week to halt his deportation from New Zealand to the U.S. on charges of copyright infringement, money laundering and racketeering.
New Zealand’s Justice Minister Paul Goldsmith divulged Friday that he had decided Dotcom should be surrendered to the U.S. to face trial, capping — for now — a drawn-out legal fight. A date for the extradition was not set, and Goldsmith said Dotcom would be allowed “a short period of time to consider and take advice” on the decision.
“Don’t worry I have a plan,” Dotcom posted on X this week. He did not elaborate, although a member of his legal team, Ira Rothken, wrote on the site that a bid for a judicial review — in which a New Zealand judge would be asked to evaluate Goldsmith’s decision — was being prepared.
The saga stretches to the 2012 arrest of Dotcom in a dramatic raid on his Auckland mansion, along with other company officers. Prosecutors said Megaupload raked in at least $175 million — mainly from people who used the site to illegally download songs, television shows and movies — before the FBI shut it down earlier that year.
Lawyers for the Finnish-German millionaire and the others arrested had argued that it was the users of the site, founded in 2005, who chose to pirate material, not its founders. But prosecutors argued the men were the architects of a vast criminal enterprise, with the Department of Justice describing it as the largest criminal copyright case in U.S. history.
The men fought the order for years — lambasting the investigation and arrests — but in 2021 New Zealand’s Supreme Court ruled that Dotcom and two other men could be extradited. It remained up to the country’s Justice Minister to decide if the extradition should proceed.
Three of Goldsmith’s predecessors did not announce a decision. Goldsmith was appointed justice minister in November after New Zealand’s government changed in an election.
“I have received extensive advice from the Ministry of Justice on this matter” and considered all information carefully, Goldsmith said in his statement.
“I love New Zealand. I’m not leaving,” German-born Dotcom wrote on X Thursday. He did not respond to an Associated Press request for comment.
Two of his former business partners, Mathias Ortmann and Bram van der Kolk, pleaded guilty to charges against them in a New Zealand court in June 2023 and were sentenced to two and a half years in jail. In exchange, U.S. efforts to extradite them were dropped.
Prosecutors had earlier abandoned their extradition bid against a fourth officer of the company, Finn Batato, who was arrested in New Zealand. Batato returned to Germany where he died from cancer in 2022.
In 2015, Megaupload computer programmer Andrus Nomm, of Estonia, pleaded guilty to conspiring to commit felony copyright infringement and was sentenced to one year and one day in U.S. federal prison.
The CableTV.com team watches television professionally, so it’s easy to forget sometimes that normal humans don’t have time for all the shows, movies, and sports we throw at them every week. With that in mind, we’ve compiled short series that you could easily take in over a weekend.
Kristin Kurens
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Up until the 1990s, the nuns had few investments. That changed as they began to set aside money to care for elderly sisters as the community aged.
“We decided it was really important to do it in a responsible way,” said Sister Rose Marie Stallbaumer, who was the community’s treasurer for years. “We wanted to be sure that we weren’t just collecting money to help ourselves at the detriment of others.”
Faith-based shareholder activism is often traced to the early 1970s, when religious groups put forth resolutions for American companies to withdraw from South Africa over apartheid.
In 2004, the Mount St. Scholastica sisters joined the Benedictine Coalition for Responsible Investment, an umbrella group run by Sister Susan Mika, a nun based at a Texas monastery who has been working in the field since the 1980s.
The Benedictine Coalition works closely with the Interfaith Center for Corporate Responsibility, which acts as a clearinghouse for shareholder resolutions, coordinating with faith-based groups—including dozens of Catholic orders—to leverage assets and file on social justice-oriented topics.
The Benedictines have played a key role at ICCR for years, said Tim Smith, a senior policy advisor for the centre. It can be discouraging work, where the needle only moves slightly each year, but he said the sisters “have the endurance of long-distance runners.”
The resolutions rarely pass, and even if they do, they’re usually non-binding. But they’re still an educational tool and a means to raise awareness inside a corporation. The Benedictine sisters have watched over the years as support for some of their resolutions has gone from low single digits to 30% or even a majority.
Gradually environmental causes and human rights concerns have swayed some shareholders, even as a growing backlash foments against investments involving ESG (environmental, social and governance concerns).
The Associated Press
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Parents and other caregivers should immediately stop using Mamibaby, Yoocaa, DHZJM, Cosy Nation and Hyhuudth baby loungers after the suffocation deaths of five infants, federal safety regulators urged Thursday.
Separately, owners of DNYSYSJ and OUKANING cradle swings are being cautioned against their use after an infant’s death in a crib of similar design, bringing the total number of deaths to six, the U.S. Consumer Product Safety Commission said.
CPSC is aware of five infant deaths in Mamibaby, Yoocaa and DHZJM-branded loungers, the agency said in a statement.
The deaths include a 10-day old infant and a five-month old baby in Mamibaby-branded loungers used for bed sharing in 2020 and 2021, according to CPSC.
Two infant deaths are linked to Yoocaa-branded baby loungers. One fatality involved a three-month-old placed in a lounger on top of an adult bed, who was found fatally entrapped between the bed and bedroom wall in 2021. The following year, a four-month-old was found unresponsive after being placed to sleep in the product with a blanket.
A fifth infant died in 2020 in a DHZJM-branded baby lounger.
U.S. Consumer Product Safety Commission
The three brands, along with Cosy Nation and Hyhuudth loungers, violate federal safety regulations for infant sleep products because of defects including sides that are too low to hold a baby and a sleeping pad thick enough to pose a suffocation risk.
The manufacturer of the loungers, China-based Ningbo Tree Nest Children Products Co., has not agreed to recall the following products, according to the agency:
In a similar vein, the CPSC issued another warning against DNYSYSJ and OUKANING cradle swings because they pose suffocation and fall hazards for infants.
The agency cited the 2021 death of a three-month-old in a cradle swing of similar design for urging parents and other caregivers not to use the product.
The DNYSYSJ cradle swings were sold online at Amazon.com from October 2021 through May 2024 for between $95 and $130.
The OUKANING cradle swings were sold online at Amazon.com from October 2021 through February 2023 for between $80 and $145.
U.S. Consumer Product Safety Commission
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn how to financially prepare for the costs of pet emergencies with firsthand experiences from pet owners and experts.
How much does emergency pet care cost? How much should you budget for unexpected pet expenses? Hosts Sean Pyles and Ronita Choudhuri-Wade discuss the unpredictable nature of pet emergencies and the importance of financial readiness to help you understand how to effectively manage unexpected veterinary costs. They begin by sharing their personal experiences and discussing the emotional toll of pet emergencies, with tips and tricks on setting up a savings account for pet expenses, considering pet insurance, and understanding the wide range of potential costs involved in emergency care. Vivien, a pet owner from Jersey City, New Jersey, also shares her story of dealing with an unexpected pet emergency.
