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We’re already in a recession, according to the Fed’s GDP tracker

As the Fed GDP tracker forecasts U.S. recession, Meta and other companies batten down the hatches.

We’re already in a recession, according to the Fed’s GDP tracker
[Source Images: Jonathan Kitchen/Getty]

At the beginning of June, 55% of Americans believed that the U.S. was in an economic recession, according to a poll from The Economist and YouGov. While the U.S. wasn’t in a recession a month ago, we may be now, at least according to the latest reading from the Atlanta Fed GDPNow measure, a model from the Federal Reserve Bank of Atlanta that tracks U.S. economic activity, and projects GDP growth in real-time. The tracker now forecasts that the U.S. economy contracted by 1% during Q2, which would officially mark a recession, which is two straight quarters of negative GDP growth.

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The Bureau of Economic Analysis will release its initial GDP estimate for Q2 on July 28, which is when we’ll know for sure whether the economy grew or, as now expected, contracted.

Given the pessimism around the economy, a recession wouldn’t be unexpected at this point. A confluence of factors has dragged the economy down and led to a high-inflation environment, which is currently hammering at many Americans’ finances. “It’s a perfect storm, with supply chains, interest rates, inflation, and the war in Ukraine—not to mention the pandemic,” says Judi Leahy, senior VP wealth management at Citi Global Wealth. The stock market, too, has taken its licks this year, and while Leahy says that there is still room for further drops, she does think that most of the damage is done.

“I think a lot of [the expectations of a recession] is baked in, but I think we might go a little bit lower in the market” in the months ahead, she says. During the first half of 2022, the S&P 500 fell more than 20% into a bear market—the worst beginning to a year in more than half a century, according to S&P Global Market Intelligence. If it’s any consolation for investors, historically, there’s been little or no correlation between the market’s performance during the first half of the year and the second half. So, it’s possible that the market could see a turnaround.

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Yet, even if it does, many large companies, such as Meta, are also signaling that they’re preparing for a tough economic environment ahead. As first reported by Reuters, an internal memo circulated among Meta employees this week from chief product officer Chris Cox said that the company needed to batten down the hatches. “I have to underscore that we are in serious times here, and the headwinds are fierce. We need to execute flawlessly in an environment of slower growth, where teams should not expect vast influxes of new engineers and budgets,” the memo said.

As for what the average consumer or investor can do, Leahy suggests sticking to some age-old advice in the face of bear markets and recessions: Weather the storm because this, too, shall pass. “We’ve seen that, historically, the market will rebound. If you take your money out now, you’re booking a loss—but right now, it’s only a paper loss,” she says. 

“Remember to ask yourself: Where do you think the economy will be in three or five years?” Leahy adds. “There’s going to be another expansion down the road. It’s just a function of when.”

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The Supreme Court gave Biden a small victory on immigration—but the case isn’t over yet

The Supreme Court ruled that Biden did not violate federal law by ending Trump’s “Remain in Mexico” policy.

The Supreme Court gave Biden a small victory on immigration—but the case isn’t over yet
[Source Images: Adam Schultz/Biden for President/Flickr; Walter Bibikow/Getty; grandriver/Getty]

Today, the Supreme Court ruled that the Biden administration’s scuttling of the Migrant Protection Protocol—which has also been referred to as the “Remain in Mexico” policy—didn’t violate federal immigration law. The Protocol, put in place under the Trump administration in 2019, required that some asylum-seekers await their immigration proceedings in Mexico. 

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The ruling was a 5-4 decision, with Chief Justice John Roberts comprising the majority along with Justices Stephen Breyer, Sonia Sotomayor, Elena Kagan, and Brett Kavanaugh. It was the final ruling of the term.

“The Government’s rescission of MPP did not violate section 1225 of the INA, and the October 29 Memoranda did constitute final agency action,” the ruling reads. “We therefore reverse the judgment of the Court of Appeals and remand the case for further proceedings consistent with this opinion.” 

The case centered around whether the Department of Homeland Security would be required to keep enforcing it, or whether the Biden administration had the power to get rid of the Protocol, and it ruled that it, indeed, does. However, the case will return to the lower courts for further litigation.

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The Biden administration stopped enforcing the Protocol in February 2021, after ordering a review of it on his first day in office—but was then ordered to reimplement it by a Texas district court after his attempt to end it was challenged by several Republican-led states.

In effect, the ruling removes a hurdle for migrants on the southern border seeking asylum—most of whom had been turned back to Mexico since the Protocol was in effect. Those migrants often faced dangerous conditions, which led to outcries from humanitarian and immigration-rights groups. 

