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Baby formula milk companies 'exploit' parents' fears to boost sales, analysis alleges

Brandon Bell/Getty Images

(NEW YORK) -- Many baby formula milk companies allegedly exploit parents' emotions and "manipulate" scientific data to boost sales, according to a major new analysis published in The Lancet.

The analysis, led by Professor Nigel Rollins of the World Health Organization, said urgent clampdowns are needed to address misleading claims made by the industry.

It comes on the heels of the formula crisis in the U.S. last year, which saw parents struggling to find formula due to global supply chain issues exacerbated by a large recall of Abbott baby formula after two infants died.

"Part of what we're exploring in The Lancet breastfeeding series is that the system of influence that commercial formula companies are engaged in is much, much more pervasive and much more influential than maybe previously thought." study co-author Dr. Cecília Tomori, a breastfeeding expert and associate professor at Johns Hopkins School of Nursing, told ABC News.

Scientific evidence overwhelmingly supports breastfeeding newborns, if possible and desired. Breastfeeding has well-documented health benefits for both the parent and the baby.

According to the Centers for Disease Control and Prevention, babies who are breastfed are at lower risk of illnesses and diseases including asthma, obesity, type 1 diabetes and sudden infant death syndrome.

Babies can also receive antibodies from the mother's breast milk, which boosts their immune systems and helps protect them from disease.

Meanwhile, mothers who breastfeed lower their risk of breast and ovarian cancer, type 2 diabetes and high blood pressure.

The authors say while many new parents breastfeed, many choose not to, and all choices should be supported.

According to the analysis, formula milk companies use exploitative tactics to sell products such as preying on parents' fears about their children's health and development.

For example, companies have said it's important to introduce formula to help settle the behaviors of babies, such as disrupted sleep and persistent crying, implying that breast milk alone is not enough.

"The formula milk industry uses poor science to suggest, with little supporting evidence, that their products are solutions to common infant health and developmental challenges," co-author Professor Linda Richter, from Wits University in South Africa, said in a press release. "Adverts claim specialized formulas alleviate fussiness, help with colic, prolong night-time sleep, and even encourage superior intelligence."

"Labels use words like 'brain', 'neuro' and 'IQ' with images highlighting early development, but studies show no benefit of these product ingredients on academic performance or long-term cognition," Richter added.

The analysis also alleged that formula milk companies used advertisements to imply formula is an "empowering" choice for working mothers, who often don't have enough parental leave or support in their places of work.

The authors called for broader societal changes to help offset the exploitative behavior of formula milk companies.

This includes adequate maternity leave with the team imploring "governments and workplaces to recognize the value of breastfeeding and care work, by actions such as extending paid maternity leave duration to align with the six-month WHO recommended duration of exclusive breastfeeding."

They also recommended that health care systems promote breastfeeding and support women to help them with any breastfeeding help during pregnancy, childbirth and after.

"What we're arguing here and throughout the series is that breastfeeding is a collective societal responsibility, and also human right, and that we need to come together as a society, and policymakers need to understand how important it is and how important it is to invest and properly fund the structures that actually enable breastfeeding and make it possible," Tomori said.

"One part of that is addressing the exploitative marketing that's happening. Other parts of that include all the things that we're very familiar with in the United States, such as facilitating structures that make it possible," she added.

ABC News' Sasha Pezenik contributed to this report.

Copyright © 2023, ABC Audio. All rights reserved.


Biden is set to propose higher taxes for the rich. Here's how they work.

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(WASHINGTON) -- President Joe Biden on Tuesday is expected to tout the nation's economic health in his State of the Union Address, just days after a blockbuster jobs report showed a strong labor market has coincided with a monthslong easing of inflation.

Looking ahead, however, Biden is expected to propose solutions for what he considers an ongoing economic ill: income and wealth inequality.

The wealth of the top 1% increased by $6.5 trillion in 2021, according to a study the Federal Reserve released last year. That wealthiest sliver of Americans controls 32% of the country's wealth, the study found.

The Biden administration's agenda, set to be announced Tuesday night, includes two policy proposals: a new tax on billionaires and the sharp increase of a current tax on corporate stock buybacks.

"The idea is to have a commitment to reducing inequality," Reuven Avi-Yonah, a law professor at the University of Michigan who focuses on corporate taxes, told ABC News. "There's no indication that the increase in inequality is stopping anytime soon and something should be done about it, so the Democrats say."

Here's what to know about Biden's anticipated tax proposals for wealthy individuals and corporations:

Billionaire's tax

A key part of Biden's new economic policy agenda is a billionaire's tax, which would set a minimum tax for the wealthiest Americans, the White House said.

The Biden administration has offered scant details about the proposal, but it appears to closely resemble a policy that Biden put forward last March. At that time, he called for a tax rate of at least 20% on Americans who bring in at least $100 million per year.

The tax rate would apply both to income and unrealized gains, a measure of the value a person's unsold investments have accumulated.

"President Biden is a capitalist and believes that anyone should be able to become a millionaire or a billionaire," the White House said in a statement Tuesday. "He also believes that it is wrong for America to have a tax code that results in America's wealthiest households paying a lower tax rate than working families."

