Relief checks, COLA 2023, mortgages... Finance news summary 27 December 2022

$1.7 trillion spending bill will allow states to kick millions off of Medicaid

The covid-19 pandemic caused tremendous upheaval in the lives of Americans. To provide some stability the administration barred states from kicking enrollees in Medicaid out of the program. However, as soon as April, that will change for 1 in 5 people currently enrolled.

While many will be able to find other health insurance roughly 5 million could become uninsured if they are removed unknowingly from the program even though they qualify. Healthcare advocates are advising those with Medicare coverage to make sure that their contact information is up to date so that they will receive the mandatory notice states must send before ending an enrollee's coverage.

FINANCIAL ASSISTANCE

SNAP benefits: what is the maximum amount recipients will receive in 2023?

SNAP benefits, to help Americans purchase food, will be higher next year. We share with you the maximum amount that the beneficiaries will receive in 2023.

INFLATION RELIEF

Inflation relief checks in 2023: which states will pay them and amounts

For months, inflation registered its highest levels in the last 40 years, so several states approved the sending of stimulus checks or tax refunds to their residents.

Although the year-on-year inflation rate fell from 7.7% to 7.1% in November, according to the Labor Department's Consumer Price Index report, several entities continue to send money in December andwill continue next year.

Dow Jones holds onto gains while S&P500 and Nasdaq drop

The Dow Jones Industrial Average clung onto merger 37.63 point gain (+0.1%) the day after the Christmas holiday. The picture wasn’t so good for the benchmark S&P 500 index nor the tech-heavy Nasdaq index. Each shed 15.57 (-0.40%) and 144.64 (-1.38%) respectively pulled down by a sharp drop in the share value of Tesla stock.

Tesla stock weighs down S&P 500 and Nasdaq

Tesla shares had their worst day in eight months and fell to lowest point in two years. The drop of 11.4% came after a Reuters report that the electric car manufacturer was planning a reduced production schedule at its Shanghai plant in January.

The news sparked fears that demand was softening in the world's biggest car market. The drop in value of Tesla’s stock dragged the S&P 500 and Nasdaq down with it.

Will Southwest Airlines compensate customers for canceled flights?

Southwest Airlines is having an operational meltdown after winter storms buried two of the primary hubs that the carrier uses. Thousands of flights have been canceled stranding travelers awaiting to be rebooked on another flight which could take days.

Senators Richard Blumenthal and Richard Blumenthal find the situation unacceptable and are calling on Southwest Airlines to compensate affected travelers beyond refunds and reimbursement for costs incurred "but significant monetary compensation for disruption to holiday plans."

Contrary to popular belief, for domestic itineraries in the US, airlines are not required to compensate passengers whose flights are delayed or canceled.

Southwest for its part states on its website that:

"If you have been impacted by a flight cancellation or significant flight delay between December 24, 2022, and January 2, 2023, you may submit receipts for consideration via Email Us on Southwest.com. We will honor reasonable requests for reimbursement for meals, hotel, and alternate transportation.”

Average price of gas set to be cheaper in 2023 but could expected to rise by May

Motorists have been watching the price per gallon drop almost non-stop since peaking over $5 per gallon on average nationally in June. The yearly average came in at just shy of $4 per gallon for 2022 and is expected to be 50 cents lower in 2023.

According to Gas Buddy the downward trend is forecast to bottom out in the days to come with the current average price per gallon in the US is $3.05. However, as driver take the road once again with warmer weather coupled with the switch over to more costly summer blends drivers could see $4-plus prices by May.

SOCIAL SECURITY

Social Security: When will the COLA increases start and when will I receive them?

In October of this year, the Social Security Administration (SSA) shared how much monthly payments will increase, thanks to the Cost-of-Living Adjustment (COLA) for retired workers, Supplemental Security Income (SSI) recipients, and those receiving disability and survivor benefits.

The COLA is calculated annually based on the Consumer Price Index for Salaried Workers in Urban Areas and Clerical Workers (CPI-W), covering from the third quarter of the last year prior to the third quarter of the current year.

For 2023 the COLA figure is 8.7%, meaning a significant increase for recipients of a Social Security program. Here's when you will start to receive that boost...

Gasoline continues to fall in the US

A combination of factors, from post-pandemic reopenings to the Russian invasion of Ukraine, contributed to the high price of gasoline during 2022. In June the average price of a gallon of gas hit $5 for the very first time and motorists felt it at the pumps. 

But those conditions have now eased and the average price has fallen to its lowest level in 18 months. But is this a temporary dip, or is it a sign of what's to come in 2023?

