Relief checks 2023 | Summary news 12 April
US Inflation Report March: Latest Updates
Headlines: Wednesday 12 April, 2023
- Inflation rose 0.1 percent in March; housing was the primary driver of the increase.
- Federal Reservecould increase rates again as soon as early May
- Real wages for workers in the manufacturing sector are lower than March 2020; meanwhile profits have soared
- Tax deadline extended in California after the state was battered by severe storms this winter
- Home prices begin to fall in some cities in California
- Payroll in the retail sector has fallen by 15,000 workers over the last year
- Over 3 million layoffs in the US this year, which sectors have seen the highest job cuts?
- Social Security and Medicare Trustees warn of respective funds depleted by 2031 and 2033
- Various states will continue to issue inflation relief checks and generous tax refunds in April
- Social Security April payment schedule: when can you expect your payment?
Extreme weather events from coast to coast across the United States have prompted the IRS to grant filing extensions for certain counties in seven states. Extensions for the affected areas range from 15 May to 16 October 2023.
The IRS will automatically identify the taxpayers who are in those areas and apply filing and payment relief. But, as Greg Heilman tells us, they will still need to indicate on their tax forms which natural disaster applies when claiming a loss.
Inflation for food flat, energy falls but rents still red hot
The Bureau of Labor Statistics (BLS) reported a 0.1 % increase in the Consumer Price Index for March.
Based on the data from March, the year-over-year inflation rate tracked by the CPI stands at 5%, down significantly from the figures recorded in summer 2022.
According to the BLS, the main driver of inflation in February was shelter, “accounting for over 70% of the increase, with the indexes for food, recreation, and household furnishings and operations also contributing.” The price of “shelter” rose by 0.8 % last month, leading to a year-over-year rise of 8.1% nationally.
However, the agency noted that grocery prices didn’t rise.Energy inflation fell as well with prices last month 6.4% lower than they were a year ago.
31 million families qualified for EITC in 2022, a nearly $7,000 tax credit
The Earned Income Tax Credit is a refundable credit, meaning that once taxes owed are accounted for the remainder gets added onto a tax refund. The credit could be worth up to almost $7,000, but the amount varies depending on earnings and the size of the taxpayer's family.
Last year, the Internal Revenue Services reports that "as of December 2022, 31 million workers and families received about $64 billion in EITC. The average amount of EITC received nationwide was about $2,043."
If you’ve ever taken the time to take a look at your paycheck, you’ll see that your take-home pay is reduced by a fair amount from what you actually earn. Depending on your job there are a number of deductions listed that could be for healthcare coverage or retirement plans through your employer, for example.
But all paystubs will list taxes both federal and state at a minimum, as well as Medicare and Social Security. Sometimes these are grouped together under the label FICA (Federal Insurance Contributions Act). Other times they are separate but instead of Social Security you may see OASDI or OASDI/EE.
Outstanding debts of all kinds can negatively impact your credit score hurting your chances of getting a loan, pushing up the interest rate you pay, being able to buy or rent a house and more. That can cause harmful stress, which can aggravate ill health.
That’s why measures are being taken tokeep medical debt from affecting your credit score so that recovering from an illness isn’t made harder by debt incurred to get treated.
If you have not completed the procedure yet and during the last year you had an emergency or medical expense, you should know that the IRS allows you to deduct these expenses on your tax return.
Food stamps, also known as SNAP benefits, are jointly overseen by federal and state authorities, meaning that the delivery of the support varies across the country. In California the program is known as CalFresh; a state-supervised and county-operated initiative.
California has no asset or resource limit for SNAP benefits, but does have eligibility requirements on both gross and net income. The gross income limit is 200% of the federal poverty level, while the gross figure is 100%.
We take a look at who is eligible for the program...
The expiration of temporary tax laws put into place during the covid-19 pandemic has changed how charitable contributions can be deducted.
The Bureau of Labor Statistics reported that real wages rose for the first time this year in March, climbing up 0.2 percent. In January and February, wages lost around 0.4 percent of their purchasing power, meaning that the figures from March offset half of what has been lost so far in 2023.
From March 2022 to March 2023, the number of hours worked each week fell from 34.1 to 39.9. Compared to this time last year, weekly earnings have fallen 0.7 percent, and as noted by the BLS, “combined with a decrease of 0.9 percent in the average workweek,” since March 2022, real wages have actually fallen by around 1.6 percent. Not only are workers making less, but they are working less, a double whammy for the purchasing power of the average household in the United States.
Some workers have seen real wages fall much more rapidly than others. Read our full coverage to find out which sectors have seen the largest losses in terms of purchasing power.
In early March, Chair of the Federal Reserve, Jerome Powell, provided his semi-annual update to Congress where he expressed a willingness on the part of the Fed to increase interest rates faster, should officials at the central bank deem the action necessary.