Then, Dr. Angela Beal, a veterinarian based in Columbus, Ohio, joins Ronita to discuss strategies for financially preparing for pet emergencies. They discuss tactics for setting up a dedicated pet emergency fund, the benefits of pet insurance, and practical steps for emotionally and financially managing unexpected veterinary expenses.
Check out this episode on your favorite podcast platform, including:
NerdWallet stories related to this episode:
This transcript was generated from podcast audio by an AI tool.
Pets are wonderful. Pets are lovely. Pets are simply the best. But pets can also chew on furniture. They don’t know not to wander into traffic. They eat things that they shouldn’t, and all that can land them somewhere nobody wants to be: the emergency room.
Pet owners could expect to pay a minimum of $2,000, probably more, for an emergency situation. I think setting aside maybe $50 to $100 per month in a savings account and letting that account grow would be a good idea.
Welcome to NerdWallet’s Smart Money podcast. I’m Sean Pyles.
And I’m Ronita Choudhuri-Wade.
And this is episode three of our nerdy deep dive into the cost of pets. And today, Ronita, we are not all sunshine and rainbows and puppies and kittens; it’s time to talk about what to do when the worst happens to our furry family members.
This is the thing nobody wants to imagine will happen: the accident, the poisoning, or the sudden turn of health, all the things that land you at the veterinary hospital where you’re at risk of making not only healthcare decisions but financial ones too.
I feel fortunate that in all of my years of pet ownership, I haven’t had to deal with a trip to the emergency vet, at least not yet, and I’m knocking on wood as I’m talking.
Yeah, I can’t say I’m so lucky. We had to take Mo to one of those 24/7 emergency vets after he ate something. We still have no idea what it was, but he got violently ill. He kept puking, and there was blood, and it was like eight o’clock at night. It was all really scary.
But we took him there, and the vet gave him something for dehydration that he was experiencing and then meds to solve the stomach issue. The visit was about 30 minutes, and the total cost was $666.89. We had a deductible, and then pet insurance covered the rest. It’s one of those things that felt so random within a very normal week, but frankly, you should expect or at least prepare for, because pets are, if nothing else, unpredictable.
They are. Sometimes you get happy tail wags. Sometimes you get a large puddle of puke.
I appreciate the visual, Sean.
Hey, it is a favorite activity of many cats, Argus included. He has a weekly puke at this point, so that’s always a fun surprise whenever we find it. So for those who are wondering what it might cost to get emergency care for your beloved pets, well, it varies widely depending on the species, your location, and the type of emergency.
It’s really hard to generalize. But WebMD says for a large dog, it can be anywhere from 80 bucks for a simple blood test to $5,000 for emergency surgery. No doubt it’s possible to go well beyond that if it’s some sort of catastrophic emergency like getting hit by a car.
Yeah, it can be a whole lot of money, which sometimes doesn’t seem fair. You may call it a pet peeve.
I see what you did there, Ronita. Yeah, when pets can cost as much as treating humans, well, I guess that’s why a lot of us consider them irreplaceable family members. And the costs keep going up too. The Bureau of Labor Statistics tracks what we spend on veterinary care, and the price of vet services in urban areas rose 6.4% from June of 2023 to June of this year.
And that’s some inflation right there.
Certainly is. Earlier this year, USA Today released a report that found 91% of 1,000 dog owners they surveyed said they’d experienced some degree of financial stress in the past year related to the cost of pet care. Sixty-six percent of them said that they’ve cut back on personal spending because of that expense.
I know I would. So it really is so important to go through the worst-case scenario exercise for a reality check on how you would deal with that kind of unexpected situation. Could you afford it if your pet had a major emergency? How would you deal with it? Do you have a number in your head for what you’re willing to spend? All really critical questions when it comes to care for your furry and scaly family members.
I appreciate the shout-out to Ozzie, the Gecko, who fortunately has not had any emergencies in has 22 years of straight chilling. All right, listeners, we want you to bark and meow at us with your stories about your pets and what it takes to keep them in kibble. What are you sacrificing in your budget to have an animal?
We want to hear any and all pet stories over the course of this series. So to share them, leave us a voicemail or text the Nerd hotline at 901-730-6373. That’s 901-730-N-E-R-D. Or email a voice memo to [email protected]. And if you have audio of your pets, all the better. So Ronita, where do we start today?
Well, first we’re going to hear from Vivien Schweitzer, a journalist and pianist from Jersey City, New Jersey. She and her partner recently had firsthand experience with a pet emergency, and she’s sharing her story with us. Hey, Vivien, welcome to the Smart Money podcast.
Thank you. Great to be here.
Today we are talking about something that’s a little bit difficult. It’s pet emergencies, and I know that’s something that you’ve gone through.
So my husband and I had been talking about getting either a cat or a dog for a long time, and a friend of ours said to us, okay, so I have a feral cat who’s just had kittens. Are you serious about getting pets because if so, I have to give away some cats? And this was last summer, so 2023. So we adopted two adorable kittens who were then three months old and brought them home, and they’re called Idris and Deshani.
Why don’t you tell us what happened to Idris?
We were trying to get them spayed and neutered ASAP. After we did that, the place that we got them spayed and neutered said that Idris had a little hernia, and we needed to get that taken care of immediately. So it wasn’t an emergency in the sense of they’d swallowed a bottle of pills or poison or something like that, but it was something that we needed to fix.
How old was he again? Three months when this happened?
Yeah, I think about four months when this happened. So he was still pretty small.
Can you walk us through what happened next?
So we’d taken them to this amazing place called People For Animals Affordable Veterinary Care For All. And I’d found them in part because I’d called so many vets just to get a quote for the spay and neuter procedure, and no one could tell me how much it would cost or even give a ballpark figure, which I found really odd and surprising because it’s such a routine procedure.
It was surprisingly opaque, almost like the human healthcare system where you just cannot get a ballpark figure for a really basic procedure. So we found this amazing place, and the reason we didn’t take them back to this place is because although they were fantastic and so reasonably priced, because it’s so reasonably priced, there’s a long wait line. So at that point, we just decided to find a private vet that was closer.
Did he have any symptoms or was there anything going on like that, was he suffering at all, or was it something more preventative?
It was one of those, it’s kind of preventative, but you really need to do it so that the hernia doesn’t explode or something like that. So again, I think it wasn’t an emergency in the type of sense that you’re rushing them to the 24-hour vet because they’ve swallowed something. But it was more the not knowing what would happen if we didn’t. I think it was one of those you need to get this taken care of so nothing worse happens.
