Relief checks, COLA 2023, mortgages... Finance summary 28 December 2022
Finance news: latest updates
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.
Headlines: Wednesday, 28 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:
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...
What a year it has been for Elon Musk. From picking a fight with Russian President Vladimir Putin and providing communication networks for Ukraine, to rocket launches with Space-X and then purchasing social media platform Twitter when it had appeared that he really didn’t want to.
Then there’s the situation at his world famous car company Tesla, and the year has not ended well for them. Here's how Tesla stock is finishing 2022...
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."
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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...
Will inflation continue into 2023?
Inflation has been one of the most decisive factors of 2022 in the United States, slashing the real wages of working Americans and making household essentials unaffordable for many. In recent months the rapid rises have begun to slow and the price of vital goods like gasoline have fallen significantly.
But, as Betsey Stevenson points out here, inflation is still painfully high and there is much more work to be done to bring growth down to a sustainable level.
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 U.S. 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."
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?
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.
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 was announced by the Biden administration on 22 November.
This final extension is a result of the legal challenges to President Biden’s Student Loan Forgiveness program, which will wipe up to $20,000 of debt from the balances of borrowers.
We take a look at the new start date for student loan repayments and what borrowers can expect for 2023...
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.
Gas prices could fluctuate over the coming year
The price of gasoline has undergone a huge swing during 2022, reaching a record average high of $5 per gallon in June before dipping to little over $3 this month. Fuel analysts at GasBuddy expect that the general downward trend will continue into the new year but seasonal pressures could push the price higher in the summer. This could mean a return for above-$4 gas prices by May.
Southwest Airlines to be held ‘accountable’, says Buttigieg
More on the situation we reported earlier as U.S. Transportation Secretary Pete Buttigieg weighed in on Southwest Airlines’ holiday-weekend implosion, promising customers that his department will hold the airline accountable.
“Their system really has completely melted down,” Buttigieg said in a CNN interview Tuesday evening. Buttigieg said he had spoken earlier in the day with Southwest Chief Executive Bob Jordan, and “I made clear that our department will be holding them accountable for their responsibilities to customers, both to get them through this situation and to make sure that this can’t happen again.”
“I conveyed to the CEO our expectation that they going to go above and beyond to take care of passengers and to address this,” Buttigieg said.
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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 and will continue next year.
Check out how this could affect you.
$1.7 trillion impact on 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.
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One of the main food aid programs provided by the United States government is the Supplemental Nutrition Assistance Program (SNAP), which provides benefits to low-income families to buy food using an electronic benefits transfer (EBT) card.
Despite being a federal program, SNAP is administered by the states, so in order to claim benefits, it is necessary to apply with the state agency responsible for administering the program. Here we share the directory of state agencies where you can request payments.
Corina González reports.
Tesla stock weighs down S&P 500 and Nasdaq
In case you missed it, 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.
As you're more than aware, 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.
Eight successive hikes have brought the current benchmark overnight interest rate to the 4.25-4.50 percent range. The latest increase of half a percentage was a step down from the four consecutive three-quarters of a percentage.
Make sure you know how this affects you.
Southwest Airlines compensation
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.”
The most well known change to the 401k retirement plan at this stage is the increase of the contribution limits.
The IRS will increase the contribution limit by $2,000 to $22,500 for 2023. Workers who are saving for retirement with 401(k), 403(b), most 457 plans, and the Thrift Savings Plan can contribute up to $22,500 to those plans in 2023.
Oliver Povey brings you what you need to know.
Finance news and live updates: welcome
Hello and a very warm welcome to AS USA's daily live blog for Wednesday 28 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 dust on Christmas celebrations settles, and a new year looms.