Between 2018 and 2020, the nation's wealthiest 400 families paid an average tax rate of 8%, the White House's Council of Economic Advisers found.

The wealthiest 25 people saw their worth increase a combined $401 billion between 2014 and 2018, but they paid an average federal income tax of 3.4% on that wealth, ProPublica found last year. By contrast, the median American making $70,000 a year pays an average federal income tax of 14%, the outlet said.

The proposal likely will face staunch Republican opposition, giving it a low probability of becoming law, since Republicans control the House of Representatives, Avi-Yonah of the University of Michigan said.

In response to previous efforts to tax wealthy Americans, Republicans have said the measures disincentivized business investment and wealth creation, hindering economic growth.

"The truth is it will not pass now with Republicans in control of the House," Avi-Yonah said. "So it's rhetoric."

Increase to the tax on stock buybacks

In addition to the billionaire's tax, the Biden administration is expected to propose a sharp increase of a current tax on corporate stock buybacks.

Companies opt to purchase shares of their own stock as a means of returning money to shareholders, since the move typically raises the price of shares.

The Biden administration takes issue with the practice because it provides money for shareholders while evading the taxes on income imposed when a company disperses money to shareholders through dividends, according to the White House. Instead, stock buybacks return money to investors as capital gains, which are taxed at a lower rate.

"Stock buybacks enable corporations to funnel tax-advantaged payouts to wealthy and foreign investors," the White House said Tuesday.

The Inflation Reduction Act, signed into law by Biden in August 2022, imposed a 1% tax on stock buybacks. If a company purchases $100 million worth of shares, for instance, it must pay $1 million in tax.

In his State of the Union Address, Biden is expected to propose quadrupling that tax to 4%, the White House said.

As with the billionaire tax, the levy on stock buybacks is expected to face strong Republican opposition and long odds to become law.

Jesse Fried, a professor at Harvard Law School focused on corporate governance, said he opposes a tax on stock buybacks because the measures force companies to either hold onto excess capital or invest it in wasteful initiatives.

Instead, stock buybacks allow companies to return money to shareholders, who can then invest or spend the money, spurring economic activity, he said.

"You're just going to have more cash bottled up in companies," he said.

Avi-Yonah, meanwhile, said proponents of a higher tax on stock buybacks argue that the measure could pressure companies to invest money in initiatives with greater social benefit.

Supporters of the policy say companies "should be using money for other things like hiring people," Avi-Yonah said. "Stock buybacks are regressive and benefit the rich at the expense of everyone else."

Copyright © 2023, ABC Audio. All rights reserved.


Inflation fight has a 'long way to go,' Federal Reserve Chair Jerome Powell says

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(WASHINGTON) -- Federal Reserve Chair Jerome Powell said Tuesday that the central bank's fight against inflation has "a long way to go," citing a blockbuster jobs report last week that showed the labor market remains hot despite the Fed's efforts to cool the economy.

"This process is likely to take quite a bit of time," Powell said. "It's not likely to be smooth."

Consumer prices rose 6.5% over the yearlong period ending in December, which amounts to a significant slowdown from a summer peak but is more than triple the Federal Reserve's target of 2%.

Speaking at The Economic Club of Washington, D.C., Powell said the "extraordinarily strong" job figures took the Fed by surprise.

The economy added 517,000 jobs in January and the unemployment rate fell to its lowest level in 53 years.

"It's certainly stronger than anyone I know expected," Powell said. "We didn't expect it to be this strong."

"It kind of shows you why we think this will be a process that takes a significant period of time," he added.

The Fed recently imposed the latest in an aggressive string of borrowing cost increases as it tries to slash price hikes by slowing the economy and choking off demand. The approach, however, risks tipping the U.S. economy into a recession and putting millions out of work.

Powell has repeatedly said that the Fed will keep its benchmark interest rate elevated until inflation reaches the central bank's 2% target. That means borrowers face higher costs for everything from car loans to credit card debt to mortgages.

While Powell said the strong jobs report indicates that the fight against inflation remains in its "very early stages," he considered the labor boom a positive sign.

"It's a good thing that inflation has started to come down without cost to the labor market," he said.

The remarks from Powell arrive a day after Treasury Secretary Janet Yellen rejected recession fears in an interview with "Good Morning America" on Monday, saying the economy remains "strong and resilient."

"You don't have a recession when you have 500,000 jobs and the lowest unemployment rate in more than 50 years," Yellen said.

Government data last month showed that the U.S. economy grew robustly at the end of last year.

Still, most economists expect a recession later this year, as interest rate hikes weigh on the economy, according to a survey released by Bloomberg last month. Forecasters expect gross domestic product to fall over the second and third quarters of this year, the survey found.

Since some areas of the economy have defied an expected slowdown, more rate hikes are likely forthcoming, Powell said.

"We think we're going to need to do further rate increases," he said. "And we think we're going to need to hold policy at a restrictive level for a period of time."

Copyright © 2023, ABC Audio. All rights reserved.


Queen of Salsa, Celia Cruz, to appear on US quarter

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(NEW YORK) -- The Queen of Salsa and Cuban icon Celia Cruz has been selected to appear on the U.S. quarter.

