Relief checks news summary | 27 January 2023
Inflation Relief: Latest Updates
Headlines | Friday, 27 January 2023
- Concerns growth that interest rate increases to tamper inflation will lead to increases in unemployment.
- Texas is one of many states seeing egg prices rise rapidly, what factors are contributing to the increase?
- Social Security Adminstration begins sending out larger benefit checks
- The Department of Education received the highest number of applications for student debt relief from California and Texas.
- New York offers residents a debt relief program for those who completed their undergraduate degree at an institution in the state.
- Congressional Budget Office shortens its timeline for exhaustion of Social Security funds
- IRS informs the public that their tax refunds may be lower than those received over the past two years.
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White House Press Secretary provides update on debt ceiling negotiations
Look, we’ve been very clear that the debt limit should be dealt with without conditions. We’ve been very, very clear on that, and we continue to make that clear. And — and we believe that Congress should act in a bipartisan way — as they did three times in the last administration, as they did 78 times since 1960, 49 times with a Republican president, and 29 times with a Democratic president.
This is incredibly important. We have seen reports that if a default happens, 6 million jobs could be lost. Right? We’re talking about an economy that we saw the GDP, just the other day, at 2.9 percent growth, which is better than was antici- — expected.
So we’re seeing a growing economy. We’re seeing record unemployment, 50-year low. We’re seeing almost 11 [million] jobs created under this President.
The Bureau of Economic Analysis has released its personal income report from December, which showed an increase of $49.5 billion or 0.2 percent. When adjusting for inflation, the same increase was reported, meaning that collectively Americans received a 0.2 percent bump in total income.
Additionally, personal savings as a percent of disposable income also continued to rise after reaching the lowest level recorded since 2008. In December, the savings rate clocked in at 3.4 percent, up from 2.9 percent in November.
The US Federal Reserve, the country’s central bank, has a dual mandate.
The bank is responsible for establishing a monetary policy that keeps inflation under two percent and supports full employment.
These two priorities often come into conflict during periods of economic uncertainty and crisis because the main tool deployed by the Fed is the raising and lowering of the Federal Funds Effective Rate. As the lender of last resort, the central bank specifies a base rate – the Federal Funds Effective Rate –that reflects economic conditions, which other lenders often tack additional interest onto before dispersing loans to individuals and businesses.
For more on how interest rates work to decrease inflation, read our full coverage.
Egg prices have been going up for Americans all year. Prices of Midwest large eggs, the standard for eggs sold in their shells, reached $5.46 per dozen on 23 December 2022, up $3.76 on the same time in 2021.
This acute price rise has been felt even more keenly in Texas.
If you are convicted of a crime in the US and incarcerated, depending on the length of your sentence your Social Security benefits may be affected.
As part of the Inflation Reduction Act, the IRS is offering a $7,500 credit when you file, but who is it for and how do you apply? Find out how to apply for the tax credit...
Student debt forgiveness numbers has been released in a freedom of information request about the number of students that applied for the Biden administration’s debt forgiveness plan. Politico made the request and have released the data publicly.
In total the Education Department received 25,031,094 applications. This does not include those who were automatically enrolled but this data has not been released. The White House anticipated that as many as 40 million people could be eligible to sign up for the programme.
Of these 25 million applicants, 16,485,454 had their requests confirmed meaning around 66% of applications were accepted.
The Supreme Court will hear oral arguments on the legality of the Biden-Harris student loan forgiveness program in late February. The Department of Education launched an online portal in October where student loan borrowers could submit a form to have up to $20,000 in federal loan debt erased. However, the measure was quickly challenged and forced to be put on hold after some 25 million had already applied.
While the fate of that program most likely won’t be known until the summer, there is another program to receive up to 24 months of loan forgiveness in New York State. The “Get On Your Feet Loan Forgiveness Program” was launched in 2015 which “under certain conditions, you may have all or part of your education loans forgiven or cancelled in exchange for performing a qualifying service for a defined period of time.”