So then what happened next?
I called around a lot of places, and I was just trying to get a ballpark figure, which was really difficult. And then I found this new vet, women-run, and I liked that too. And they gave us a quote upfront with a minimum cost and the maximum cost, which I really appreciated, and they fit him right in. So we ended up taking him there.
And so what were those minimum and maximum costs you were given?
So the low estimate was $736, and the high estimate was $874, and they broke down the cost in between that as well.
Talk me through your emotions during this process, what you thought initially as you went through it and then at the end. And we’re guessing that Idris is fine now, right?
Happy to report, he’s totally fine. Well, I actually felt a little bit guilty at first because, as it turned out, if I had taken him to one of the private clinics, when they were doing the pre-op assessment, they probably would’ve seen that he’d had a hernia and then they could have done the hernia at the same time as they’d done the spay procedure.
But as it turned out, he had to go through the spay procedure and go under the anesthetic, and then three weeks later, he had to go under another anesthetic for the hernia operation. So I actually felt a little bit bad that I’d put him through essentially two surgeries within three weeks.
But I think a lot of the communication isn’t great, and these places tell you they need to do an assessment before the spay neuter, but it’s not really communicated why that is. And if someone had said to me we need to do an assessment first and then we’ll be able to tell you how much it is because, for example, it’s very common for kittens to have a hernia. And if that’s the case, we’ll do both.
All it seemed to me, as the person shopping around for a vet, was it was just very confusing and poorly communicated, but I figured that was better than riding it out to see what happened.
And hopefully, he doesn’t remember any of it now.
Since this is the Smart Money podcast, I did want to come back to the financials. So you paid between $700 and $850. How did you manage to cover the costs?
We put it on a credit card.
And did you have pet insurance? Is that anything you’ve ever considered?
We don’t have it at the moment, and our reasoning is that they’re still so young and that they don’t go outside. I think in a couple of years we’ll probably end up getting pet insurance just because it’s obviously more likely that they’re going to have some issues, but I also realize that in the meantime they could swallow something, so we might change our mind on that and get pet insurance.
How did you feel about putting it on a credit card? Was it just more of like, okay, this is convenient, let’s put it on there, or were you just thinking ahead of time pet costs are going to go on the card?
We actually just put a lot of stuff on the card anyway, we get points and what have you, and it’s such a fairly big chunk of change, so that tends to go on the credit card. And I think that was also the thing with the spay neuter. I think with two cats, it was going to be like $2,000 to get both of them if we hadn’t found the discount place.
Yeah. And so was there any other aftercare required? Did they need any medications, anything like that?
Fortunately, they didn’t. I think he just had a few pain meds, but nothing serious.
Have you made any changes to how you think about paying for pet expenses, emergency or not?
I’ll definitely still put stuff on a credit card, and I would definitely advise any friends who are considering getting pets also to just shop around for a vet who’s willing to be as upfront as possible with the costs, because I think some vets are, like this vet gave us a very detailed budget summary of minimum and maximum, and that made the process a lot less stressful because you’re not going to get hit with the equivalent of a human surprise billing thing.
Well, that’s wonderful and we’re so happy to hear Idris is perfectly fine now. I’m going to guess he’s a happy cat and not torturing his sister.
Yes, a very happy and very needy but happy cat.
Well, Vivien, thank you so much for joining us today and sharing a bit about your pets and your experience with paying for an unexpected expense.
Great. Well, thank you so much for having me.
First off, I’m glad to hear that Vivien’s cats are doing okay. Her story really exemplifies how random pet emergency expenses can be. It does seem like they were smart about how they shopped around for their vet care, though. I’m hoping they were able to pay off that credit card balance quickly, ideally before they paid any interest on their debt, because we know how expensive credit card debt can be and how difficult it can be to get out of it once you’re in it.
Totally. What I thought was interesting, and something I think a lot of us can relate to, is this idea of looking for something slightly cheaper, but that in the end can actually end up costing more. And a lot of it is about knowing.
If she had known about the potential of a hernia issue, I’m sure Vivien would’ve known to go to a vet, but since they didn’t, the kitty had to have another surgery to remove the hernia in addition to the neutering when it all could have been done at once.
Well, clearly, as we’ve already noted, it is just so, so important to at least think about what you would do if the worst happened and you needed to take your pet to the emergency vet. Even better, set aside some money or, as we’ve talked about in the last episode, consider pet insurance.
Yeah, I will tell you we were really glad to have it when Mo ended up at emergency care. So next, we’re going to hear from Dr. Angela Beal. She’s a veterinarian based in Columbus, Ohio, and has done a lot of writing about pet care and the veterinary industry. We’re going to hear her recommendations for preparing your finances for if and when you need to get emergency care for your furry family member.
That’s coming up in a moment. Stay with us.
Dr. Beal, thanks so much for joining us today on the Smart Money podcast.
Thanks, Ronita. I’m happy to be here.
So we’re talking today about emergency pet care, those unexpected expenses that can come up regardless of how well you take care of your fur babies. In your opinion, why is it so crucial for pet owners to be prepared for unexpected veterinary expenses?
Studies have shown that unexpected expenses are a major stress for pet owners, and as little as actually a $250 bill that’s unexpected can result in really difficult decisions for pet owners. So if a pet owner is not financially prepared, they may not be able to choose the best care for their pet. They may have to opt for second, third, fourth-tier care and maybe just the basics. And in worst-case scenarios, a pet may need to be euthanized because the pet owner doesn’t have the funds for their care.
So Dr. Beal, why do you think it’s so hard to plan for these expenses, and why do you think many people put off putting savings aside or creating a plan?
I think if people have not experienced a pet emergency before, they may not realize how significant that event can be and how stressful it can be. Statistics show though that the majority of pets will experience some sort of emergency during their lifetime, and I think people probably don’t realize just how common pet emergencies are.
These types of things aren’t happy thoughts, so I think we tend to focus on the good things and the good times with our pets. So we may not necessarily want to think about disaster situations, although that kind of thinking and preparation really is important.
Can you share some common pet emergencies that can result in significant vet bills?
Sure. Toxicity is a big one. Pets like to get into all kinds of things. They may eat something that’s toxic. Certainly, hit-by-car accidents are quite common with both dogs and cats, broken bones and other sorts of trauma. Even a fight, two dogs fight, and you have significant injuries from that.
And then going over to the medical scene, those are traumatic situations, but over on the medical side of things, a lot of diseases, kidney disease, for example, are very silent and don’t cause a lot of clinical signs until it gets really bad, and then all of a sudden, you have a medical emergency on your hands. And at that point, the disease has progressed quite a bit, and treatment is going to be a significant expense.