Cruz, who died in 2003, was selected by the United States Mint to be one of the five honorees in the 2024 American Women Quarters Program.

The American Women Quarters Program is a four-year initiative that honors the achievements and services of American women. The U.S. Mint is releasing up to five new designs each year; they began in 2022 and will continue through 2025.

Celia Cruz, also known as Úrsula Hilaria Celia de la Caridad Cruz Alfonso, was one of the 20th century's most well-known Latin performers and a cultural icon. Cruz is the winner of many distinctions and honors, including five Grammy Awards, a National Medal of Arts and a posthumous Grammy for Lifetime Achievement.

“All of the women being honored have lived remarkable and multi-faceted lives, and have made a significant impact on our Nation in their own unique way,” said Mint Director Ventris C. Gibson, in an official statement. “The women pioneered change during their lifetimes, not yielding to the status quo imparted during their lives. By honoring these pioneering women, the Mint continues to connect America through coins which are like small works of art in your pocket.”

The other women chosen were Patsy Takemoto Mink, who was the first black woman to serve in Congress; Dr. Mary Edwards Walker, who was a Civil War-era surgeon, women's rights advocate and abolitionist; Pauli Murray, a poet, writer, activist, lawyer and Episcopal priest, as well as a strong advocate for civil rights, and Zitkala-Ša, also known as Gertrude Simmons Bonnin, a writer, songwriter, educator and political activist for the rights of Native Americans.

The designs for the 2024 American Women Quarters are expected to be released in mid-2023.

Copyright © 2023, ABC Audio. All rights reserved.


‘This is a big deal’: What to know about the new retirement savings law

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(NEW YORK) -- A major set of changes to the rules for retirement finances took effect this year, but many people may not have noticed. The rules were buried within a 4,000-page long, $1.7 trillion spending measure signed by President Joe Biden in December.

The batch of changes, called Secure Act 2.0, affords people greater flexibility in how and when they withdraw from their retirement accounts. The act also creates the first government-backed database for identifying lost retirement benefits, for instance when a person moves to a new job.

The rules aim to ease retirement finances at a time when most Americans are struggling to set aside a nest egg for their twilight years. Roughly 55% of people say they have fallen behind on their retirement savings, a Bankrate survey found in November.

"There's a crisis out there -- people haven't saved enough for retirement," Dan White, an author and founder of the financial advisory firm Daniel A. White & Associates, told ABC News.

"This is a big deal," he added. "It's trying to get people incentivized to put away enough money."

Here's what you need to know about Secure Act 2.0, the new retirement law:

What is the new retirement law Secure Act 2.0?

As its name suggests, Secure Act 2.0 is not the first of its kind.

The measure builds upon a previous version of the Secure Act -- which stands for Setting Every Community Up for Retirement Enhancement -- enacted at the outset of 2020.

Like the initial law, Secure 2.0 eases some of the restrictions placed on retirement accounts, but the changes carry some caveats and exceptions that will add complexity as people adapt to the new rules, White said.

"Overall, the Secure Act is very friendly for helping people with retirement," he said. "At the same time, the government makes everything so stinking complicated."

Why are the key changes in Secure 2.0 around retirement saving?

Key changes in Secure 2.0 center on the relaxing of restrictions on retirement accounts, such as 401(k) and Roth IRA accounts. For such retirement accounts, individuals must begin pulling out money at a minimum age, even if they'd prefer to leave the accounts untouched.

Secure Act 2.0 raises that minimum age of distribution from 72 to 73 years old, allowing older Americans to push back the time when payouts begin if the individuals have alternative sources of income or frugal spending habits, White said.

Further, the new rules alleviate the penalties for individuals who miss a required minimum distribution from their retirement accounts.

For instance, if a retiree was supposed to take out $10,000 by the end of 2022 but instead took out only $5,000, then under the previous rules he or she paid a 50% penalty for the remaining $5,000. Under Secure 2.0, that penalty has been cut to 25%.

In addition to easing the penalties for those who access a retirement account too late, Secure Act 2.0 softens the blow for some who take out money too early.

Federal law imposes a 10% penalty on any money pulled from a retirement account before age 59.5, but the new rules expand exceptions that allow some individuals to evade such penalties. For example, if a person suffers financial losses due to a natural disaster or contracts a terminal illness, he or she can access retirement accounts early without penalty, White said.

How does Secure 2.0 change how younger Americans put money into retirement accounts?

Besides adding flexibility for withdrawals from retirement accounts, Secure Act 2.0 changes the way the accounts operate in the first place, potentially setting up younger Americans for improved savings down the line, Joel Dickson, the head of enterprise advice methodology at Vanguard, who has closely followed Secure 2.0, told ABC News.

First off, the new rules will take the onus off of workers to initiate new retirement accounts, instead enrolling them automatically when they start a job. Also, Secure Act 2.0 allows retirement accounts to automatically travel with workers when they move from one job to the next, Dickson said.

Plus, the law creates a database for finding lost retirement benefits, helping workers keep track of and collect savings generated at a given employer or over a particular period of time that they may have otherwise overlooked.