Conservatives, however, viewed the Trump-era policy as critical to slowing the growing number of immigrants coming from Central and South America. Justice Samuel Alito, among the Court’s more conservative members, wrote in a dissenting opinion that DHS shouldn’t be able to “simply release into this country untold numbers of aliens who are very likely to be removed if they show up for their removal hearings.”

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Again, the case isn’t fully decided and will return to the lower courts to be further hashed out. But the ruling does represent a small win for the Biden administration, which came minutes after a big loss in a separate ruling (West Virginia v. EPA), in which the Supreme Court also curbed the Environmental Protection Agency’s ability to regulate power plants.

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New data shows just how much investors have been contributing to the housing boom

Flippers and investors are buying tons of properties. But are they to blame for the affordability crisis?

New data shows just how much investors have been contributing to the housing boom
[Source Images: Sean Gladwell/Getty]

The economy may be cooling, but houses are still hot commodities. Home prices rose 20.4% year over year in April, according to the latest data from the S&P CoreLogic Case-Shiller Index. Currently, the median sales price for a new home in the U.S. is just shy of $450,000, and is nearly $408,000 for existing homes.

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Those prices, combined with mortgage interest rates that are hovering around 6%, have given would-be homebuyers less wiggle room than they had even a year ago when the real estate market was still firing on all cylinders. Suffice to say that many buyers are frustrated and angry at their inability to find and purchase a home over the past couple of years.

The question, though, is who’s to blame? Investors and home flippers, attracted to the market due to low borrowing costs and appreciating home values, make for an easy target. But they may not be the right target.

The primary driver behind increasing home costs is lack of supply—there simply aren’t enough homes on the market to satisfy buyer demand. And that problem is exacerbated by investors who are outbidding would-be buyers to purchase investment properties that they then rent out or flip for a profit, rather than make their primary residence.

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The share of homes sold to investors during the first quarter of 2022 averaged 28% per month, which is an increase of 9% from the first quarter of 2021, according to the Harvard Joint Center for Housing Studies’ State of the Nation’s Housing 2022 report, citing data from CoreLogic. Between 2017 and 2019, that figure was 19%. 

Further, home flipping—a process that entails purchasing a property, making some upgrades, and then relisting it at a much-increased sale price—is also on the rise. During the first quarter of the year, nearly 115,000 single-family homes were flipped, comprising almost 10% of home resale transactions, per data from Attom. The typical profit on those flipped houses during that time frame was $67,000.

While investors and flippers have added to the demand side of the equation, they didn’t affect the supply. And that, experts say, is where the problem persists.

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“The investors are out there,” says Sarah Knight, a broker at Windermere Real Estate in Spokane, Washington, “but they’re not the ones that are driving up prices. I think desperate homebuyers are.” Knight adds that it comes back to a lack of options for buyers, which has led to bidding wars, driving prices way up. “The thing about investors is that they have bottom lines,” she says. “They’re not emotional about getting a house like many homebuyers are, who want to live in the home.”

Knight’s sentiment was echoed by researchers from Freddie Mac, who wrote in a recent analysis, “[A]lthough investors are certainly contributing to the affordable housing shortage, they are not the driver of the tight supply of homes available for purchase.”

Again, it comes back to the imbalance between supply and demand. In 2021, there was a national housing shortage of 3.8 million units, according to Freddie Mac. That shortage—combined with homebuyers with cash to burn and low borrowing costs (up until recently)—is the primary driver of housing prices, not merely investors and house flippers.

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“Maybe investors and house flippers will drive prices up a bit,” Knight says. “But they’re not going crazy with their bids.”

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Can a Supreme Court justice be removed? Yes, and here’s how

Impeachment is rare but possible.

Can a Supreme Court justice be removed? Yes, and here’s how
[Photo: Tasos Katopodis/Getty]

After a spate of U.S. Supreme Court decisions were released this past week—including an unpopular decision to overturn Roe v. Wade, the 1973 case that guaranteed abortion rights across the country—protestors are now calling for the federal government to take action against justices who they claim have not been honest with the American people.

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On Sunday, representative Alexandria Ocasio-Cortez joined those calls in a television interview, in which she said impeachment should be “very seriously considered” if justices lied in their confirmation hearings about their intent to overturn Roe v. Wade—presumably referring to justices Brett Kavanaugh and Neil Gorsuch, both of whom seemed to testify under oath that Roe v. Wade was a settled legal precedent.

