Inflation relief checks: Social Security payments, inflation expectations, housing market | 14 November

PERSONAL FINANCE

What happens to house prices in a recession?

House prices have been rising gangbusters since the covid-19 pandemic pushed by Americans changing their living habits in light of the pandemic and ultra-low mortgage rates. Rampant inflation throughout the economy though has forced the Federal Reserve to take aggressive measures to rein in rising prices.

Policymakers, after easing into raising rates in March and April, kicked into high gear with four straight 75 basis point rate hikes, the fastest increase since the 1980s. The initial effect has been a spike in mortgage rates which is cooling the housing market but has also raised concerns that the US economy could be thrown into a recession.

What could that do to house prices?

Americans to get a break from high prices

In just a few weeks, my plan to bring down prescription drug prices and energy costs starts to go into effect. It’ll be good for our economy. And it’ll be good for working- and middle-class families who will finally get a break.

Goldman Sachs expects "significant" decline in US inflation

Easing of supply chain constraints, housing inflation peaking and slower wage growth factored into Goldman Sachs expectations that US inflation will see a "significant" decline next year.

Ecoomists at the US lender forecast the Federal Reserve's preferred measure of inflation, core personal consumption expenditure (PCE), dropping from the current 5.1% to 2.9% by December 2023.

Homebuyers waiting for prices to drop may be in for disappointment

New survey data from the Federal Reserve Bank of New York found that the number of Americans thinking about changing their primary residence has reached its lowest level since 2013. Only 14.4 percent of respondents said they were thinking of moving in the coming year. 

The reason? Rising home mortgage rates which have risen above 7 percent for a 30-year fixed rate, almost double what they were a year ago. Millions of Americans were able to lock in their current mortgage during the historic low period.

The housing market has begun to cool, but the tight supply, aggravated by people staying put, may keep prices from falling substantially.

Latest News

The deadline to claim the $3,200 stimulus payments: how to apply?

The deadline to claim stimulus checks and the 2021 child tax credit is 15 November 2022. The IRS has sent letters to those who have yet to file a tax return and, thus, have left their benefits unclaimed.

For those who have not yet filed a 2021 tax return, one must be submitted to the IRS by the deadline in order to receive the payments, which could total more than $3,200.

Interest rates for 30-and-15-year fixed rate mortgages

The St. Louis Fed has reported that mortgage interest rates continue to rise: 

- 15-year fixed rate mortgage: 6.38% 

- 30-year fixed rate mortgage: 7.08%. 

Both of these rates have risen rapidly since the Federal Reserve moved to increase rates in an attempt to slow inflation. In the housing market, rate increases have lowered demand as mortgage payments are much higher now than they would have been a year ago. 

After fraught week crypto tries to build client trust with “proof of reserve”, is that enough?

Crypto exchanges are finding that clients have lost trust in them after two high profile events this past week that has sent Bitcoin, the mother of cryptocurrency, plummeting yet again. First, FTX went bankrupt and then Crypto.com announced that it had misplaced over $400 million, Bitcoin is now down nearly 20 percent from this time last week.

To remedy the situation several crypto exchanges are pledging to produce voluntary audits of their solvency. Operators say that soon they will show publicly what coins the exchange holds on balance through proof-of-reserve (PoR) reports. The promise to provide more regular, third-party audited reports going forward.

But will that really remedy the situation? The fiasco with FTX revealed that the company had a backdoor for its book keeping that was unknown after between $1 and $2 billion went missing.

RETIREMENT SAVINGS

Can I have a 401(k) and an IRA at the same time?

Two of the most commonly utilised form of retirement support are 401(k) retirement plans and an Individual Retirement Account (IRA). Each come with their own terms and conditions and offer different benefits for users. 

We take a look at the differences between the two, and which will make you money work best for you...

Biden promises bipartisan work to bring down inflation

After the release of the positive inflation report last week, and with the Democrats almost certain to lose control of the House of Representatives, President Biden confirmed that he would work with Republicans to address price rises. 

