Relief checks news summary | 6 January 2022
Headlines: Friday, 6 January 2023
- More than 223,000 new jobs added in December, employment report show
- US housing market likely to slow in 2023, experts warn
- California inflation relief payments will conclude this month
- Social Security recipients receive COLA boost of 8.7% to start the year
- Medicaid expansion reversed as part of $1.7 trillion spending bill
- Supreme Court to hear challenges to Student Loan Forgiveness in February
- What next for interest rates as inflation starts to ease?
- Minimum wage to rise in several US states in 2023
Related news stories:
Jobless claims down, reflecting a still-robust job market
The Labor Department reports that applications for unemployment aid for the week ending Dec. 31 fell by 19,000 to 204,000.
The labor market is closely monitored by Fed policymakers, who raised interest rates seven times last year in a bid to slow job growth and bring down stubbornly high inflation.
So far, there have been little indication that it has weakened the job market enough to for the Fed to alter its course in 2023.
What is happening with student debt in 2023?
Student loan borrowers will not be forced to resume repayments in January, thanks to another extension to the moratorium first introduced at the start of the pandemic.
The November extension will ensure that repayments will not continue until the Supreme Court has issued a legality on the program. Once the ruling has been given, payments will resume after 60 days. If a resolution is not found by 30 June 2023, the payments will resume after 60 days anyway.
Recipients of Social Security checks won’t have to wait any time at all for their checks as the new year begins. There have been no changes to the payment calendar for 2023.
Social Security paydates for 2023
Birth date 1st – 10th - Second Wednesday of the month
Birth date 11th – 20th - Third Wednesday of the month
Birth date 21st – 31th - Fourth Wednesday of the month
What have experts said about interest rates this year?
The inflation data received so far in October and November show a welcome reduction in the pace of price increases, but it will take substantially more evidence to give confidence inflation is on a sustained downward path.
It has been easy, and necessary, for the Fed to raise interest rates aggressively in 2022 with interest rates starting from zero, unemployment below 4 percent, and inflation at a 40-year high. It gets a lot tougher to raise rates once the economy slows, unemployment rises and inflation remains stubbornly high.
As inflation is nowhere near the 2% target set by the Fed it is unlikely that there will be a reduction in the interest rate and a near certainty that it will increase further.
A forecast from the central bank showed that the interest rate could still be at 5% in a year’s time, meaning more increases are likely before they begin to taper off. Currently, inflation stands at 7.1%.
The next increase could happen as soon as 1 February as this is the next meeting due for the Fed. Anticipate a 0.5 percentage point increase, the same as in December.
Today's December jobs report made positive reading for the White House, showing that another 223,000 new jobs were added last month. But while the jobs market was certainly a concern, the biggest economic struggle of 2022 was the high rate of inflation recorded for much of the year.
The Federal Reserve has focused its attention on bringing down the rate of price rises, predominately using interest rate hikes to cool the economy.
We take a look at what today's report could mean for interest rates going forward...
Federal Reserve likely to continue with interest rate hikes
As was the case for much of 2022, the Federal Reserve will continue to tackle high inflation with a series of interest rate hikes. The central bank can control interest rates in the United States, essentially altering the cost of borrowing agreements, such as loans and mortgages. The rate of price rises has begun to fall but Fed Chair Jerome Powell wants to see greater progress before halting the currrent policy.
What does the December jobs report mean?
After a year of economic turbulence, the United States’ job market managed to close out 2022 on a positive note with strong figures. On Friday the Department of Labor reported that 223,000 new jobs were added in December, exceeding experts’ predictions of 200,000.
This was positive reading for the White House, as was the news that the unemployment rate had fallen to 3.5%. This represents a long-awaited return to pre-pandemic levels.
Hiring undoubtedly cooled during 2022 from a high of 539,000 new jobs per month in the first quarter of the year. But this is to be expected as the US moves further away from the huge spike in unemployment at the start of the pandemic.
Hiring slows but remains strong
In December the United States exceeded projections of 200,000 new jobs, adding roughly 223,000 new payroll jobs across the month. This continued the trend of gradual decline in the number added each month, as is to be expected as more time has elapsed since the pandemic caused a huge spike in unemployment.
Jobs report shows 223,000 jobs added last month
The United States economy continued to add jobs in December with another 223,000 payroll jobs added last month. There had been concern that, with the Federal Reserve upping interest rates to cool inflation, employment figures may have been negatively impacted.