If a pet parent doesn’t prepare, how much more difficult does that make the decisions around what care to say yes to?
I think it makes it very difficult. A pet owner who is prepared can focus on their pet and making sure they get the care they need. If a pet owner is not prepared, then their focus shifts to having to decide what diagnostics can I afford, what treatments can I afford? And it all becomes about the money. They’re focused on their pet as a secondary thought, unfortunately, although everyone would much rather be focusing on their pet.
In our previous episode, our guest talked about economic euthanasia, the idea that you have to let a pet go because you can’t afford to help it. You touched on this earlier as well. What are some practical tips for pet owners to start saving for potential emergency vet care so they don’t face that kind of decision?
I think ideally, the best-case scenario is that you have a pet savings account that you set up yourself. You budget a certain amount every month and put it into a savings account so that money is there and it’s ready if and when you need it. Other options include pet insurance, very similar to human health insurance. And so that can be a nice safety net for people.
And then another option that can even be combined with the other options is having a healthcare credit card. CareCredit is one that’s very popular in the veterinary world. This is a healthcare-specific credit card, and a lot of people will even pair it with pet health insurance. They can cover the initial bill, the credit card, and then be reimbursed by their pet insurance company and turn around and pay off that credit card bill quickly.
When you talked about the savings account, what would you suggest or what are your tips on how much to save? And we know that age, breed, of course, type of pet can make a difference, but what are your tips for how pet owners should research how much they should put aside?
I think a good place to start would be with actually the pet insurance company websites. A lot of these websites will list costs for certain types of pet emergencies, and that could give you an idea of how much a particular pet emergency would cost.
I would say just off the top of my head that with rising veterinary costs over the last several years, a pet owner could expect to pay a minimum of $2,000, probably more, for an emergency situation. So I think setting aside maybe $50 to $100 per month in a savings account and letting that account grow would be a good idea.
I know that when Mo ate something strange, again, what it is, we still do not know. I think that vet bill, just that one instance, was close to $1,000 straight away. He didn’t need very much as far as getting better or anything like that. They gave him something to pass through his system, and then he was fine, but it was just straight away a thousand bucks.
Right. And if you’re talking about a situation where a pet requires several days of hospitalization or intensive care, you can see how that bill would increase significantly.
Absolutely. What would be your advice on how pet owners can put the money aside? Would you suggest putting it in a separate account, like a separate savings account? Any other ways to structure it?
I would suggest that a pet owner has a separate savings account that is earmarked specifically for their pet’s emergency care. That way, the money doesn’t just get lumped in with everything else and potentially spent, and then it’s not there when you need it.
The other thing I would mention is that when we talk about an emergency savings account, I really would earmark that just for emergency situations. So routine veterinary care like vaccines and parasite prevention, things like that, should not come out of this fund. This fund should be specifically set aside for emergencies only.
Do you know of any financial assistance programs or organizations that can help pet owners with emergency vet bills?
There are a number of organizations that are set up to help pet owners with vet bills, especially emergencies. I will say most of them are fairly small and potentially connected with local shelters and things like that. Most of them require an application process, which can become really challenging and difficult.
If you’re a pet owner and you are in an emergency hospital with your pet right now and your pet needs care fairly quickly, it would be challenging to have to take time to go through that process. I don’t think a lot of them are probably the best option for pet owners. And again, most of them are small organizations and can only help a small number of pet owners.
What advice do you have for pet owners who are struggling to find room in their budget for emergency savings?
For those pet owners, I would say that whatever they can set aside is better than nothing. They could also consider an accident-only pet insurance policy, which are the cheapest pet insurance policies, and most companies provide them for around $20 per month or maybe a little more, but that’s pretty affordable for most people.
And that type of policy does not typically increase in price with age. So policies that cover illnesses, the cost of those policies increases significantly as pets age and their likelihood of becoming ill increases. But the accident-only policies typically don’t increase with age.
The other one I mentioned, the healthcare credit card, is another option. Obviously, then you’re paying interest, which is not ideal, but it can be an option to help you deal with an emergency situation.
And while we have spoken a lot about the financial aspect of emergency situations, do you have any advice for how to deal with the emotional side of something happening suddenly and taking your pet to the vet and then dealing with bills?
Going along with what we’ve talked about, I think again, being financially prepared can take a huge burden off of pet owners. When the pet owner is stuck thinking about how on earth they’re going to pay for this emergency care, that’s incredibly stressful on top of the stress of worrying about your pet and how they’re going to handle the emergency.
So if you can take away that piece, if you can be financially prepared and not have the stress of worrying about how you’re going to pay for that, I think that would help pet owners tremendously.
Any final thoughts for our listeners on how they can prepare both emotionally and financially for the possibility of their pet needing emergency care?
I think proactively providing excellent care throughout your pet’s life. I realize we’re talking about if we have an emergency, but trying to prevent emergencies before they happen, of course, is always better. So just keeping on top of your pet’s care, making sure they see their vet annually, at least, for checkups and wellness care like vaccines and parasite preventives that can help them avoid emergency situations, is certainly the best situation.
And then on top of that, I think having a good support system in place and maybe even a plan, and no one wants to think about what will I do in an emergency, but just having a plan in mind about how you will take care of that emergency if it happens, know where your local emergency hospital is and know their phone number and how to get your pet there if an emergency arises, so you are not scrambling in those moments any more than would be expected.
Dr. Beal, thanks so much for joining us today on Smart Money podcast. This is incredibly helpful.
You know, Sean, I took away a lot of advice from talking to Dr. Beal, and it got me thinking about how important it is to know your options and resources, especially before Mo randomly starts puking on the floor.
I remember we were frantically Googling that evening, and if we had known where the emergency vet was beforehand, we could have saved time and maybe even had more of a choice of where we could take him, on top of knowing how to exactly pay for the upcoming bill.
Yeah. If listeners take away just one thing from this episode, it should be Dr. Beal’s point about just having some plan, any kind of plan, for a pet emergency. Even setting aside $10 a week into a high yield savings account would put you in a better place than burying your head in your cozy companion’s fur and ignoring the possibility of a crisis. And as Vivien’s story makes clear, this is important no matter the age of your pet.
So Sean, we’ve spent this episode talking about something that, as we said earlier, nobody really wants to think or talk about, which is their pet having some sort of emergency, but there’s another aspect of pet ownership that is even more difficult.
Yeah, I think I know where you’re going with this. End-of-life issues for our pets are incredibly emotional and hard to deal with, and they can involve a lot of discussions about money. What are we willing to spend to extend their lives even just one more day?