After Chair Powell’s remarks came the collapse of Silicon Valley Bank and a series of other bank failures that created a level of uncertainty within financial markets. In part, these bank failures were a response to higher interest rates, and later in the month, the Fed opted for a 0.25 percent increase in the Federal Funds Rate.
After comments from the Chair about a faster pace of rate hikes, the quarter-percent increase was seen as cautionary, with the Fed not wanting to move too quickly given the uncertainty in financial markets. Throughout the month, the economy added 236,000 jobs, leading the national unemployment rate to fall by 0.1 percent to 3.5 percent. Now, the Bureau of Labor Statistics is reporting that average prices rose only 0.1 percent in March, down from the increases of 0.5 and 0.4 percent seen in January and February, respectively.
Read our full coverage for details on how these events and data points will inform the Fed's choice to increase rates next month.
Prices slowed their growth in March, only rising 0.1 percent, bringing the year-over-year change in the CPI down from six to five percent. Housing continued to be a major driver of inflation, a worry for some economists who predict that higher rates could continue to push home prices up.
Combined with the increases seen in January and February, inflation has officially hit one percent this year. Markets are likely to respond positively, given the newest report is a major sign that inflationary pressure may be disapating.
Read more on which goods and prices saw changes in their price in March in our full coverage.
The Consumer Price Index (CPI) is one indicator to evaluate inflation in the market. It had been anticipated that inflation would fall quickly in 2023, though it has fallen by 0.5 percentage points between December and February to 6.0%.
The latest data will be released on 12 April at 8.30 AM.
Inflation using this measure is expected to fall to 5.2% in the March data which will be the lowest inflation since May 2021.
When will the March Consumer Price Index come out?
The Bureau of Labor Statistics will release the March Consumer Price Index report, which tracks changes in the average price of goods and services, at 8:30 AM ET this morning.
This is one-way economists and policymakers can track inflation. In February, average prices rose 0.4 percent, and combined with the 0.5 percent increase seen in January, inflation has already pushed prices up close to one percent. The Federal Reserve aims to keep price increases under two percent, meaning that prices need either fall or slow their pace of growth to stay under this goal.
Social Security experiencing 'worst crisis' says labor union
The Social Security Administration “is in the midst of the worst public service crisis in memory caused by historic levels of employee attrition due to uncompetitive pay in benefits, exceedingly low employee morale, and overwhelming workloads,” according to Rich Couture, Council 215 president at the American Federation of Government Employees.
The service delays facing the program’s approximately 67 million beneficiaries are signs of “an agency in crisis,” according to Couture.
Union leaders spoke out about the Social Security Administration’s diminishing services amid funding constraints that have lasted for more than a decade.
Social Security beneficiaries now confront long waits for service on the phone and in person at the agency’s field offices, as agency workers face low staffing levels.
Increased funding for the program, as well as stronger policies to help retain workers, may help, according to the union.
Big banks expected to report billions in deposit flight
The biggest banks in the US are projected to share that their clients withdrew up to $100 billion at the start of the year, even after acquiring new customers following the failure of Silicon Valley Bank, according to the Financial Times.
The banks include JPMorgan, Bank of America, Citi, and Wells Fargo.
Deposits usually serve as the cheapest source of funding for banks. The large banks have been seeing an increasing number of withdrawals over the past year as the Federal Reserve increased its rates.
Legally separating or getting divorced can bring with it changes to how you file your taxes, like what your filing status is. Also, depending on when the legal agreement was finalized it will also affect whether the payments must be reported on a federal tax return.
Here's a look at what you need to do on your federal tax filing with the Internal Revenue Service.
What do Social Security’s OASDI taxes pay for?
As the name suggests, ‘Old-Age, Survivors, and Disability Insurance’, the money paid into these programs which goes toward three types of beneficiaries. The majority of the money that the SSA pays out goes to retirees, who can begin to claim benefits when they turn 62 but should take into account that early retirement could knock 30 percent off monthly payments.
Disability benefits (SSDI) provide payments for those who are unable to work, or whose capacity to work is limited, due to a disability. Beneficiaries can be the worker who has contributed a sufficient amount to the program or family members of a contributor.
Survivor benefits may be paid to certain eligible family members of a contributor who is deceased. The amount depends on the age of the family member and whether or not they have a disability.
As of January 23, the Internal Revenue Service (IRS) began to receive and process tax returns for the 2022 fiscal year with a 168 million of taxpayers expected to file a income declaration.
Nearly three months into the tax season, the agency is preparing to close the window for timely submission of tax documents, with the deadline to file your income tax return coming Tuesday 18 April.
With the 2023 tax season drawing to a close, here are two mistakes to avoidwhen requesting your IRS refund.
Welcome to AS USA’s live blog on the latest financial news
There’s only a week to go before the 18 April deadline to file your tax returns. We give you some reminders and tips to help the process go smoothly.
Plus, the latest figures on the economy and other financial news.