Relief checks news summary | 3 May 2023
US Finance News: Latest Updates
Headlines | Wednesday, 3 May 2023
- Federal Reserve moves to raise interest rates by 0.25 percent, now standing at 5.15 percent
- New March data showed inflation cooling, Fed still expected to raise rates in May
- Job openings have fallen by 1.6 million since December
- Layoffs are up twenty-nine percent compared to April 2022; meanwhile, the number of workers voluntarily leaving their jobs has fallen by thirteenpercent
- First Republic Bank acquired by JP Morgan Chase
- World Economic Forum forecasts 14 million jobs disappearing in five years
- Median home selling prices increased 2.6 percent in March
- The rate of families with an unemployed member fell three percent from 2021 to 2022 to 4.7 percent
- Housing prices continue to fall, is it a good time to buy?
- Various states will continue to issue inflation relief checks and generous tax refunds in April
Related stories:
Tuesday Morning to close all stores
Home goods retailer Tuesday Morning has gone bust and will close all of their stores.
They have announced a going-out-of-business sale with 30% discounts in all their stores, which number approximately 200.
Tuesday Morning has joined the growing number of troubled retailers who are going bankrupt due to slower consumer spending, combined with more expensive debt caused by higher interest rates.
Last week, Bed Bath & Beyond filed for bankruptcy and also declared that they were shutting down all their stores.
Cargando...
Last year, the inflation rate reached historic levels in the United States. In June 2022, the year-on-year rate was 9.1%, the highest in the last 40 years.
After its peak, inflation began to fall. According to the latest summary of the Consumer Price Index, in March, year-on-year inflation was 4.98%. However, the prices of some items are still high.
Corina Gonzalez tells us when we can expect prices to slide back down.
Pacific Western Bank shares tumble
Another regional bank appears to be in trouble.
Shares of Pacific Western Bank have plunged 56% following reports that it is considering its strategic options, including a possible sale.
The turmoil at PacWest follows on the heels of the sale of First Republic Bank to JP Morgan Chase, and the collapse of Silicon Valley Bank and Signature Bank in March.
Cargando...
Due to inflation, several states in the US approved the sending of stimulus checks or tax refunds as relief last year. Since then, inflation has fallen; however, financial support continues in certain locations, with payments of up to $1,500.
This report tells us which states give out financial aid, and who are qualified to receive it.
Top CEO salary raises outpace inflation
The average pay for top CEOs rose 7.7% last year to a record $22.3 million, a new study found, as big stock awards helped the group stay ahead of inflation while workers' pay fell behind.
Among those receiving big pay increases were the CEOs of Jefferies Financial Group and Prologis Inc according to the study released by research firm Equilar.
The study reviewed the 100 highest paid CEOs at public companies with revenue of $1 billion or more that reported compensation as of March 31. A similar review last year showed a 31% pay increase for CEOs for 2021.
The consumer price index, a widely-used measure of inflation, rose 6.5% in the 12 months ended Dec 31, down from 7% in the year-earlier period.
Pay among the CEOs rose faster than for workers in 2022 despite tight labor markets. Average weekly earnings for private sector employees was $1,132 in December, up 3.6% from a year earlier, according to the Bureau of Labor Statistics. The CEOs´ higher gains pushed the median "pay ratio" at companies led by the CEOs studied by Equilar to 288 times the pay of their average employee, up from 254 times in 2021.
(REUTERS)
Cargando...
Interest rates hit highest level since 2007
For the first time in over a decade, the federal funds rate (FFR) has surpassed five percent.
The Federal Reserve announced another rate hike of 0.25 percent, leaving the FFR between 5 and 5.25 percent.
Some economists had called on the central bank to slow the pace of its rate increases in light of the the collapse of First Republic Bank. However, the Fed seems to have their own view, affirming that from their vantage point "The U.S. banking system is sound and resilient."
Cargando...
For the second year in a row, both the number of billionaires worldwide and their total wealth have declined. According to Forbes, in 2023 , the number of billionaires fell from 2,668 in 2022 to 2,640 this year. On the other hand, the total wealth of billionaires dropped by $500 billion.