But, in another piece of good news for President Biden, the unemployment rate fell to 3.5%, bringing it back to the pre-pandemic low.
Each year the IRS adjusts the tax brackets for filers to ensure that they reflect the rate of inflation in the United States. The various tax bands are designed to make sure that richer people are taxed more stringently that poorer people, but the distinctions between these groups gradually shifts as prices creep up.
After rampant high inflation during 2022 the IRS imposed significant alterations to the income tax brackets for 2023. We take a look at the new thresholds...
What to do if you threw away your inflation relief debit card
The state of California has nearly concluded the huge state-wide initiative distributing inflation relief payments to an estimated 23 million residents. The California Middle Class Tax Refund is worth up to $1,050 to eligible residents.
While most people received their payment as a direct deposit into their bank account, some received it in the form of a debit card. But some recipients of the card mistakenly threw it away; here's what to do if you need to request a replacement inflation relief debit card...
The California Franchise Tax Board (CFTB) has sent payments for the Middle Class Tax Refund to over 17 million Californians. The inflation relief support, which range from $200 to $1,050, has been sent as either direct deposit or debit card.
While most of those receiving the support should have seen the money deposited in their bank account by 14 November, the mailing of debit cards follows a separate schedule. Debit cards are sent to those for whom the CFTB does not have a bank account on file.
The last groups who are yet to recieve their California inflation relief payment should get them this month.
Eurozone inflation rate dips in December
Breaking news this morning, the Consumer Price Index in the Eurozone dipped to 9.2% in December 2022, exceeding expectations. The group of European nations has imposed the same interest-rising response against inflation that has been used in the United States and price rises appear to have slowed as a result. We'll have to wait and see how this impacts European economic policy going forward.
Experts give their interest rate predictions
"The inflation data received so far in October and November show a welcome reduction in the pace of price increases, but it will take substantially more evidence to give confidence inflation is on a sustained downward path."
"It has been easy, and necessary, for the Fed to raise interest rates aggressively in 2022 with interest rates starting from zero, unemployment below 4 percent, and inflation at a 40-year high. It gets a lot tougher to raise rates once the economy slows, unemployment rises and inflation remains stubbornly high."
Last summer communications giant T-Mobile agreed to a $350 million settlement package to resolve a number of class-action suits related to a massive data breach within the company.
More than 76 million Americans were affected by the breach which saw hackers steal the personal information of huge numbers of current, former and prospective clients. The settlement represents the second-largest data break pay-out in US history and millions of victims are expected to be eligible for compensation. Payments range from $25 to $25,000.
When is the inflation report released?
Each month the Bureau of Labor Statistics (BLS) releases a Consumer Price Index report for the previous month, outlining how typical prices have changed. The figures offer a crucial insight into the rate of inflation and are compared to the same month in the previous year, to give an annualised rate.
The next CPI report will come out next week, on Wednesday, 12 January at 8:30am Eastern Time.
The Social Security Administration (SSA) oversees the financial support programmes available to millions of Americans. Some receive disability support but the majority receive the retirement benefits, 77.1 percent of all claimants a retirees.
The recent cost of living adjustment (COLA) increase of 8.7 percent will bump up payments again after a big increase in 2022. Here's what that will mean for retirees in 2023...
When will interest rates start to fall?
The Federal Reserve implemented a number of interest rate increases during 2022 in a bid to keep inflation under control. These rate hikes, however, are a fairly blunt tool and have left borrowers dealing with sky-high interest rates on their loans, mortagges, and other financial products.
But, for now at least, the Federal Reserve does not appear likely to reverse the increases and may in fact enforce further rises in the coming months.
“While I believe it is too soon to definitively declare that inflation has peaked, we are seeing increasing evidence that it may have,” Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, wrote in a statement. “In my view, however, it will be appropriate to continue to raise rates at least at the next few meetings until we are confident inflation has peaked.”
Experts give their take on inflation in 2023
The Federal Reserve is trying desperately to bring down the rate of inflation after a year of historic price rises in 2022. After a series of interest rate hikes the November CPI report showed that inflation was beginning to fall in the United States, giving reason for optimism in the New Year.
All the financial news from the United States...
As the House remains deadlocked after three days of failed Speaker votes, President Biden has been out celebrating the passage of the huge infrastructure bill. We'll also be keeping you up to date with news on Social Security payments, inflation relief and the housing market.