"There's a lot that gets lost in the system today in many ways when people change employers," Dickson said.

The new rules "make it a little easier for people to know where those resources are and keep track of them over time," he added.

When do the changes in Secure 2.0 go into effect?

Many of the provisions in the new measure go into effect at different times, leaving the availability of any given offering murky at first glance, Dickson said. People should seek help from an advisor if they're trying to take advantage of a given rule change on a specific timeline, he added.

Some of the important provisions have already taken effect, including the rule that pushes back the age of an initial required minimum distribution from 72 to 73. The provision that mandates automatic enrollment for all new retirement accounts, like 401(k)s and Roth IRAs, will take effect next year.

"Although Secure 2.0 may be a lot of different individual changes and measures, the broad theme is increasing flexibility and access for people to be able to meet their retirement savings goals," Dickson said.

Copyright © 2023, ABC Audio. All rights reserved.


AMC announces new price system based on seat location: What to know

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(NEW YORK) -- AMC Theatres announced a new ticket pricing initiative Monday that has customers paying based on where their seat is located.

The initiative, called Sightline at AMC, is described by the company in a press release as a way for moviegoers to "now have the option to pay less, or more, for a movie ticket based on their seat selection."

There are three tiers of seats for customers to choose from: Standard Sightline, the most common in auditoriums and the traditional cost of a ticket; Value Sightline, seats in the front row of the auditorium as well as select ADA seats which cost less than Standard Sightline seats; and Preferred Sightline, seats typically in the middle of the auditorium and priced more than Standard Sightline seats.

Value pricing is only available to AMC Stubs members, including the free tier membership, AMC Insider. AMC Stubs A-List members won't pay the additional charge for the Preferred section.

Sightline at AMC will only be applied to showtimes which begin after 4 p.m. and is not applicable on Discount Tuesdays.

AMC Theaters offering the initiative will provide a detailed map showing the seating sections for customers purchasing tickets online, in the AMC app and at the box office.

"Sightline at AMC more closely aligns AMC's seat pricing approach to that of many other entertainment venues, offering experienced-based pricing and another way for moviegoers to find value at the movies," Eliot Hamlisch, executive vice president and chief marketing officer of AMC Theatres, said in a press release.

Hamlisch said the program seeks to deliver an experience to those "who prioritize their specific seat and others who prioritize value moviegoing" by ensuring that guests "have more control over their experience."

The company said the initiative has rolled out at select locations and is expected to expand to all domestic AMC and AMC Dine-In locations by the end of 2023.

Copyright © 2023, ABC Audio. All rights reserved.


Google announces new AI program named Bard, in wake of viral ChatGPT

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(MOUNTAIN VIEW, Calif.) -- If you ever needed artificial intelligence's help to plan a friend's baby shower, your time has come, as Google officially unveiled an AI program it's calling Bard, seemingly its answer to the viral ChatGPT.

Google CEO Sundar Pichai announced Bard on the company's blog Monday, calling it "an important next step" in AI for the search engine giant.

"Bard seeks to combine the breadth of the world's knowledge with the power, intelligence and creativity of our large language models," Pichai said. "It draws on information from the web to provide fresh, high-quality responses."

The company's new AI chatbot is based on its Language Model for Dialogue Applications (LaMDA) and is only available to a select group of testers.

Based on a video shared by Pichai on Twitter, users could use Bard to compare two Oscar-nominated movies, come up with ideas for lunch based on the ingredients in a person's refrigerator or know about the latest discoveries from the James Webb Telescope.

Google said Bard would be widely available to the public in the next few weeks.

"It's a really exciting time to be working on these technologies as we translate deep research and breakthroughs into products that truly help people," Pichai said.

Bard is seemingly Google's answer to ChatGPT, an AI-driven program that exploded in popularity in the last few months after users shared posts of the tool composing Shakespearean poetry, writing music lyrics and identifying bugs in computer code.

Created by artificial intelligence firm OpenAI, ChatGPT, which stands for Chat Generative Pre-Trained Transformer, is a chatbot -- a computer program that converses with human users. The program uses an algorithm that selects words based on lessons learned from scanning billions of pieces of text across the internet.

Microsoft, which invested in OpenAI in 2019 and 2021, announced last month that it's extending its partnership with the firm and investing billions of dollars into the company.

According to Forbes, Microsoft is investing up to $10 billion into ChatGPT and may incorporate it into its Bing search engine.

ABC News' Arthur Jones II and Max Zahn contributed to this report.

Copyright © 2023, ABC Audio. All rights reserved.


United Airlines faces possible $1.15M fine from FAA over pre-flight system check

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(NEW YORK) -- United Airlines is facing a possible $1.15 million fine after allegedly conducting flights with planes that hadn't undergone a certain safety check, federal regulators said, though United called the check "redundant" given other systems.

The Federal Aviation Administration (FAA) proposed the fine on Monday and said that from June 2018 to April 2021, United removed the fire system warning check from its Boeing 777 pre-flight checklist -- an inspection task required in its maintenance specifications manual.

United operated more than 100,000 flights with the Boeing 777 during this time, according to a letter from the FAA.

