Relief checks, COLA 2023, mortgages... Finance news summary 29 December 2022
Headlines: Thursday, 29 December 2022
- Personal Consumption Expenditures (PCE) figure fell to 5.5% in Nov as inflation eases
- Last Friday, Congress passed a $1.7 trillion spending bill to fund government through September
- Supreme Court to hear two challenges to student loan forgiveness plan in February
- US inflation slowed to 7.1% in November
- Fed continues to raise interest rates as inflation starts to ease
- Minimum wage to rise in several US states in 2023
Related news stories:
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We're likely to find out the result of the legal challenges against President Biden's student debt cancellation plan in the spring, as the Supreme Court has announced it is to hear arguments relating to the case in February.
Six Republican states are challenging the forgiveness scheme.
Southwest Airlines will be held to account for cancelations stranding thousands
SouthWest Airlines has canceled thousands of flights as its operation collapsed in the wake of the Winter Storm Elliot. Things went into a tailspin after two of its major hubs were buried under snow snarling traffic in and out. The chain reaction has left travelers that had booked flights with the carrier stranded across the nation and lost baggage piling up.
While airlines are not required to compensate ticket holders for expenses incurred when a flight is canceled Soutwest has said that it "will honor reasonable requests for reimbursement for meals, hotel, and alternate transportation."
Transportation Secretary Pete Buttigieg is planning on holding the carrier to written commitments that it and other airlines made this summer after another bout of travel chaos developed as Americans began to travel again in mass but airlines and airports had trouble handling the surge in demand.
In a bid to curb inflation, the Federal Reserve has been steadily raising interest rates in the US for several months.
What effect does this have on Americans' day-to-day lives?AS USA's Will Gittins takes a look.
As we approach the end of the year, some will already be looking ahead to 2023 and the upcoming tax season in the United States. Most of the pandemic-era tax relief initiatives have now ended and we’re back to normality when it comes to tax filing.
However not everyone is required to file a return with the IRS and low earners will not have to pay tax. If your total earnings are less than the standard deduction amount then you will not be required to declare taxes.
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The Social Security Administration in the United States released the biggest cost-of-living increase in more than four decades. With an annual rate of 8.7 percent, this historic COLA will significantly increase the maximum Social Security payout.
As 2023 approaches, some workers are awaiting a rise thanks to efforts to increase their state's minimum wage.
Some states have passed ballot measures, while others can thank their state legislatures for the boost in pay. For many, these increases cannot come fast enough, considering how inflation has cut into purchasing power, particularly for low-income households.
For more on where increases in the minimum wage are set to take effect,check out our full coverage.
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After a year of high inflation, many in the US are dreaming about winning the lottery.
Residents of Rhode Island, Georgia and Michigan made it into the five for spending (on lottery), with an average of $429.88, $429.51, and $408.51 respectively.
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Shops may be closed on the federal holiday of 2 January, 2023. This has been moved a day later because the holiday of New Year’s Day is on a Sunday. Check your local for more information as it will vary.
However, most shops and stores will be open on all three days.
New Year’s Day is a federal holiday in the US meaning many shops and services will be closed. Banks are no exception and due to a dating quirk they will be closed an extra day as well.
At most banks, if you must do any transactions on New Year’s Eve or Day you can use an ATM or online banking service. However, be aware that the Federal Reserve will be closed until the New Year, so any money transfers done between banks online will not be processed until the following business day.
Investigation into Southwest Airlines meltdown
As winter storms hit the United States over the weekend thousands of flights were cancelled across the country. But one operator, Southwestern Airlines, has been responsible for far more cancellations than others. This has led to accusation that they were not properly prepared for winter conditions, and claims that Southwestern should be liable to cover the costs as a result.
US Transport Secretary Pete Buttigieg wrote on Twitter: "Southwest passengers have experienced unacceptable disruptions and customer service conditions. I have made clear to their executives that our department will hold Southwest accountable for making things right with their customers and employees."
Debate has raged for years on what is to be done about the minimum wage in the US. It has not changed since 2009 and sits at $7.25 an hour, an unliveable amount for Americans in an era of abnormally high inflation.
States with a $7.25 minimum wage
Alabama
Georgia
Idaho
Indiana
Iowa
Kansas
Kentucky
Louisiana
Mississippi
New Hampshire
North Carolina
North Dakota
Oklahoma
South Carolina
Tennessee
Texas
Utah
Wisconsin
Wyoming
Inflation and economy heading for trouble say voters
Recent polls show continued pessimism over America’s future, with about two-thirds of voters saying the country is headed in the wrong direction amid anxiety about the economy, despite recent signs inflation has peaked.
More than two-thirds of Americans (70%) said the country is not on the right track, according to a State Policy Network/Morning Consult poll. More than half (55%) said their state was also headed in the wrong direction.
Expert gives his prediction for inflation in 2023
Speaking on Forbes Talks, Senior Contributor Bill Baldwin outlines where the dangers could be for the United States' economy as we head into 2023. Inflation soared to 9% during parts of 2022 but dipped to around 7% last month. He suggests that housing costs could continue to complicate matters in the US economy if instability continues, causing an upwards push in the consumer price index; the measure used to calculate inflation.
In 2020 and 2021 American travellers were forced to stay in the United States due to the pandemic-era travel restrictions. The covid-19 testing requirements were only eased in June 2022, meaning that most people missed out on an international summer holiday this year too.
But that is expected to change in 2023 with a huge jet-setting surge. In the first week of December 62% of searches for 2023 flights were for international destinations, with a Hopper report claiming that international travel is set “for a big comeback.”
So what does this mean for flight prices in 2023?
Will fuel prices rises again next year?
The national average price of gas could cool early in the year as demand remains seasonally weak, followed by a rise that starts in late winter, bringing prices to the $4 per gallon range in time for summer. Barring unexpected challenges, prices in 2023 should return to normal seasonal fluctuations, rising in the spring, and dropping after Labor Day into the fall.
"Though most major US cities will see prices top around $4 per gallon, areas of California like San Francisco and Los Angeles could again experience near $7 gas prices again in the summer of 2023 if refineries struggle under mandates of unique formulations of gasoline."
GasBuddy releases 2023 Fuel Outlook
Fuel analysts GasBuddy have released their Fuel Outlook for 2023, predicting that average gas prices will be around 50 cents per gallon lower than in 2022. The price of gas has been a major concern for motorists throughout the past 12 months, reaching an all-time high of $5 per gallon in June.
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When a public health emergency (PHE) was declared in early 2020 to help tackle the covid-19 pandemic, states were prevented from removing anyone from Medicaid. The PHE ensured that no one has been removed from Medicaid in nearly two years.
But during negotiations for the recent omnibus package, it was decided that this additional coverage was no longer justifiable and the program should return to pre-pandemic conditions. This could see 20% of current Medicaid claimants being removed from the insurance plan...
Renewed calls for Social Security boost
It is no secret that the cost of Social Security is increasing year-on-year, a result of the gradually aging US population. As a higher proportion of the population retires, there are fewer working age people to contribute to Social Security programs.
This, clearly, means that a rethink is needed on how the system is funded and Rep. John Larson has been at the forefront of that effort. Here's what he has in mind for the programs in his Social Security 2100: A Sacred Trust legislation...
Finance news and live updates: welcome
A warm welcome to AS USA's daily live blog for Thursday 29 December 2022.
Here we will be bringing you the latest US financial news and information - with a particular focus on inflation relief measures in the country as the new year approaches.