Universal basic income (UBI), sometimes known as guaranteed income, would provide a regular payment to citizens whether they were in work or not. Amounts vary but it would work as a direct debit to people’s accounts. The idea behind it is that it would decrease poverty and prevent homelessness by giving everyone money to subsist. Outside of raw economics it would give people the chance to work less and live more fulfilling lives in being able to choose jobs they want to do rather than what they have to do to survive.
Here's a look at cities that have implemented such programs.
Last spring, the Social Security Trustees reported that the Trust Funds that pay part of the benefits to retirees and survivors of contributors would be exhausted by 2034. However, a recent report from the Congressional Budget Office (CBO) shortened that timeline by a year.
What could the debt default damage be?
Mark Zandi, chief economist for Moody’s Analytics, estimated that the US would lose 6 million jobs, $12 trillion in household wealth and 4% of gross domestic product. The unemployment rate would double to 7%, putting an extra 2.8 million people out of a job.
“The US economy could suffer an economic hit comparable to the 2007-08 financial crisis and recession if the federal government defaulted on its debt,” The Hill’s Sylvan Lane wrote in analysing Moody’s report.
The upcoming debt ceiling debate, and its consequences, are being fiercely debated. While it is more than likely that an accomodation will be found, the US has never defaulted on its debt obligations, the longer negotiations take the more damage is done to the economy.
Economic analysts are already looking at the permutations leading up to default day in mid June.
Prices have been rising all year on all sorts of items. We have you covered in the tools department with a list of those tools you need in your life.
The state began distributing the Middle-Class Tax Refund in late October and to date 7.1 million have been sent out via through direct deposit, with an additional 9.4 million on pre-paid debit cards.
The California Franchise Tax Board (CFTB) estimates that in total more than 31 million residents have benefited from the tax credit and that the program cost the state just over $9 billion. If you are yet to receive yours, there is one more batch of payments to be sent.
Here's when that money could arrive...
Mortgage rates drop to lowest rate in four months
Freddie Mac reported on Thursday that the weekly average of the most popular home loan, the 30-year fixed-rate mortgage dropped again to 6.13%, as of 26 January. That’s its lowest level in four months after peaking in late October and once again in early November at 7.08%.
Demand in the housing market had been decreasing, but “ample demand remains, fueled by first-time homebuyers.” The improving conditions for homebuyers, prices and borrowing costs dropping, has created a thaw in demand “from the months-long freeze that gripped the housing market.” However, “potential homebuyers remain sensitive to changes in mortgage rates.”
US Markets buoyed by strong GDP report
ll three major US indexes were up at the end of trading on Thursday after a volatile early morning. Investors were processing a barrage of economic data, including strong GDP growth countered by data showing the labor market is still tight, and mixed corporate earnings. All of which could indicate what the Federal Reserve will do next week when it meets.
The general consensus is that central bank policymakers will raise interest rates by a quarter percentage point which ha been priced into shares. However, not everyone is convinced.
"The economic data had something in it for everybody; for the dreamers who think the economy is just slow enough to put the Fed on hold and the pessimists who think growth is still too hot for the Fed to step away,” David Carter, managing director at JPMorgan Private Bank in New York told Reuters. "Hope is not an investment strategy, and the economic facts could soon weigh on the market. The biggest uncertainty is what will happen in the back half of this year," he added.
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Social Security Administration has begun sending increased monthly Social Security payments of more than $1,800. Here are the shipping dates in 2023.
US saw real increase in GDP in Q4-2022
Even as the US experienced high levels of inflation last year, real GDP rose 2.9 percent in Q4-2022 (July, August, September). Understanding the time this data point comes from is important because it is just a few months after the Fed's rate increases went into effect.
In the following month, major tech companies began to announce layoffs, and markets began to slow. Additionally, the Federal Reserve still expects unemployment to increase this year, and the historical record shows that rate increases often create recessions 12-18 months after the hike begins.
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With tax season 2023 now well underway, we'll be keeping you in the loop about tax credits, applicable deductions and other tips and tricks for income tax filing.