Relief checks: 7 February summary news
Headlines: 7 February 2023
- BP reports $28bn profit, double 2021 number
- Michigan Gov. Whitmer mulls $180 tax rebate for residents
- Treasury Secretary Janet Yellen sees path to lower inflation without entering recession
- Tech layoffs continue, Dell announces 5,000 job cuts
- Wall Street starts week with losses on Monday on fears of more Fed rate hikes after strong jobs report Friday
- President Biden touts record low unemployment after two years in office.
- Federal Reserve pushes up federal funds rate by twenty-five basis points to 4.5 to 4.75 percent
- 1.6 million workers in the US are currently receiving unemployment benefits.
- Federal stimulus checks ended long ago, but this month some states will send their own payments
- Inflation cut into the purchasing power of remittances sent to foreign countries from the US in 2022
- The price of many food staples continues to rise, most notably eggs due to worst bird flu in US history.
The US economy and the State of the Union
Inflation continues to be one of President Biden’s most pressing economic problems, and while price growth is slowing, it is still increasing.
Compared to March 2020, prices are on average fifteen percent higher across goods and services included in the Consumer Price Index.
Since January 2020, on average, families are spending 23.3 percent more at the grocery store, renters are paying 13.6 more for housing, and the price of health insurance has risen almost nine percent. Meanwhile, average wages have fallen by three percent, in real terms, over the same period.
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What is President Biden likely to say about the economy during the State of the Union?
It is the eve on the State of the Union address.
President Biden’s speech risks isolating voters if, instead of focusing on the economic hardship being felt across the country, he only promotes his own achievements. The White House understands this, and on Monday, POTUS tweeted, “All told, between higher prices and lower wages, lack of competition between businesses costs the median American household $5,000 a year.”
Striking the right tone will be critical for President Biden since this year’s State of the Union will likely be his last major address before announcing his decision on whether to seek another term. A formal announcement has yet to be made, but the president has alluded to running again. As much as the speech is focused on where the state stands, the address is an opportunity to explain what another term could look like —an opportunity team Biden is sure to take advantage of.
We must commit to finding common ground on a responsible debt limit increase. Finding compromise is exactly how governing in America is supposed to work, and exactly what the American people voted for just three months ago. Defaulting on our debt is not an option, but neither is a future of higher taxes, higher interest rates and an economy that doesn’t work.
House Speaker Kevin McCarthy has reiterated his calls for spending cuts from the Biden administration for the debt ceiling negotiations that look set to dominate political discussions on Capitol Hill for the next few months.
Republican control of the lower house gives the party the power to flex its muscles again after two years out in the cold. In that time much of the platform President Biden ran on in 2020 has collapsed in the House or Senate due to Democrat infighting. The prospect of any legislation, especially progressive, being passed before the next presidential elections in 2024 is very slight.
Fed not happy with bumper job increase
"We didn't expect it to be this strong," Fed chief Jerome Powell said about the January jobs report, but it "shows why we think this will be a process that takes quite a bit of time."
Powell declined several times to say that the addition of 517,000 new jobs would necessarily force the Fed's benchmark interest rate higher than the 5% to 5.25% range currently anticipated.
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Month after month, the Social Security Administration (SSA) sends monthly benefits to retired workers. The administration recommends that workers claim their payments at their full retirement age. People born after 1960 must wait until they are 67 to reach full retirement age and receive maximum benefits.
However, workers can retire and start receiving benefits at age 62, or delay their claim until age 70 to receive more money each month.
ELIZABETH FRANTZ / REUTERS
Fed Chair Powell expected to be grilled on blowout US jobs report Tuesday
Jerome Powell is due to speak to the Economic Club of Washington on Tuesday. Investors will be listening intently to what the Federal Reserve Chair says in his first public appearance since announcing the latest interest rate hike on Thursday.
Policymakers slowed the pace of increases implementing a quarter-percentage-point rise, the smallest since March last year. The move came as four-decade-high inflation numbers have been decreasing but still remain well above the Fed’s 2% target, registering 5% in the latest data.
However, the following day the Labor department released a gangbuster US job growth report showing that the US economy added 517,000 jobs in January. While the Federal Reserve doesn’t typically put weight on single data points, investors will be looking to see if Powell takes a more hawkish tone on Tuesday than he did last week. When he speaks he will most likely have to field more than a few questions on the matter.
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...
BP reports record $28bn profit in 2022, calls grow for windfall tax
British Petroleum reported a record profit of $28 billion for 2022 on Tuesday, more than doubling last year’s tally. This follows over-the-top earnings reports last week at other oil majors Chevron, Exxon Mobil and Shell.
The record profits have been boosted by the price of energy rising after Russia invaded Ukraine. The bumper earnings have prompted renewed calls for a further windfall taxes on what it seen as profiteering on the war to help households struggling to pay for the increased cost of energy.
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Last year, inflation in the United States reached historic levels.
Given the rising prices, particularly of staple goods, a number of government institutions approved sending stimulus checks or tax refunds as inflation relief for hard working Americans. Although inflation has fallen in recent months, support continues to be sent.
Here are the states sending checks or refunds in February and what the amounts are.
After a near-record number of workers quit their jobs last year in search of higher wages and better conditions, many may have to report their income to the IRS using more than one W-2.
Legally, employers are required to send out W-2s to all current and former workers and they are nearly out of time to send the forms for the 2023 tax season. If you have not received yours, here is what you can do.
Having a retirement plan is essential. Millions of workers in the US have a 401(k) plan. However, when changing jobs and being fired, a worker must know what happens or what to do with it. We share the options and some tips.
