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Today’s Big Deal: A look at the five big challenges facing President Biden as he tries to battle inflation. We’ll also look at an uptick in unionization rates among younger workers and a Super Bowl ad that took down a cryptocurrency exchange.
But first, Trevor Noah is bringing the White House Correspondents’ Association Dinner back to “abnormal.”
For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Reach us at slane@digital-stage.thehill.com or @SylvanLane, afolley@digital-stage.thehill.com or @ArisFolley and kevers@digital-stage.thehill.com or @KarlMEvers.
Let’s get to it.
Five obstacles in the battle against inflation
President Biden was delivered a blow last week amid the news that inflation is rising and showing no signs of slowing down.
Consumer spending has returned to pre-pandemic levels, but the rush of demand, lack of supply, and labor shortages and shipping bottlenecks have caused high inflation to linger.
We break down here the five big obstacles in Biden’s battle against inflation.
- Pandemic-driven supply chain snarls: The intense pressure on supply chains has left Americans paying more or waiting longer for many products. The Biden administration has also scrambled to clear up port backlogs, get more truckers on the road and loosen up supply chains — though it has limited reach beyond U.S. borders.
- Labor shortages: As businesses wait for millions of workers who left the labor force in 2020 to return, many have boosted prices or cut back their operations.
- Rents are rising: After collapsing during the onset of the pandemic, rents rose 4.4 percent in the year since January 2021, and economists expect them to steam ahead.
- Inflation momentum: Economists have paid close attention to how high consumers and businesses expect inflation to rise since the rapid price increases of the 1970s. Dozens of major companies behind grocery store staples are set to keep raising prices as their profits soar — drawing anger from liberals and action from the administration.
- Energy shocks: Oil prices rose substantially in 2021 as the rapid recovery from the coronavirus recession fueled a surge of consumer demand for goods and travel following a sharp decline in oil prices during the peak of the pandemic in 2020.
LATE REGISTRATION
Crypto firm BlockFi settles with SEC, states for $100M over lending business
A cryptocurrency firm will pay $100 million to settle claims it failed to register its crypto lending account product with federal and state regulators, the Securities and Exchange Commission (SEC) announced Monday.
In a Monday settlement, BlockFi Lending LLC agreed to pay $100 million split between the SEC and 32 states and end its BlockFi Interest Accounts (BIAs), which allowed cryptocurrency holders to deposit their digital tokens with the company in exchange for interest.
- BlockFi would lend and invest the cryptocurrency to generate interest for the accounts and held roughly $10.4 billion in assets for roughly 570,000 BIA account holders, according to the settlement.
- The SEC charged BlockFi with violating 82-year-old federal rules that require companies that offer securities — including investment contracts — to register those products with the agency.
BlockFi agreed to offer a new version of the BIA registered with the SEC under the Securities Act of 1933, one of the first federal laws governing the sale of stocks and other investment products. The company did not admit to any wrongdoing, per the terms of the settlement.
Sylvan has more here.
PICKET LINES
Union rates tick up among young workers
More young workers are joining unions, and some are spearheading union mobilization campaigns at companies around the country, according to The Associated Press.
According to the news agency, union membership among employees ages 24-34 rose from 8.8 percent in 2019 to 9.4 percent in 2021.
- The news comes as younger workers have been seen at the helm of unionization campaigns at high-profile companies such as Starbucks and Google.
- The pro-union push among young Americans defies the trend for workers in other age groups, who have seen a decline in union membership over the years.
Aris has more here.
QR CRASH
QR code Super Bowl commercial causes crash for cryptocurrency app
The Coinbase Super Bowl commercial that featured a QR code caused the cryptocurrency app to temporarily crash.
The minute-long commercial featured a colorful QR code floating around the screen, mimicking the bouncing DVD logo often seen in the early 2000s. Viewers who scanned the code were brought to a link that offered $15 in free bitcoin to anyone who created an account with Coinbase before Feb. 15.
- Coinbase chief product officer Surojit Chatterjee tweeted that the company “had to throttle traffic for a few minutes” as its website struggled to keep up with more than 20 million hits in one minute.
- The coinbase spot was one of several Super Bowl commercials advertising cryptocurrency firms.
Read more from The Hill’s Mychael Schnell.
Good to know
As Americans get started on their tax returns for the 2021 tax season, the Internal Revenue Service is grappling with a backlog of millions of tax returns from the last tax season, The Washington Post reported.
Nearly 24 million individual and business tax returns that require at least one action by an IRS employee have yet to be processed as of Jan. 28, according to taxpayer advocate data obtained by The Post.
Here’s what else we have our eye on:
- Former President Trump’s longtime accounting firm said it could no longer vouch for the financial statements it prepared for the Trump Organization following accusations from the New York attorney general that the company had been fraudulently misrepresenting the value of its assets.
- Jim “Mattress Mack” McIngvale, owner of Gallery Furniture, lost a record $9.5 million in a Super Bowl LVI bet, Chron.com reported. The Biden administration is considering offering Ukraine up to $1 billion in loan guarantees as it faces the threat of a Russian invasion.
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.