"Removal of the check resulted in United's failure to perform the required check and the operation of aircraft that did not meet airworthiness requirements," the agency said in a news release.

United, however, said it changed its pre-flight checklist in 2018 "to account for redundant built-in checks performed automatically by the 777" and that the FAA reviewed and approved the change at the time.

"The safety of our flights was never in question," United said in a statement.

The airline said it will review the proposed penalty and "respond accordingly."

"The fire test on a jetliner, like the 777, is really very comprehensive," ABC News contributor and former commercial pilot John Nance explained in an interview. "It's just testing for all the circuitry to make sure that everything is working right."

"The airplane actually does this itself, but it has been traditional for pilots to follow up and do a test," Nance said.

Copyright © 2023, ABC Audio. All rights reserved.


Treasury Secretary Janet Yellen rejects recession fears, says economy is 'strong'

ABC News

(NEW YORK) -- Treasury Secretary Janet Yellen rejected recession fears in an interview with ABC News' Good Morning America on Monday, saying the economy remains "strong and resilient."

A blockbuster jobs report last week showed that the economy added 517,000 jobs in January, dropping the unemployment rate to a near-historic low.

"You don't have a recession when you have 500,000 jobs and the lowest unemployment rate in more than 50 years," Yellen said.

The remarks from Yellen came a day before President Joe Biden makes his State of the Union Address, when he will likely comment on the nation's economic outlook amid ongoing inflation.

Four in 10 Americans say they're worse off financially since Biden became president, according to an ABC News/Washington Post poll released on Sunday. The figure marks the highest share of discontented respondents since the outlets began conducting the poll 37 years ago.

When asked by ABC News' George Stephanopoulos about persistent economic concern despite a strong jobs market, Yellen said, "The country has been through a lot."

"With the COVID pandemic and all the stress that placed on the economy, and then Russia's war in Ukraine that boosted food and energy prices, Americans are concerned about inflation and it's been President Biden's top priority to bring it down," she added.

Consumer prices rose 6.5% over the yearlong period ending in December, which amounts to a significant slowdown from a summer peak but remains more than triple the Federal Reserve's target of 2%.

Price hikes for some items stand well above the overall inflation rate. The price of eggs has risen 60% over the past year while the cost of flour has risen 23%, government data showed.

The Fed last week imposed the latest in an aggressive string of borrowing cost increases as it tries to slash price hikes by slowing the economy and choking off demand. The approach, however, risks tipping the U.S. economy into a recession.

Legislation enacted during the Biden administration, such as the $369 billion Inflation Reduction Act, has helped the central bank's effort to slow price increases, Yellen said.

"While the Fed has primary responsibility here, legislation that has been passed in some cases on a bipartisan basis is strengthening our economy and lowering costs for Americans," she said.

The Inflation Reduction Act will reduce the federal deficit by $238 billion over roughly the next decade, according to the nonpartisan Congressional Budget Office.

Speaking with GMA, Yellen also weighed in on a possible dispute in Congress over raising the nation's debt limit before it is set to exceed the threshold this summer.

Each year, the U.S. enacts a law that increases the amount of money that the federal government can borrow for past expenditures, ensuring that the nation continues paying creditors what it owes. Failure to reach an agreement would all but ensure a recession, experts previously told ABC News.

Some Republicans in the House have resisted an increase of the debt limit unless Democrats agree to spending cuts. The Biden administration, however, has repeatedly said that it will not negotiate over the debt ceiling.

"America has paid all of its bills on time since 1789, and not to do so would produce an economic and financial catastrophe," Yellen said. "Every responsible member of Congress must agree to raise the debt ceiling."

She added, "It's something that simply can't be negotiable."

Copyright © 2023, ABC Audio. All rights reserved.


FTX's new CEO tells bankruptcy court independent investigation would be a waste of money

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(NEW YORK) -- FTX's new chief executive told a bankruptcy court Monday there is "a danger" to authorizing an independent investigation of the crypto exchange's collapse.

John Ray said he had no use for prior court-supervised investigations into other companies he steered through bankruptcy.

"Neither in Enron nor in Residential Capital did I make use of that report," Ray testified during a hearing before U.S. Bankruptcy Judge John Dorsey in Delaware. "They're almost a curated gathering of statements that failed to take real opinions as to what occurred."

The Enron investigation cost $90 million and the Residential Capital investigation cost $100 million, Ray said, adding that neither was helpful. Ray's testimony came as the judge considered whether to appoint an examiner in the FTX collapse as requested by the Justice Department.

"This is just too fragile an environment for me to accept yet another seat at the table," Ray testified. "We've come too far to allow that to happen."

The collapse of FTX spurred criminal charges against its founder, Sam Bankman-Fried, who has pleaded not guilty to eight criminal charges, including fraud and conspiracy.

Ray testified that FTX has furnished 70,000 documents to federal prosecutors, who have asked 156 times for information.

"It's virtually an ongoing exercise, but the last 90 days have been an extremely intense effort to provide the information the government has requested," Ray said.

Ray said the company is also working with federal prosecutors in California, New York, Hawaii and Maryland.