White House fights for Student Loan Forgiveness

“Callous efforts to block student debt relief in the courts have caused tremendous financial uncertainty for millions of borrowers who cannot set their family budgets or even plan for the holidays without a clear picture of their student debt obligations, and it’s just plain wrong."

“I want borrowers to know that the Biden-Harris Administration has their backs and we’re as committed as ever to fighting to deliver essential student debt relief to tens of millions of Americans. We’re extending the payment pause because it would be deeply unfair to ask borrowers to pay a debt that they wouldn’t have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests.” 

PERSONAL FINANCES

How does the rise in interest rates affect your day to day?

The United States has been experiencing a bout of inflation not seen in four decades as the economy came roaring back from the depths of the pandemic-induced recession. In order to bring rising prices to heel, the Federal Reserve began raising interest rates in March.

In time, this should help to cool the rampant inflation and ease the rate of price rises. But, in the meantime, how will the interest rate hike affect your finances?

Expert issues predictions for inflation in 2023

Inflation has been one of the defining economic factors of 2022, pushing up prices across the board and devaluing the wages of working Americans. For the first nine months of the year prices were soaring, especially the cost of gasoline, but recent months those pressures have eased. 

But the United States is not out of the woods yet and remains in a very precarious economic position. Forbes Senior Contributor Bill Baldwin gives his take on the inflation outlook for 2023...

US NEWS

Do you need to start paying off your student loans again in January 2023?

In March 2020 then-President Trump enacted a temporary pause on student loan repayments and that measure has been extended numerous times since then.

The most recent extension legal challenges to President Biden’s Student Loan Forgiveness program came as a result of two legal challenges, that have left the White House unable to enact the support. But Biden is eager to distribute the relief as quickly as possible and the Supreme Court has set a hearing date for the new year...

INFLATION RELIEF

California inflation relief payments schedule: When will the remaining recipients get their checks?

Are you still waiting for your California inflation relief payment? More than 18 million California residents have now received their one-off payment of up to $1,050 but there are still some groups who have yet to benefits from the support. 

The state-wide program is so vast that authorities are making the payments in a series of waves, that are set to continue into 2023. Here's the payment schedule for the California Middle Class Tex Refund...

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...

MINIMUM WAGES

Which US states will raise the minimum wage in 2023?

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. 

Residents in these states can expect to enjoy a minimum wage increase in the coming 12 months...

Will inflation remain high in 2023?

The Cleveland Federal Reserve published a new working paper which calculates a new measure of rent inflation.In the data it found that one of the key drivers of soaring prices may be less of an issue going forward.

Housing inflation appears to have rolled over, dropping to a 6.03% rise year-over-year in the third quarter from the 11.88% seen the prior quarter. Shelter costs makeup nearly one third of the government's monthly Consumer Price Index.

The closely watched report influences Fed policymakers' stanch on raising interest rates, which they have been doing aggressively to bring down decades-high inflation.

What is in the new $1.7tn spending bill?

Last Friday, just two days before Christmas, Congress passed a $1.7 trillion omnibus spending package to prevent a partial government shutdown over the holidays. Each year Congress must vote to authorise the financing of the federal government, used to undertake essential tasks. This year's funding comprises everything from military spending to disaster relief funds in the United States. 

US NEWS

Who is not required to declare taxes in 2023?

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.

Here's everything you need to know...

Will there be a 'Santa Rally' this year?

Bruised investors are hoping a so-called Santa Claus rally can soften the pain of a tough year in U.S. stocks and potentially brighten the outlook for 2023.

Without a doubt, the market could use some holiday cheer. In December – typically a strong month for equities - the S&P 500 has so far lost around 6%, weighed down by hefty declines in shares of Tesla Inc, Amazon.com Inc and other names that had led markets higher in previous years. The index is down nearly 20% year-to-date and on track for its worst annual performance since 2008.

History shows the market still has a better-than-average chance to pare those losses. U.S. stocks have risen during the last five trading days of December and the first two days of January about 75% of the time, CFRA Research data showed, a pattern attributed to low liquidity, tax-loss harvesting and investing of year-end bonuses.

Pre-Christmas retail surged in 2022

A SpendingPulse report released by Mastercard found that retail sales leading up to Christmas exceed its September forecast. US retail sales between 1 November and 24 December, when the majority of shoppers make their holiday season purchases, were up 7.6%. The stronger than expected performance was the result of consumers taking advantage of marked down prices by retailers attempting to reduce inventory.

However, that was lower than last year when sales growth registered an 8.5% increase. Decades-high inflation, rising interest rates and worries about a potential recession made Americans cautious with their spending.