Inflation has driven the cost up on everyday goods, which is squeezing household budgets and forcing families to forego necessities. That’s why they sent us to Lansing to lower costs and put more money back into people’s pockets. We heard Michiganders loud and clear.
Michigan’s government has a dilemma. It is expected to produce a budget surplus of nearly $9 billion by the end of the budget year of 30 September. $6 billion of that will need to be spent this year and the state government has been considering its options.
The Democrat governor, Gretchen Whitmer, announced on Monday that she intends to get a $180 check to Michigan residents. As a part of the ‘Lowering MI Cost Plan,’ the checks would need to be agreed through the upper and lower legislative houses. At present these are both controlled by Democrats which could make negotiations a formality.
The housing market is down from its peak in the summer of 2022 cooled by rising borrowing rates and many previously red-hot markets being overvalued. But will the US see a housing market crash in 2023?
While the general downturn is expected to continue, it depends on which market, with four potentially set for a major correction. Other markets though could come through with but a scratch and some even seeing slight gains.
Stimulus checks feel like a long distant memory, the thought drifting away like trying to remember last night’s dream.
While there are no federal financial support plans announced, especially with most ending definitively with the expected announcement of the ‘end’ of the pandemic coming in May, individual states and cities are. These range from tax refund to trials of universal basic income. Many of these programmes is no longer accepting applications.
However, at the state level, relief remains available.Check out our full coverage for the details.
The United States is in full tax season for the 2022 fiscal year.
When filing your taxes, you may be able to apply for any of the tax credits offered by the tax collection agency, including the Earned Income Tax Credit (EITC), which is aimed at low-income individuals and families.
You can save thousands of dollars by taking advantage of the various deductions and tax credits that are available to filers. They are sometimes referred to interchangeably, but deductions and credits are completely different.
We take a look at the two, and outline some of the differences between the two...
After the 2021 American Resuce Plan, families were able to claim a larger Child Tax Credit. While there are still some in Washington, on both sides of the aisle, who would like to see the program extended, no bills have been introduced. The impact of this inaction means that taxpayers with dependents will receive a smaller credit valued at $2,000.
Read our full coverage for details on how the value of the credit is determined.
LS provides insights into which job markets are expected to increase
Over the coming decade, the various sectors that makeup the US economy will see fluctuations in the number of jobs available in that industry. Major gains are expected in the healthcare industry, jobs that relate to computers and mathematics, and personal care services. The last group includes hairstylists, child care workers, animal groomers, fitness trainers, and many others. Sectors that are likely to see a decreases is office and administrative support, and production.
Check out more on these labor market shifts from the Bureau of Labor Statistics.
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Treasury Secretary says there is no recession
You don't have a recession when you have 500,000 jobs and the lowest unemployment rate in more than 50 years. What I see is a path in which inflation is declining significantly and the economy is remaining strong.
Treasury Secretary sees way out of inflation problems without recession
Treasury Secretary Janet Yellen on Monday said she saw a path for avoiding a recession, with inflation coming down significantly and the economy remaining strong
The Labor Department confirmed on Friday that nonfarm payroll jobs had increased by 517,000; nearly trebling the Dow Jones’ estimate of 187,000. This huge gain has pushed down the rate of unemployment to a 54-year low of 3.4%. This also beat estimates of a 3.6% rate.
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Unemployment continues to differ across racial and ethnic groups
Late last week, the Bureau of Labor Statistics reported that the US economy added over half a million jobs in January. The news shocked many economists who had assumed that no more than 200,000 workers would have been added to the payroll.
The addition of these workers has brought the unemployment rate to 3.4 percent, the lowest recorded figure in over four decades.
However, not all racial and ethnic groups have seen the same dramatic decreases in unemployment since the outbreak of the covid-19 pandemic. Further, the inequalities in unemployment before the pandemic, which led to millions of layoffs, made it harder for some groups to benefit from the tightness of the labor market during the recovery.
While all groups have lower unemployment rates today, compared to February 2020, the rates for Black, Native American, Hispanic and Latino workers remain a few points higher than the national average.
Last Wednesday, Federal Reserve Chairmen Jerome Powell said that the impact of interest rate increases has yet to affect the economy overall. Some economists worry that when they begin to be felt, unemployment could increase rapidly for racial and ethnic minorities, erasing many of the gains made over the last three two years.
"Hope is not a strategy" when it comes to possible US debt default says BoA
Janet Yellen announced that the Treasury Department had begun “extraordinary measures” as the US has reached its debt ceiling limit. These accounting maneuvers will keep the nation from defaulting on its financial obligations until early June while lawmakers work on agreeing to an increase to the borrowing cap.
GOP lawmakers in the House of Representatives want to use the negotiations to exact spending cuts from the budget. However, the game of chicken that has become terribly common in recent years could bring dire consequences should the US hit the “X Date” when the US goes off the financial cliff.
The CEO of Bank of America, Brian Moynihan, told CNN that such a possibility which might happen cannot be ignored. “We have to be prepared for that, not only in this country but in other countries around the world. You hope it doesn’t happen, but hope is not a strategy — so you prepare for it,” he said on ‘CNN This Morning’.
Welcome to AS USA!
Hello and welcome to AS USA's live feed on financial news for Tuesday, 7 February.
Fears of a recession have receded for now as the US economy continues to power forward. However, inflation still remains uncomfortably higher than policymakers would like who have signaled that interest rate hikes will continue.
Despite the Fed raising borrowing costs again last week, less hawkish tone gave encouragement to markets. But much-better-than-expected jobs report showing 517,000 jobs added in Decemeber raised specter that tougher measures may be implemented to loosen tight labor market depressed stocks values once again on Monday.
We'll keep you up to date on what is happening in the markets and what's being done to help Americans cope with inflation along with other financial news.