FTX has sent confidential messages to political figures, political action funds and other recipients of contributions by Bankman-Fried asking them to return the money by the end of February, the company said in a press release Sunday.

The messages follow an announcement in December that FTX arranged for voluntary return. Otherwise, FTX said in a release Sunday, the company would "reserve the right to commence actions before the Bankruptcy Court to require the return of such payments, with interest accruing from the date any action is commenced."

Recipients were cautioned that using the money to make a donation to a third party, including a charity, would not prevent FTX from trying to get the money back.

Copyright © 2023, ABC Audio. All rights reserved.


Why the job market is booming despite high-profile layoffs

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(NEW YORK) -- The job market is booming despite high-profile layoffs at companies like Amazon, Microsoft, Twitter and Goldman Sachs.

The economy added a staggering 517,000 jobs in January, more than double the employment growth a month prior and well above the breakneck pace of some 400,000 monthly jobs added on average last year, according to government data released on Friday.

In turn, the unemployment rate fell to 3.4%, the lowest figure since 1969.

Layoffs at prestigious positions at companies with household names send a shudder through workplaces nationwide but the news doesn't indicate much about broader job trends, since tech and finance are relatively small sectors with limited ties to the larger economy, labor economists told ABC News.

Perhaps more improbably, the hiring blitz has defied an aggressive series of rate hikes from the Federal Reserve aimed at slowing down the economy and slashing inflation, the experts said. Tech and finance are more sensitive to rate hikes than other sectors.

"Tech is omnipresent in our lives so it feels like it should be omnipresent in our labor market, but that's not necessarily the case," Kathryn Edwards, a labor economist and policy consultant, told ABC News.

Sales at top tech firms have retreated from the blistering pace attained during the pandemic, when billions across the world were forced into isolation. Customers stuck at home came to rely on delivery services like e-commerce and virtual connections formed through social media and videoconferencing.

As consumers return to habits that more closely resemble pre-pandemic life, companies have encountered diminished revenue growth and the need to reduce their workforce, Rachel Sederberg, a senior economist at labor analytics firm Lightcast, told ABC News.

"They're making a course correction to come back to the economic reality that we're all facing," she said.

Exacerbating this pain, the tech sector – alongside peers in finance – suffers from more expensive borrowing costs tied to a string of interest rate hikes imposed by the Fed.

The Fed on Wednesday said it was raising its short-term borrowing rate another 0.25%, extending a monthslong effort to cool the economy and dial back inflation.

Interest rate hikes make it more expensive for banks to access money that they in turn lend to companies and households, hurting the finance industry's profit margins. Also, rate hikes typically hurt the stock market, damaging investor returns.

High interest rates make it more expensive for tech companies to access cheap capital, which they rely upon to fuel early growth, experts said.

"Finance and tech, Silicon Valley and Wall Street, have been hardest hit by the Fed's interest rate increases but layoffs there are more than offset by an absence of layoffs on Main Street," Julia Pollak, a labor economist at ZipRecruiter, told ABC News.

Last year, the smallest number of Americans lost their jobs to layoffs and firings of any year since data collection began in 2000, Pollak said, citing government data.

"Layoffs are very, very low," Pollak said.

Government data released on Friday showed robust hiring in the service sector as pandemic fears continue to wane. Government, health care and retail were also among the sectors spearheading the hiring surge.

The strong hiring owes in part to an excess of job openings when compared to the number of available workers, leaving employers eager to hire whichever workers they can find and hold onto the ones they have, Edwards said.

"We've heard employers say for almost two years now that they've had a hard time finding workers," she said. "I wouldn't be surprised if people see an employee they can get, they will grab it."

The pandemic brought a surge in early retirement among baby boomers, alongside other factors like long COVID that have prevented some working-age adults from rejoining the job market.

A stock market tear during the pandemic ballooned the assets of some older Americans, allowing them to subsist without income, experts previously told ABC News. Meanwhile, the heightened risk of severe illness faced by older Americans amid the COVID outbreak left them fearful of exposure at the workplace.

"The baby boomer retirement has put a lot of strain on the labor market," said Sederberg of Lightcast. "I'm not worried about layoffs."

Despite strong hiring in January, there was no change in the labor force participation rate, a measure of the share of working age adults in the workforce or seeking work, suggesting many Americans remain on the sidelines.

At a press conference on Wednesday, Fed Chair Jerome Powell said there remains a path for bringing inflation down to normal levels without causing a significant rise in unemployment.

In other words, Powell reiterated the possibility of a soft landing, in which the Fed slows the economy and brings down inflation while preventing the U.S. from entering a recession and causing a spike in unemployment.

The jobs report released on Friday suggests the potential for an even more optimistic outcome, Pollak said.

"Now we're seeing something even more improbable than that soft landing," she said. "The best case scenario is rather than a small increase in unemployment, we actually see falling unemployment."

Copyright © 2023, ABC Audio. All rights reserved.


Unemployment rate dips to 3.4% as 517,000 jobs added in January

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(WASHINGTON) -- U.S. employers added 517,000 jobs to their payrolls in January, the latest figures released Friday by the Labor Department show.