As for the number of billionaires in the world, most of the members of the Forbes list are from the United States with 735 billionaires. The US is followed by China (495), India (169) and Germany (126). The richest person in America is Elon Musk from Texas, but who are the billionaires in the rest of the country?
Writers guild trying to save jobs from AI and get better pay
The Writers Guild of America (WGA) began its largest strike in 15 years, not only to secure better pay as streaming continues to disrupt Hollywood but to protect their jobs from artificial intelligence (AI). Several shows have already been affected and depending on the length of the strike many others could be too.
According to WGA statistics, median weekly pay for writer-producers has decreased by 4 percent over the last decade, when adjusted for inflation it’s a decline of 23 percent. The median number of TV series writers working at the minimum salary has gone from a third in the 2013-14 season to half nowadays.
The writers guild also wants to prevent studios from using AI to generate scripts. Either producing new material which writers may be asked to polish up for less pay or training the machines on writers’ previous work to create new scripts in a specific writers style.
"We don't want our material feeding them, and we also don't want to be fixing their sloppy first drafts," said John August, a screenwriter and member of the WGA negotiating committee.
“What (AI) could do is spew out a garbled piece of work," said Warren Leight, a screenwriter who has also served as a showrunner and executive producer. "Instead of hiring you to do a first draft, (studios) hire you to do a second draft, which pays less. You want to nip that in the bud."
Cargando...
Digital currencies seen by some as safe have from inflation
Cryptocurrency market capitalization is still nearly a third below where it was a year ago but certain digital coins are being used by some as a financial safe haven. People in countries like Turkey and Argentina have been putting their money into stablecoins, which are pegged to the dollar or gold.
Both countries are experiencing rapidly rising prices for goods while each nation’s currency plummets. Just over 27% of Turks and around 23.5% of Argentines possess digital currencies.
Cargando...
Starting at the onset of the covid-19 pandemic, Congress passed a law allowing the Food and Nutrition Service (FNS) to boost the amount households received from the Supplemental Nutrition Assistance Program (SNAP). Lawmakers, however, voted to end the Emergency Allotments (EA) as they were known as part of the Omnibus spending bill passed at the end of 2022.
While the SNAP EA program was in place it is estimated that it kept 4.2 million people out of poverty and reduced childhood poverty by 14 percent. As of 1 March, SNAP EA benefits ended in the 32 states that were still paying them along with the District of Columbia, Guam and the US Virgin Islands.
Households saw their monthly allotment drop by $95 on average, some will lose hundreds of dollars to put nutritious food on the table. For those that benefited from the increased payments, they will now have to make hard choices about what they spend their money on as the cost of living has increased. That will mean cutting back on how much they eat or putting off paying bills so they can put food on the table.
The Federal Reserve since March 2022 has been tightening monetary policy including successive interest rate hikes to tame rising prices. Inflation in the United States has been slowing but isn’t expected to reach the US central bank’s target of two percent until at least 2025. Experts don’t rule out more rate hikes, especially if macroeconomic data stays strong, and most don’t forecast any cuts before the end of the year.
Minutes from the March meeting of the Federal Open Market Committee (FOMC) expressed concern over inflation which is “still well above the Committee’s longer-run goal of 2 percent” and the it is “unacceptably high.” The data on price pressures in the economy “indicated slower-than-expected progress on disinflation.”
But interest rate change remains a blunt tool to tackle a nuanced economic issue and its use doesn’t come without some pain. However, “the worst pain would be if we failed to act,” according to the Fed chair. We take a look at some of the consequences of the interest rate hike and how it could affect you…
The Federal Reserve has raised interest rates nine times over the past year taking them from 0.25 percent to 5 percent over twelve months. Policymakers are expected to bump up borrowing costs once more on Wednesday with experts predicting a quarter percentage point increase.
The US central bank’s monetary tightening is intended to slow the pace of rising prices by cooling the US economy via getting people and businesses to spend less. While higher interest rates will make it costlier to borrow for purchasing a home, a car or anything else, one of the places where most Americans will see the effect of the Fed’s rate hikes is on their credit card bill if they carry a balance.
The FDIC managed to work out an orderly resolution of First Republic Bank. JP Morgan Chase will purschase the failed financial institution and assume all its deposits.