Ocasio-Cortez also took aim at justice Clarence Thomas, for his refusal to recuse himself from cases regarding the 2020 election and 2021 insurrection, after it was revealed that Thomas’s wife was involved in efforts from the Trump campaign to overturn Biden’s victory.

If you were wondering if it was possible to remove Supreme Court justices after they are confirmed to their lifetime appointments, the answer is yes. The framers of the U.S. Constitution included a process to do just that. That said, it has never really been done successfully. Yet.

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Section 1 of Article 3 of the Constitution says:

The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish. The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behavior, and shall, at stated Times, receive for their Services a Compensation which shall not be diminished during their Continuance in Office.

This means that the justices hold office as long as they choose and can only be removed from office by impeachment. The only Justice to be impeached was back in 1805, when Associate Justice Samuel Chase—who was appointed by President George Washington—was accused of allowing his political views to interfere with his decisions and “tending to prostitute” the court and his position. (You can read the riveting account on the U.S. Senate’s website.) The House of Representatives passed Articles of Impeachment against him, but he was acquitted by the Senate.

However, the threat of impeachment proceedings has led to the resignation of a justice: In 1969, Supreme Court Justice Abe Fortas resigned before he could be impeached for taking $20,000 a year for life from the family of a Wall Street titan in jail for SEC violations.

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As a 2010 story in the Washington Post points out, people on both sides of the political spectrum have for years called for justices to be impeached—from Chief Justice Earl Warren to Justice Clarence Thomas to Chief Justice John G. Roberts Jr. and Justice Sonia Sotomayor. None have succeeded.

That doesn’t mean people shouldn’t give it the old college try, though, when the situation calls for it.

June 27, 2022: This story has been updated to reflect current events regarding recent Supreme Court decisions.

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About the author

Melissa Locker is a writer and world renowned fish telepathist.

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The Supreme Court just struck down ‘Roe v. Wade.’ Here’s what it means

With its final decision on a Mississippi abortion law, the Supreme Court has voted to overturn ‘Roe v. Wade,’ upending a 49-year precedent that secured the constitutional right to abortion.

The Supreme Court just struck down ‘Roe v. Wade.’ Here’s what it means
[Source Images: Sofia Polukhina/Getty; Bill Clark/CQ-Roll Call, Inc/Getty; Wikimedia Commons]

The Supreme Court announced its final decision on Roe v. Wade today, affirming the leaked draft opinion that was obtained by Politico in May. The court’s 6-3 ruling, which upholds a Mississippi law banning abortions after 15 weeks of pregnancy, strikes down a landmark decision that has enshrined abortion rights across the U.S. for nearly 50 years. All of the court’s reliably conservative justices—Clarence Thomas, Neil Gorsuch, Brett Kavanaugh, and Amy Coney Barrett—joined Samuel Alito’s majority opinion, while its more liberal members penned a jointly written dissent.

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“The Constitution does not confer a right to abortion,” wrote Alito. “Roe and Casey are overruled; and the authority to regulate abortion is returned to the people and their elected representatives.”

While the Court has allowed for restrictions on abortion access, it had long maintained the precedent set by Roe. This ruling will have a devastating and instant impact on people seeking abortions, forcing them to travel long distances to get the care they need or carry an unwanted pregnancy to term. With Roe overturned, the decision to protect or deny access to abortion is now left to individual states, many of which have already passed abortion bans and other increasingly restrictive measures in anticipation of this day.

In 13 states, ending Roe sets into motion existing trigger laws that almost immediately prohibit abortion. With the Court’s decision in hand, these bans have already outlawed abortion in Kentucky, Louisiana, Oklahoma, and South Dakota, while those in other states—Arkansas, Idaho, Mississippi, Missouri, North Dakota, Tennessee, Texas, Utah, and Wyoming—will take effect in the coming weeks. (In Oklahoma, an outright ban on abortion has been in effect since late May.) None of these laws make exceptions for cases where a pregnancy is the result of rape or incest.

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Several states—Alabama, Arizona, Michigan, West Virginia, and Wisconsin—have abortion bans that predate Roe, though it’s not clear if or when those may be enforced. (In Michigan, for example, enforcement of the state’s abortion ban has been temporarily blocked due to a lawsuit filed by Planned Parenthood.)

Countless other states are also intent on further curtailing access to abortion, building on myriad restrictions they’ve adopted over the past decade. Some people may be able to obtain a medication abortion, while others could perhaps use benefits provided by their employers to have the procedure. But with more than half of U.S. states poised to ban or significantly restrict abortion rights in total, the Court’s ruling will fundamentally reshape access to reproductive care across the country.

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About the author

Pavithra Mohan is a staff writer for Fast Company.

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