Honestly, it’s something I don’t even want to think about. Mo is my best friend, and he’s with me here all day. How do you put a price on the life of a pet? That is just pure agony. I know it’s coming one day; I just don’t even want to think about it.
In our next and final episode, we are going to talk about those decisions, how we make them, how we afford them, and how to know what’s best for our animals. And I’ll hope not to cry.
So what I want and what I want a client to see is that they have a pet who experiences the best possible quality of life for as long as possible. But when that quality falls lower, then we make the right decisions to make sure they get to leave this earth in the arms of their owner or eating a cheeseburger.
For now, that’s all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That’s 901-730-N-E-R-D. You can also email us at [email protected]. And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.
This episode was produced by Tess Vigeland. Sean helped with editing. Kim Lowe helped with fact-checking, and a big thank you to NerdWallet’s editors for all their help.
Here’s our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
And with that said, until next time, turn to the Nerds.
Sean Pyles
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Mortgage rates mostly leveled off in the week ending Aug. 15, following last week’s comparatively precipitous drop.
30-year fixed-rate mortgages fell one basis point to 6.28%. A basis point is one one-hundredth of a percentage point.
While rates may be cooling slightly, home prices continue to heat up around the country.
Explore mortgages today and get started on your homeownership goals
Get personalized rates. Your lender matches are just a few questions away.
The sale prices of single-family existing homes rose in the second quarter of 2024 in 89% of tracked metro areas, according to the National Association of Realtors (NAR).
Within these areas, three metros saw price gains of nearly 20%: Racine, WI (19.8%), Glen Falls, NY (19.8%) and El Paso, TX (19.2%). The national median single-family existing-home price grew 4.9% from this time last year, reaching $422,100.
Seven of the top 10 most expensive metros at the end of Q2 are in California. The most expensive metro measured was San Jose-Sunnyvale-Santa Clara, where the median home price grew 11.6% to an eye-watering $2,008,000.
NAR Chief Economist Lawrence Yun acknowledged that this is a boon for homeowners who continue to see their equity bloat, while would-be buyers face an even steeper climb up the economic ladder. “It’s difficult for those wanting to buy a home as the required income to qualify has roughly doubled from just a few years ago,” he said.
In fact, the national median home sale price is $100,000 more than in Q2 2019, in which the St. Louis Federal Reserve pegs at $322,500. That’s an increase of nearly 31% in just five years. To add additional perspective, the average 30-year mortgage rate never went above 4.65% in all of 2019, compared to 2024’s peak (so far) of 7.448% in May.
Those in the market to buy a home may find these numbers disheartening, but price growth is ever-so-slightly slowing down. The national median home price increased 4.9% in Q2, compared to 5% in Q1. And though sale prices rose in 89% of tracked metro areas in Q2, this is down from 93% in Q1.
10% of tracked metro markets actually saw price declines, up from 7% in Q1.
If you’re planning to purchase a home, there are steps you can take now to maximize affordability — namely, shopping around for the best rate.
Explore mortgages today and get started on your homeownership goals
Get personalized rates. Your lender matches are just a few questions away.
Taylor Getler
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NEW YORK — Wall Street is rallying closer to its records on Thursday following signals the U.S. economy is holding up better than expected, with particular credit going to the country’s shoppers.
The S&P 500 was up 1.1% in morning trading and on track for a sixth straight gain as the U.S. stock market rights itself following a scary few weeks. It’s back to within 3% of its all-time high set last month after earlier falling nearly 10% below it.
The Dow Jones Industrial Average was up 357 points, or 0.9%, as of 10:20 a.m. Eastern time, and the Nasdaq composite was 1.6% higher as Big Tech stocks recover more of their stumbles from the last month.
Treasury yields leaped in the bond market following the encouraging economic data. One report said U.S. shoppers increased their spending at retailers last month by much more than economists expected, while another said fewer U.S. workers applied for unemployment benefits.
A year ago, such reports could have sent the stock market reeling on worries they would worsen high inflation. But good news on the economy is once again good news on Wall Street, particularly after a report earlier this month showed U.S. employers pulled back on their hiring by much more than expected.
That dud of a jobs report raised worries the U.S. economy could buckle under the weight of high interest rates brought by the Federal Reserve, and it contributed to turmoil in stock markets worldwide. But Thursday’s reports hint a perfect landing may still be possible, one where the Fed slows the economy’s growth by just enough through high rates to stifle inflation but not so much that it causes a recession.
“The growth scare isn’t over, but it’s a little less scary,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Walmart added to the optimism after it delivered a bigger profit for the spring than analysts expected. The retail giant also raised its forecasts for sales and profit over the full year. Walmart’s shares rose 6.7%.
Other big companies likewise joined the parade that’s built of businesses topping analysts’ expectations for springtime profit.
Tapestry rose 1.8% after the company behind the Coach and Kate Spade brands reported stronger profit than expected.
Cisco System’s profit and revenue for the latest quarter squeaked past analysts’ forecasts, and its stock jumped 8.3% after the maker of networking equipment also said it would cut costs by eliminating thousands of jobs as it shifts to faster-growing areas of technology.
Ulta Beauty’s stock rose 10.4% to help lead the market after Warren Buffett’s Berkshire Hathaway revealed it has built an ownership stake in the retailer.
In the bond market, the 10-year Treasury yield clambered up to 3.92% from 3.84% following the strong economic data.
The two-year Treasury yield, which more closely follows expectations for action by the Federal Reserve, jumped to 4.07% from 3.96%.
Traders still widely expect the Federal Reserve to cut its main interest rate at its next meeting in September, which would be the first such cut since the 2020 COVID crash. But they’re now largely expecting the Fed to lower rates by the traditional quarter of a percentage point, according to data from CME Group. A week ago, many traders were forecasting a more more severe cut of half of a percentage point because of worries that the U.S. economy’s growth was sliding too fast.
The Fed has been clear about the tightrope it began walking when it started hiking rates sharply in March 2022: Being too aggressive would choke the economy, but going too soft would give inflation more oxygen and hurt everyone.
The Fed ultimately raised its main interest rate from virtually zero to a two-decade high, where it’s sat for about a year. Inflation has slowed sharply from its peak above 9% two summers ago, and an easing of rates would remove pressure on the economy and on prices for investments.
Signals of a stronger U.S. economy helped drive smaller stocks in particular on Thursday. Smaller companies can be more beholden to the strength of the U.S. economy than huge multinationals, and the Russell 2000 index of smaller stocks rose 1.9% to help lead the market.