Many scams on the internet involve sending checks claiming to be from the US Department of the Treasury. If you feel that you may have received the check by mistake or that it is a scam, it is best to contact the IRS to verify the validity of the payment. This can help to prevent identity theft and other types of fraud.
When looking for more information on this topic online, individuals should be aware of scams, viruses, and other malicious attempts to steal personal information. However, there is no need to subject yourself to these issues because the refund 30 status does not impact the funds distributed to the taxpayer.
The Social Security Administration continues to send monthly benefits to retired workers in 2023.
The SSA is also responsible for sending Supplemental Security Income benefits, disability and survivor benefits. This report tells us when to expect the payments for the month of May.
More than two years have passed since the US federal government approved the third and last stimulus check. The payment was part of the March 2021 American Rescue Plan and offered a $1,400 check for eligible taxpayers and up to $2,800 for couples filing jointly.
Since then, millions of Americans have been waiting for a fourth stimulus check, and although the measure was never approved at the federal level, various states decided to send their own checks to residents. Below we will discuss which states can expect a direct payment in May and June.
Most experts see a recession in 2023
On the data front, despite the slowdown in inflation in March, there is still a lot more work to be done to get back to the 2% target. We maintain the first rate cut in March 2024. Should the stresses in the financial system be reduced in short order, we cannot rule out that stronger macro data will lead the Fed to put in additional hikes beyond May.
The Federal Open Market Committee (FOMC) are meeting this week for the first time since March, where policymakers will decide on the next move to bring inflation back to the US central bank’s target of two percent while still attempting to produce a “soft landing.” The Federal Reserve has been aggressively raising the cost of borrowing over the past year implementing nine successive rate hikes, taking them from 0.25 percent to 5 percent.
The general view among experts is that the Fed will raise rates again on 3 May another 25 basis points, which is also in line with market expectations.
Federal Reserve Governor Lisa D. Cook spoke publically last week about the state of economic research and the current questions that exists for many tracking changes in the US economy. Governor Cook called attention to what she sees as signs that the labor market is “softening,” including a slowdown in the quit rate and hiring a reduction in the number of job openings. From December to March, the number of job openings fell by 1.6 million to 9.6 million.
Specifically, Gov. Cook’s comments mentioned the ‘strong’ increase in wages seen for “workers in the lowest-income quartile [...] relative to other quartiles over the past two years.” With far more jobs than workers seeking then, Gov. Cook said that this group “benefitted from the availability of jobs and, in many cases, the ability to move to better, higher-paying jobs in the current strong labor market.”
Read our full coverage for more details on the relationship.
Minnesota labor market could spell trouble for Fed rate hike policy
Federal Reserve Chair Jerome Powell signaled in March that the Federal Reserve “may” implement at least one more rate hike this year. Experts believe that could come on Wednesday after the May meeting of the Federal Open Market Committee concludes. After that, the vast majority see rates staying at the 5%-5.25% range through the end of the year.
However, some don’t rule out that macroeconomic data may force the US central bank to increase rates even more. Minnesota may be a harbinger of such economic forces.
Businesses in the state are taking extraordinary measures to attract new workers and retain the ones that they have. Like the US as a whole, there are far more jobs available than able-bodies to fill them. While nationally there are 1.7 jobs for each of the 5.9 million unemployed jobseekers, in the Land of Ten Thousand Lakes there are 2.6. Both numbers have come down in recent months, but they remain well-above pre-pandemic levels.
Policymakers at the Federal Reserve was to see the tight labor market loosen as a result of their increasing the cost of borrowing. Ideally, the demand for workers would shrink without causing mass unemployment, but companies so far are still trying to hire scores of new employees.
Wages is another factor being considered by the Fed. In the case of Minnesota, Daikin jacked its starting wage from $17 per hour to $24 and its US chief executive Jeff Drees says it still needs 200 more employees at its two facilities in the state. He doesn’t see wage growth levelling off any time soon.
Cargando...
Welcome to AS USA’s live blog on the latest financial news
Throughout the day we'll bring you news on personal finance and the wider US economy. The big story for Wednesday 3 May is an expected interest rate hike by the Federal Reserve as it continues efforts to bring inflation down to 2%.
That goal isn't predicted to be accomplished until 2025. In the meantime households are still struggling with rising prices but inflation relief programs are coming to an end.