In a statement issued last week, Biden said: "I will work with anyone – Democrat or Republican – on ideas to provide more breathing room to middle-class and working families."

He added that he would "oppose any effort to undo my agenda or to make inflation worse," and pledged to "build an economy from the bottom up and the middle out."

Inflation wakes up and smells the coffee

As reported in The Wall Street Journal, coffee was one of the hottest commodities earlier this year, but it has now gone cold, with prices declining more than 20% in the past month.

Wet weather in farming areas such as Brazil and Indonesia is raising the prospect of a good crop and bigger coffee supply, sending prices down. At the same time, a strong dollar this year has pressured prices of many commodities.

What could that mean for the wider economic picture? Kirk Maltais brings you more.

Money safe | IRS advice for Black Friday deals

The IRS has joined with representatives of the software industry, tax preparation firms, payroll and tax financial product processors and state tax administrators to combat identity theft refund fraud to protect the nation's taxpayers.

The Security SummitPDF consists of IRS, state tax agencies and the tax community, including tax preparation firms, software developers, payroll and tax financial product processors, tax professional organizations and financial institutions. Total membership includes 42 state agencies and 20 industry offices in addition to the IRS. 

The Security Summit members are organized into six work groups, each tasked with addressing an area of need and each with a co-lead from the IRS, states and industry.

Biden bucked trend despite rising gas prices

As election forecasts darkened for his Democratic party, U.S. President Joe Biden kept predicting things would turn around. This weekend, he was vindicated as Democrats retained control of the U.S. Senate, bucking history, media projections and pundits who warned voters cared more about gas prices than Biden's warnings that equality and democracy were under threat.

"I know I'm a cockeyed optimist," Biden told reporters in Cambodia, referencing a sunny song from the musical South Pacific, "but I'm not surprised by the turnout." His next step, he said, is to reach across the aisle to Republicans.

Americans want progress

White House senior adviser Anita Dunn told NBC's "Meet the Press" program on Sunday that Biden would continue to build on his track record in securing bipartisan infrastructure legislation and the first major gun law in over 30 years. "He's made some real progress, but he has a lot more to do," she said.

Dunn said even with a 50-50 split Senate and a very narrow House majority, it had "not been all that easy" to move forward on legislative priorities over the first two years of Biden's presidency, but some major legislation had still been passed.

"The reality is that the people of this country want progress. They want people to work together ... and they want their leaders in Washington to put their priorities first, and not necessarily political priorities," she said.

Inflation varies by city

As we've been reporting, inflation is finally beginning to show signs of slowing down across the United States, but any financial relief that Americans may have felt hinged on where they lived.

Several Mountain states have become a hotbed for inflation, with the region — which includes Arizona, New Mexico, Colorado, Utah, Nevada, Wyoming, Idaho and Montana — reporting that prices soared 9.3% in October.

The spike is even worse in certain cities: Phoenix, for instance, recorded the highest inflation rate among large cities, with prices up a stunning 12.1% last month. While that's down from a peak of 13% recorded earlier this year, that's likely little consolation to residents facing painfully high prices.

Fed's cautious inflation tone sees futures slide

U.S. stock index futures edged lower on Monday as hawkish comments from a U.S. Federal Reserve official tempered hopes of a less aggressive pace of monetary policy tightening, reports Reuters. Federal Reserve Governor Christopher Waller said on Sunday that markets should now pay attention to the "endpoint" of rate increases, not the pace of each move, and the endpoint is likely "a ways off".

The comments from Waller, a voting member of the rate-setting committee this year, follow softer-than-expected inflation data for October that led to a euphoric market rally last week, with the S&P 500 logging its biggest weekly percentage gains in about five months.

"The message is coming loud and clear from the Fed, investors should hold their horses when it comes to expectations of looser monetary policy," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Traders now expect the Fed to hike interest rates in December by a half point, and expect terminal rate in the range of 4.75%-5.0% in May 2023.