Smaller stocks have been even jumpier than the rest of the market recently, rising more than the S&P 500 when signals indicate the U.S. economy is doing well and interest rates are about to come down, but tumbling more sharply when pessimism rises.
In stock markets abroad, indexes also rose in much of Asia and Europe.
Japan’s Nikkei 225 rose 0.8% after data showed its economy returned to growth during the spring. The U.K. economy also grew during the latest quarter, a welcome signal following a rough run, and the FTSE 100 rose 0.6% in London.
___
AP Business Writer Yuri Kageyama contributed.
The Federal Reserve is widely expected to bring about a long-awaited interest rate cut during its next meeting. But just how big will that potential rate cut be? The central bank held interest rates steady in July — a move that was expected and kept rates at the 5.25% to 5.5% range. But Fed Chair Jerome Powell said at the time that the first rate cut since the early days of the COVID-19 pandemic…
Gillian Manning
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NEW YORK — Does signing up for Disney’s popular streaming service mean you have agreed to never sue the entertainment giant over anything forever?
That is what Disney argues in a wrongful death lawsuit involving a 42-year-old New York doctor whose family claims had a fatal allergic reaction after eating at an Irish pub in Disney Springs in October.
Disney is asking a Florida court to dismiss a lawsuit brought by Jeffrey Piccolo, the husband of Kanokporn Tangsuan, a family medicine specialist with NYU Langone’s office in Carle Place, on Long Island.
The company argues Piccolo had agreed to settle any lawsuits against Disney out of court through the arbitration process when he signed up for a one-month trial of Disney+ in 2019 and acknowledged that he had reviewed the fine print.
“The Terms of Use, which were provided with the Subscriber Agreement, include a binding arbitration clause,” the company wrote in its motion. “The first page of the Subscriber Agreement states, in all capital letters, that ‘any dispute between You and Us, Except for Small Claims, is subject to a class action waiver and must be resolved by individual binding arbitration’.”
But Piccolo’s lawyer, in a response filed earlier this month, argued that it was “absurd” to believe that the more than 150 million subscribers to Disney+ have waived all rights to sue the company and its affiliates in perpetuity — even if their case has nothing to do with the popular streaming service.
“The notion that terms agreed to by a consumer when creating a Disney+ free trial account would forever bar that consumer’s right to a jury trial in any dispute with any Disney affiliate or subsidiary, is so outrageously unreasonable and unfair as to shock the judicial conscience, and this court should not enforce such an agreement,” Brian Denney, Piccolo’s attorney, wrote in the Aug. 2 filing.
Spokespersons for the Walt Disney Company and Raglan Road, the pub in Disney Springs where Tangsuan dined, didn’t immediately respond to emails seeking comment Wednesday.
But Disney, in its May 31 filing, argued that whether Piccolo actually reviewed the service terms is “immaterial.” It also noted the arbitration provision “covers ‘all disputes’ including ‘disputes involving The Walt Disney Company or its affiliates’.”
Arbitration allows people to settle disputes without going to court and generally involves a neutral arbitrator who reviews arguments and evidence before making a binding decision, or award.
Piccolo’s lawsuit, which was filed in February, claims that he, his wife and his mother ate at the Raglan Road Irish Pub in Disney Springs, an outdoor shopping, dining and entertainment complex at Disney World, on Oct. 5, 2023.
After informing their server numerous times that she had a severe allergy to nuts and dairy products and required “allergen-free food,” Tangsuan ordered the vegan fritter, scallops, onion rings and a vegan shepherd’s pie.
The waiter then “guaranteed” that the food was allergen-free even though some of the items were not served with “allergen free flags,” the lawsuit states.
About 45 minutes after finishing their dinner, Tangsuan had difficulty breathing while out shopping, collapsed and eventually died at the hospital, despite self-administering an EpiPen during the allergic reaction, according to the lawsuit.
A medical examiner’s investigation determined later she died as a result of “anaphylaxis due to elevated levels of dairy and nut in her system,” the lawsuit said.
An Oct. 2 hearing has been scheduled on Disney’s motion in county court in Orlando. Piccolo seeks more than $50,000 in his lawsuit.
M&M’s maker Mars has struck a deal worth nearly $30 billion to buy Kellanova, marking one of the food industry’s biggest deals and expanding the candy maker’s brand portfolio to include salty snacks such as Pringles and Cheez-It.
Kellanova was formed last year when the Kellogg Co. split into three companies. Kellanova sells many of the former company’s most profitable brands, including Eggo, Town House, MorningStar Farms and Rice Krispies Treats. It had net sales of more than $13 billion last year and has approximately 23,000 employees.
The acquisition would expand Mars’ reach into the salty snack category. The company owns brands like Combos and Ben’s Original, but it’s primarily known for its chocolates, candies and pet food. Mars makes M&M’s, Lifesavers, Juicy Fruit gum and Skittles as well as Pedigree and Royal Canin pet foods, among other products.
But sales of some of those products, like gum, have sputtered in recent years as snacking habits shift. The deal helps Mars expand into areas of growth.
“There is significant logic behind Mars acquiring Kellanova, not least because the deal would allow Mars to push more heavily into the savory snacks category where it has virtually no presence,” noted Neil Saunders, managing director of GlobalData. “Savory snacks sales are growing at a faster clip than confectionery, where Mars currently predominates.”
It is the biggest deal in the sector since J.M. Smucker bought Hostess for $5.6 billion last year, and among the largest of 2024, coming in second to ExxonMobil’s $60 billion acquisition of Pioneer Natural Resources.
“The Kellanova brands significantly expand our snacking platform, allowing us to even more effectively meet consumer needs and drive profitable business growth,” Andrew Clarke, global president of Mars Snacking, said in a statement.
Mars Inc. said Wednesday that it will pay $83.50 per share in cash. The company put the total value of the transaction at $35.9 billion, including debt.
Shares of Kellanova jumped $5.50, or 7.4%, to $80.00 in Wednesday morning trading. Mars, headquartered in McLean, Virginia, is one of the largest privately held companies in the U.S.
Mars’ purchase of Kellanova is expected to close in the first half of next year. Once it’s complete, Kellanova will become part of Mars Snacking. Corporate headquarters will remain in Chicago.
The other company formed in the Kellogg split, WK Kellogg Co., retained cereal brands like Raisin Bran, Frosted Flakes and Froot Loops, which have struggled with slowing sales in recent years. It is not involved in the deal.
The merger also may help Kellanova at a time when rising prices are squeezing consumers and putting many companies under pressure to put a cap on prices. Economists say that many consumers appear to be returning to pre-pandemic norms, when most companies felt they couldn’t raise prices very much without losing business.