The number of jobs added far exceeded what economists had expected and is more than double the amount added in December -- 223,000.

The biggest gains in employment last month occurred in leisure and hospitality (128,000), professional and business services (82,000), government (74,000) and health care (58,000).

The unemployment rate, meanwhile, dropped slightly to 3.4%, marking a 50-year low.

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Households plunge into debt amid inflation and high interest rates

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(NEW YORK) -- When Karissa Warren lost her job as a kitchen manager in December, she worried about how she and her husband would continue to pay off over $10,000 in credit card debt they had accumulated during previous financial rough patches.

Worsening the problem, high inflation had hiked the couple's everyday costs, including meals for their 3-year-old daughter, said Warren, 31, who lives in Silver Spring, Maryland.

To help pay the bills, she focused on her side job as a baker, but the food prices made it nearly impossible for her to turn a profit, she said.

"The cost of everything is going crazy, especially eggs," Warren said. "All of the recipes I make have eggs."

On top of that, interest rates on the couple's credit card have skyrocketed. Roughly two years ago, Warren and her husband consolidated their debt on a single card, which offered 0% interest for the first year. Then it ticked up to 5%. In recent months, that rate has doubled to 10%, Warren said.

"I'm really upset," she said. "It's a pressure every day."

Warren is one of many Americans battered by a one-two financial punch of elevated inflation, which has sent household expenses soaring; alongside aggressive interest rate hikes, which have spiked credit card rates and interest rates for other loans that help cover the ballooning costs.

The setback could plunge some households into debt for years, as they struggle to make payments that keep up with the rising interest rates, experts said.

The average credit card user carried a balance of $5,805 over the last three months of 2022, research firm TransUnion found. The figure marked an 11% increase from the year prior.

The Fed has put forward a string of borrowing cost increases as it tries to slash price hikes by slowing the economy and choking off demand. That means borrowers face higher costs for everything from car loans to credit card debt to mortgages.

"Because the Fed has been raising rates aggressively over the past year, that really has a direct pass through to your credit card rate," Ted Rossman, a senior analyst at Bankrate.com who focuses on the credit card industry, told ABC News.

"A lot of people may not have enough income coming in to support day-to-day expenses, so it lands on the credit card," he added. "That becomes a very persistent cycle of debt, unfortunately."

The average credit card interest rate offered in the U.S. over the last three months of 2022 stood at 21.6%, according to WalletHub, a jump from 18.2% a year prior.

At the same time, the share of people with ongoing credit card loans has grown. The proportion of credit card users who carry a balance has risen to 46% from 39% a year ago, Bankrate found.

Meanwhile, households looking for relief from high prices have seen an easing of inflation, but price increases remain unusually high.

Consumer prices rose 6.5% over the year-long period ending in December, which amounts to a significant slowdown from a summer peak but remains more than triple the Fed's target inflation rate of 2%.

Price hikes for some items stand well above the overall inflation rate. The price of eggs has risen 60% over the past year; while the cost of flour has risen 23%, government data showed.

"The fact you're paying more to fill your cart with groceries, to fill your car with gas -- that's directly leading to more spending and debt," Rossman said.

Paula Green, 60, a gig worker raising her 14-year-old granddaughter, plunged $4,500 into credit card debt in November after spending thousands on her daughter's wedding. The interest rate on her card, 13.99%, marked an increase from the rate on the card months before, she said.

Rather than pay the debt off relatively quickly at about $500 a month, Green has committed half as much to paying it down as she weathers inflation, she said.

"It has affected me drastically," she said. "It has turned my budget on its head."

The cost of food for Green and her granddaughter has jumped significantly, she said. A 12-pack of diet Coke cost Green $6.99 before the pandemic, she said; now it costs double that.

Green, who has worked freelance since 2009, is training for a customer service job at a cruise line company to find more reliable income as she faces at least two years of credit card debt, she said.

"I don't think it's going to calm down anytime soon," she said.

Despite their debt, Warren and Green remain optimistic.

Warren said she is starting a new job next week that pays more than the one that laid her off. She's hoping the added income will help her and her husband pay off their credit card debt within two years, and eventually buy a home, she said.

Green, meanwhile, said she has no regrets about going into debt for her daughter's wedding.

"Both of my parents have a saying: 'It's only money, we make more,'" Green said.

Inflation will soften over the coming years, eventually reaching normal levels, experts said. But the easing of prices may require more interest rate hikes, known as monetary tightening, which make borrowing costs and in turn credit card rates even more expensive in the meantime, they added.

"The question is: How much tightening does it take to slow down the economy and bring down inflation?" William English, a former senior Fed economist and finance professor at the Yale School of Management, told ABC News. "It's very hard to predict."

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Families sue Snapchat parent company over drug delivery deaths

ABC News

(NEW YORK) -- Nearly two years ago in June 2021, mom Fran Humphreys got a phone call at work that no parent wants to receive.

"I was called at work and came home to the chaos and the grief," the nurse recalled to ABC News' Good Morning America.

Fran Humphreys was told that her 20-year-old daughter Sophia Humphreys had been found unresponsive in bed and died. Later, she and her husband learned that their daughter had allegedly been sold fake Percocet pills through the popular social media app Snapchat.