At 5:30 a.m. ET, Dow e-minis were down 82 points, or 0.24%, S&P 500 e-minis were down 14 points, or 0.35%, and Nasdaq 100 e-minis were down 71.5 points, or 0.60%.

Growth stocks gave back some gains from last week, with Apple Inc, Intel Corp and Amazon.com down about 1% each in premarket trading.

Tesla Inc dropped about 2% as Chief Executive Elon Musk said "I have too much work on my plate" when asked about his recent acquisition of Twitter and his leadership of the electric-vehicle maker.

In the week ahead, investors will closely monitor a slew of economic data, including retail sales numbers on Wednesday.

Chinese leader Xi Jinping and U.S. President Joe Biden met on Monday for long-awaited talks that come as relations between their countries are at their lowest in decades, marred by disagreements over a host of issues from Taiwan to trade.

"Even with inflation" the Dems won

US politics makes news across the globe and in an interview on UK television the midterms were a major talking point.

Here, Dr Thomas Gift points to how inflation concerns by Americans were not enough to turn them off the Democrats as the party to lead them to a better place.

We have seen labour market conditions deteriorate very substantially in a slice of the labor market.

The pain is concentrated in a narrow set of industries: tech, real estate and finance, mostly.

Job search hitting hard

Every day, headlines blare stories of turmoil in the tech world as companies including Meta, Twitter, Stripe, Lyft and Salesforce slash their workforces.

It’s an anxious time for the tens of thousands of newly laid-off workers now hitting the US job market amid inflation pressures and recession concerns. As they seek new jobs, they contend with fewer openings, hiring freezes and competition from all the other suddenly unemployed people.

The change in atmosphere is palpable.

More from Carolyn Said

Clerical error at Crypto.com concerns Investors

This has been a rough week for cryptocurrencies, which have been experiencing a rough year. While advocates claim that the digital coins will become assets untethered to the stock market, something akin to gold, as Wall Streets fortunes soured over the year, crypto took a shellacking.

The latest bad news came first with the collapse of the FTX crypto exchange resulting in billions lost. Now Crypto.com has admitted that it made yet another clerical error to the tune of over $400 million. 

The exchange sent 320,000 in Ethereum to its corporate account at Gate.io instead of putting it into one of its cold, or offline, wallets. It has since recovered the funds unlike a previous mistake In August. Instead of sending a customer a $68 refund, the individual got $7.2 million which the company is suing to get back.

Student Loan Forgiveness Program suspended: what happens next?

Student loan borrowers that have applied, or wishing to do so, for forgiveness of their debt under the Biden administration’s program find themselves in limbo after a Texas federal judge declared it illegal. The ruling on Thursday was the second such since the Department of Education launched its online portal for borrowers to submit an application.

However, while the first on 21 October put a pause on processing applications already submitted, this second court decision has prompted the Education Department to stop accepting new applications. Millions have already applied and over half of those have been processed. So, what will happen next?

Department of Education ends student loan forgiveness application

After a federal judge in Texas struck down the White House's plan to forgive up to $20,000 in student loan debt, the application has been closed. 

This does not mean that it will not be re-opened, but for now, the Department of Education must wait to see what the courts decide. 

US NEWS

What did President Joe Biden say about the CPI inflation report for October?

Inflation has clearly been making headlines over recent months and was one of the topics being pondered as people took to the polls for the midterms.

One person rather important in this matter is US President Joe Biden, and my colleague Will Gittins had a look at what he had to say about the last CPI report.

Finance and inflation news: welcome

Hello and welcome to AS USA's live blog covering financial news and bringing you the latest on state initiatives to pass relief directly to their residents. 

In October, inflation slowed, increasing only 0.4 percent, brining the year-over-year average down to 7.7 percent. This comes as unemployment increased slightly last month but showed strong signs of job growth, with over 200,000 jobs being added to the economy. 

Markets have responded well to the news on inflation as well as the overperforming of Democrats against Trump-backed candidates. 

Additionally, crypto-markets are in free-fall as some of the largest exchanges collapse.