Mars got its start in 1911, when founder Frank Mars started making and selling butter cream candy from his home in Tacoma, Washington. The company moved to Chicago in 1929 and introduced the Snickers bar the following year.
Mars has steadily grown through acquisitions. It entered the pet food business in 1935 with the purchase of a U.K. dog food brand and bought the Dove ice cream brand in 1986. In 2008, it purchased the Wrigley chewing gum business for $23 billion.
If you find that you no longer need the credit, review any potential closure fees before deciding to cancel the card, too. Instead, you could look into downgrading the card, transferring balances, or using the card at least once a year for a small purchase to keep the account active.
Letting a credit card go dormant can impact your credit score in a few ways. As noted above as a con, if you don’t use a card for a long time, your credit issuer might close the account, which reduces your total available credit limit. For example, if your total credit limit drops from $10,000 to $8,000 with the account closure but your spending remains at $2,000, your utilization ratio rises from 20% to 25%. A higher ratio can negatively affect your credit score because it suggests you’re using more of your available credit.
Having a mix of different credit types—such as credit cards, student loans, mortgages and car loans—helps maintain a healthy credit score. If a card is closed, you lose some of this diversity, which can also impact your score.
Consistent on-time payments are crucial for maintaining good credit. Even if a card is dormant, missing payments can damage your score. To avoid this, pay more than the minimum payments on your credit cards and make all payments on time, every time.
It is important to review your credit report and score at least once a year to make sure there are no errors. You can obtain your credit report and score through Canada’s two credit bureaus, Equifax and TransUnion, a third-party service, or your bank’s website or mobile app. Even without any errors, regularly checking your report can help you better understand how your financial habits can affect your score and helps you see ways to improve it and manage debt better.
If you’re worried about letting your credit card go dormant, there are a few alternatives. Consider transferring balances from other credit cards or look at downgrading and switching to a no-fee version of the same card. Both of these options keep your account open and your credit utilization ratio low.
You can also keep the card active by using it occasionally for small purchases, setting up a small recurring charge on it, or making it your go-to card for a regular expense, like buying gas. This helps keep your account in good standing without much hassle.
There isn’t a set rule for how many credit cards Canadians should have in their wallets. The number of credit cards that is right for you depends on what you can afford to spend and pay back on time. Remember, it’s not just about the number of cards you have, but how responsibly you use them.
Sandy Daykin
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Virgin Red — the rewards program for the Virgin Atlantic airline, Virgin Hotels and Virgin Voyages cruises — is launching a new credit card. The Virgin Red Rewards Mastercard, issued by Synchrony, isn’t open for applications yet. For now, you can join the waitlist and be notified when the card becomes available in fall 2024.
The Virgin Red Rewards Mastercard will charge a $99 annual fee, but will charge no foreign transaction fees.
Image courtesy of Virgin Red
The Virgin Red Rewards Mastercard will offer a welcome bonus of 40,000 Virgin Points when you spend $3,000 in the first 90 days.
Cardholders will also earn:
3 Virgin Points per $1 spent on Virgin Atlantic, Virgin Hotels and Virgin Voyages purchases.
1 Virgin Point per $1 spent on anything else.
If you spend $15,000 per year on the Virgin Red Rewards Mastercard, you can select one “exclusive Virgin perk,” such as:
A voucher for a companion seat or seat upgrade on a Virgin Atlantic flight.
A free night or suite upgrade at a participating Virgin Hotel.
Up to a $300 bar tab on a Virgin Voyages cruise.
A “Blue Extra Perks Package” with Virgin Voyages, which includes laundry service, access to an exclusive cocktail party and daily coffee credits.
You can select a second perk once you spend $30,000 in a year, and if you reach that spending threshold, you can choose the same perk twice if you’d prefer.
There are also a number of ways to earn extra points. Get 5,000 Virgin Points each year when renewing your card. If you add authorized users, you’ll get 2,500 points per person (up to four people).
You’ll earn 25 Flying Club Tier Points after $2,500 in eligible purchases, with a maximum earning of 50 Tier Points per month. Flying Club Tier Points will move you up to higher status levels with Virgin Atlantic.
Also, you can get a third night free after booking two nights at a participating Virgin Hotel once per year.
Redeem Virgin Points for flights, hotel stays and cruises through the Virgin brand. You can also use points for experiences like bike or kayak tours, wine tastings, movie tickets and more.
Sara Rathner
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General Motors is collecting data on its car owners’ driving habits and selling that information to insurers without consumers’ consent or knowledge, Texas attorney general Ken Paxton alleges in a lawsuit filed Tuesday.
Texas is alleging GM has engaged in “false, deceptive and misleading” business practices that have impacted 1.8 million Texans who own vehicles manufactured by the automaker.
The lawsuit comes amid increased scrutiny of new car systems that can track vehicles’ speeds, their locations and even how hard a driver brakes, with Mozilla last year proclaiming that new cars “are a privacy nightmare.” The Texas lawsuit claims car buyers were told their driving data would help GM improve the safety and functionality of its vehicles, but weren’t informed that the same data would also be sold to insurers.
“Millions of American drivers wanted to buy a car, not a comprehensive surveillance system that unlawfully records information about every drive they take and sells their data to any company willing to pay for it,” Paxton said in a Tuesday statement about the lawsuit.
The lawsuit comes at a time when consumers have been slammed with sharply higher insurance costs, with car coverage jumping 19% in July compared with a year earlier. One reason is due to riskier driver behavior, experts have told CBS News.
In June, Paxton had opened an investigation into several car makers over claims they had improperly collected data about drivers from their vehicles and then sold the information to other companies.
“We’ve been in discussions with the Attorney General’s office and are reviewing the complaint. We share the desire to protect consumers’ privacy,” a GM spokesperson told CBS News in a statement.
The data collected by GM was allegedly sold to companies including LexisNexis Risk Solutions and Verisk Analytics, the lawsuit alleges. That data allows companies to create a driving score for individuals, with information on driving habits deemed bad, like late-night trips, sharp turns and hard braking, factored into the analysis, the lawsuit claims.
Such information, called “telematics” data, can be used by insurers to set auto coverage rates, according to NerdWallet. Ideally, customers should be aware that their data is being tracked and analyzed by insurance companies, with the promise that good driving habits will be rewarded with lower rates.
But a New York Times investigation revealed that some drivers aren’t aware their data is being tracked and used in such ways, with one driver telling the publication that he felt a “betrayal” when he learned LexisNexis had compiled 130 pages about his driving habits. He learned of the report after his car insurance had jumped more than 20%.