"Immediately, the law enforcement took her phone," Fran Humphreys said. "And the detective called us shortly after and said that they were able to see that she had purchased it from a Snapchat dealer."

Fran Humphreys is just one of 25 families who have sued Snap, Inc, the company behind Snapchat.

"No parent should have to go through this," Fran Humphreys said.

One lawsuit, filed in Los Angeles by the Social Media Victims Law Center on behalf of 18 plaintiffs, and obtained by ABC News, claims the social media giant "facilitates – and profits from – designing a product that markets and sells lethal drugs to its young users" and accuses it of enabling drug dealers to allegedly sell drugs like fake prescription pills that are laced with fentanyl to minors and young adults.

Matthew Bergman, a founding attorney of Social Media Victims Law Center, told GMA Snapchat is the differentiator in this particular case.

"They all lost a child to fentanyl poisoning through counterfeit drugs obtained through Snap, not through Instagram, not through TikTok, but through Snap," Bergman claimed. "This isn't an internet problem. This isn't a social media problem. This is a Snapchat problem."

According to the lawsuit, "From 2020 through 2022, Snapchat was involved in over 75 percent of the fentanyl poisoning deaths involving children between the ages of 13 to 18 and involving a dealer who was connected with the child via social media." The dealers, according to the lawsuit, would sell fatal fentanyl doses that were often counterfeit or disguised as prescription drugs.

Some of Snapchat's features that set it apart from other apps, like automatically deleted messages, are especially attractive to drug dealers, the lawsuit alleges, making illegal activities harder to track.

Bergman told ABC News the families in the lawsuit hope to see changes to Snapchat, including ending the the disappearing messages feature, improving the detection of and permanent removal of drug dealers from the app, and improving notifications for parents and children of what they call a "clear and present danger" that exists on the app.

In a statement to ABC News, a spokesperson for Snap. Inc. said they could not comment on any active lawsuits but claimed the company was using "cutting-edge technology to … proactively find and shut down drug dealers' accounts."

"We block search results for drug-related terms, redirecting Snapchatters to resources from experts about the dangers of fentanyl. We continually expand our support for law enforcement investigations helping them bring dealers to justice, and we work closely with experts to share patterns of dealers' activities across platforms to more quickly identify and stop illegal behavior," the statement continued.

They added, "We will continue to do everything we can to tackle this epidemic, including by working with other tech companies, public health agencies, law enforcement, families and nonprofits."

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Senator calls on Apple, Google to remove TikTok from app stores

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(WASHINGTON) -- The push on Capitol Hill to rein in China-owned social media network TikTok has set its sights on tech giants Apple and Google.

Sen. Michael Bennet, D-CO, sent a letter to Apple CEO Tim Cook and Google CEO Sundar Pichai on Thursday calling on their companies to remove TikTok from their respective app stores, citing concerns about how TikTok handles the data of American users.

"Like most social media networks, TikTok collects vast and sophisticated data from its users," Bennet said. "Unlike most social media networks, TikTok poses a unique concern."

"TikTok's vast influence and aggressive data collection pose a specific threat to U.S. national security because of its parent company's obligations under Chinese law," Bennet added.

TikTok, which has more than 100 million monthly active users in the U.S., has faced growing scrutiny from state and federal officials over fears that American data could fall into the possession of the Chinese government.

In December, Congress banned TikTok from all devices owned by the federal government. TikTok CEO Shou Zi Chew is scheduled to appear before the House Energy and Commerce Committee in March on the company's data security practices, the committee said on Monday.

More than half of U.S. states have taken steps toward a partial or full ban of TikTok on government devices.

The Biden administration and TikTok wrote up a preliminary agreement to address national security concerns posed by the app but obstacles remain in the negotiations, The New York Times reported in September.

TikTok said it stores the data of U.S. users outside of China, and has never removed U.S. posts from the platform at the request of the Chinese government.

Google and Apple did not immediately respond to a request for comment.

"Unfortunately, Senator Bennet's letter relies almost exclusively on misleading reporting about TikTok, the data we collect, and our data security controls," TikTok told ABC News in a statement.

"It also ignores the considerable investment we have made through Project Texas—a plan negotiated with our country's top national security experts—to provide additional assurances to our community about their data security and the integrity of the TikTok platform," the company added.

"We are disappointed that many state agencies, offices, and universities will no longer be able to use TikTok to build communities and connect with constituents," the company added.

Recent news stories have called into question the security of user data.

Buzzfeed reported in June that TikTok engineers based in China gained access to intimate information on U.S. users, such as phone numbers. Forbes reported in October that ByteDance, TikTok's parent company, intended to use the app to access information on some users.

The Trump administration tried to ban TikTok in 2020, eventually calling on ByteDance to sell the app to a U.S. company. However, the sale never took place.

In his letter on Thursday, Bennet said TikTok poses "an unacceptable threat to the national security of the United States."

Bennet addressed Cook and Pichai directly: "Given these grave and growing concerns, I ask that you remove TikTok from your respective app stores immediately."

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JET

2007-2009

"Always in our Heart! "