Capping poverty with aid: Federal aid expansion prevented a dramatic rise in poverty during April and May as the CARES Act increased safety net spending by $460 billion. However, experts predict that without continued support, millions of people could fall under the poverty line once the increased unemployment benefits expire in July.
“Poverty rates are based on annual incomes, so families losing aid may suffer new hardship even though the earlier assistance leaves them above the formal poverty line,” reports The New York Times.
Peer-to-peer lending: Rhydian Lewis, head of peer-to-peer lender RateSetter, recently criticized banks for paying savers a pittance for the deposits that fund their loans. Now, Lewis is in negotiations to sell his company to one such bank.
Metro, which set up as a high street challenger a decade ago, is now in talks to buy RateSetter. The acquisition would aid Metro in building a stronger consumer lending business, which it would fund with the deposits in its interest-free current accounts. This is an interesting piece by Financial Times which reflects a broader trend taking place across the peer-to-peer lending sector in response to the pandemic.
TikTok talks finance: Popular social media site TikTok recently announced its new initiative, #LearnOnTikTok, which will fund various educational videos. While the app is known for lighthearted dance and musical content, financial experts like Dr. Brad Klontz are taking up the challenge of using the platform for financial education. TikTok users are statistically young, with 41% of them between the ages of 16 and 24, and most of them did not receive personal finance courses in school. Learning about personal finance early is key to financial security later on in life, as an estimated 68% of Americans are financially illiterate. Read more in this piece by CNBC for a detailed insight.
Crash goes the budget-train: This year saw a collapse in state tax revenues in April, with rates falling on average by half. Before the pandemic, states were expecting increases in both revenue and spending, but the virus has caused many states to dramatically cut funding to public services in order to maintain balanced budgets. Lucy Dadayan of the Urban Institute estimates that the gap will be around $75bn in fiscal 2020 and $125bn in fiscal 2021, reports The Economist.