In the Tuesday lawsuit, Texas alleges that GM “profited handsomely” by selling driver data to insurance companies, while neglecting to inform car owners that their information could be sold to other businesses.
“At no point did General Motors inform customers that its practice was to sell any of their data, much less their driving data,” the lawsuit alleges. “Nor did General Motors disclose that it had contracts in place to make its customers’ driving scores available to other companies.”
Melissa Neiman
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There are two main categories of work in the eyes of the IRS — 1099 contractors and W-2 employees. These two types of work involve different tax forms and come with different tax obligations for employers and workers.
Generally speaking, W-2 employees have taxes withheld from their paychecks by their employer, while 1099 contractors are responsible for paying taxes on their own
The difference between 1099 work and W-2 work also depends on the nature of the employment relationship — and there are strict rules about which kinds of workers can be given each classification. Here’s what to know.
1099 workers get that name from the 1099-NEC tax form they receive from their employer(s) each January or February.
The form lists the amount of nonemployee compensation they received from a particular employer. 1099 forms typically show the gross amount paid in the previous year since the employer does not withhold tax unless the worker is subject to backup withholding.
The employer (or “payer,” in tax jargon) sends the 1099 form to the IRS and also provides workers with a copy to help them determine their total income (and income tax liability) when filing their annual income tax return.
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W-2 employees are so named because their employers send them a W-2 form at the beginning of each year, listing their compensation from the previous year and the amount of income tax withheld.
Employees who earned $600 or more in the previous year get one and use it to complete their tax returns. A W-2 form also contains additional information that isn’t applicable to a 1099 worker, including pre-tax payroll deductions such as 401(k) contributions and employer-sponsored health insurance plan costs.
Like 1099 forms, employers send a copy of a W-2 form to both the IRS and the employee.
The IRS provides rules for classifying 1099 vs. W-2 work. The guidelines are divided into three categories: behavioral, financial and type of relationship.
Behavioral. Typically, W-2 employers have the right to control how, where and when a worker does their job — for example, by mandating certain working hours, making a worker come into an office or providing specific tools for the job. 1099 employers don’t have this kind of control, and can only set deliverables and deadlines.
Financial. W-2 employment generally means work for a regular paycheck (subject to minimum wage and overtime laws), while 1099 work can involve one-off or irregular payments at any pay rate. W-2 employees are also often reimbursed for work-related expenses, while 1099 workers are usually responsible for their own expenses.
Type of relationship. W-2 employment may come with benefits and often has an indefinite timeframe. 1099 work, on the other hand, generally doesn’t come with benefits and may be limited to a specific timeframe or the completion of a specific project.
If a business is having trouble determining whether a worker should be classified as 1099 or W-2, it can submit Form SS-8 to the IRS and let the agency decide.
As discussed previously, W-2 workers are typically people who have to show up to a workplace and/or have set working hours. They typically receive a regular paycheck with income tax withheld and may also get benefits.
A non-exhaustive list of jobs that are typically classified as W-2:
Office and factory workers.
Waiters, cooks and retail associates.
Health care workers in hospitals or clinics.
Most government employees.
Maintenance workers who work for a business, such as janitors.
1099 workers generally set their own hours and work conditions and may be paid on a one-time or sporadic basis. They generally don’t get benefits or income tax withholding. This kind of worker includes, but is not limited to:
Freelance writers, graphic designers and other creative workers.
Sole-proprietor tradespeople such as handymen.
Gig-economy workers such as delivery and ride-share drivers.
Withholding isn’t the only tax difference between 1099 work and W-2 employment. The two types of relationships have very different implications for tax due dates, Social Security and Medicare taxes and federal unemployment insurance — for both workers and employers.
As discussed, the biggest difference between 1099 work and W-2 work, from a worker’s perspective, is the lack of tax withholding for 1099 work.
While an employer handles tax withholding for a W-2 worker, remitting taxes to the IRS on the employee’s behalf, 1099 workers are responsible for paying taxes on their own.
This means 1099 workers may need to pay estimated taxes quarterly if they have a significant amount of 1099 income in order to avoid a large tax bill or an underpayment penalty in April. If their 1099 work totals $400 or more, they may also owe self-employment tax, which is a combination of Social Security and Medicare taxes.
But there are some tax-related upsides of being classified as a 1099 worker, including a variety of tax deductions that are not available to W-2 employees. These include certain unreimbursed business and home office expenses — and in some cases, even health care expenses.
Another tax-related difference between 1099 work and W-2 work is which form each worker fills out at the beginning of their employment. 1099 workers fill out Form W-9 when starting a new job, while W-2 employees fill out Form W-4.
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There’s a big difference in the amount of tax-related work a business has to do for 1099 contractors compared with W-2 employees.
Businesses usually have to withhold at least some of a W-2 employee’s federal and state income tax from their paychecks, depending on what level of withholding the employee chose on their W-4. They also generally must withhold the employee-paid portion of the FICA tax.
Employers also have to pay certain taxes for W-2 employees. These include the employer portion of the Social Security and Medicare tax, as well as the federal unemployment insurance (FUTA) tax.
Businesses don’t have to withhold taxes from payments to 1099 workers unless a worker is subject to backup withholding according to their W-9. Payments to 1099 workers don’t generate any FUTA tax liability for businesses, as 1099 workers generally aren’t eligible for unemployment insurance. They also don’t generate any employer-side Social Security or Medicare tax liability, as 1099 workers pay these taxes themselves, in full, through the self-employment tax.
In short, a business’s tax responsibilities for a 1099 worker usually consist solely of collecting a W-9 at the beginning of the job and then filing a 1099 form for each year of work as applicable. Like W-2 forms, 1099-NEC forms must be sent out to the worker and the IRS by January 31.
Given that 1099 relationships involve much less tax liability (and much less work) for businesses, employers may be tempted to say that onsite workers with set hours — in other words, W-2 employees — are 1099 workers, to save themselves some money and time. They may also be tempted to do this to skirt minimum wage and overtime laws for their workforce.
Misclassifying employees can lead to serious legal consequences, including fines and penalties, repayment of all uncollected employment taxes, and in some severe cases, jail time.
Employees who suspect that they are being misclassified can complain confidentially to the Department of Labor. Employees can also submit Form SS-8 to the IRS to force a decision between 1099 and W-2 status in an ambiguous situation.
In some cases, employers who had a “reasonable basis” for misclassifying employees, or who want to reclassify ambiguous-status workers as W-2 employees to avoid future legal action, can enter into a settlement with the IRS that squares them with the law while granting partial relief from tax penalties. Check out the IRS pages on employment tax relief and the Voluntary Classification Settlement Program (VCSP), respectively, to learn more.
Sam Taube
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