US financial news | Summary news 13 September
Headlines: Wednesday 13 September 2023
- Consumer Price Index shot up 0.6 percent in August:how will the Federal Reserve respond?
- Another government shutdown looms large over Washington
- Be aware of possible scams as the student loan moratoriumcomes to an end
- Home-sale prices rise 4.5% as supply as mortgage applications slump
- Social Security payment increase due to COLA projected to be 3%
- Minimum wage in California and Illinois to go up in 2024
- New requirements to receive SNAP benefits in 2024 to take effect soon
Stocks finish mixed after data showed increase in August consumer prices
Wall Street closed mixed on Wednesday, and US Treasuries oscillated within a tight range after data showed underlying inflation remained on its slow, downward trajectory, cementing the likelihood that the Federal Reserve will let interest rates stand for now.
The S&P 500 gained modestly and interest-rate sensitive mega caps, led by Amazon and Microsoft, gave the tech-heavy Nasdaq the edge.
The IRS has launched a plan to use improved technology and artificial intelligence to collect unpaid taxes from people with higher incomes, partnerships, and corporations.
The plans of the IRS to focus on high-level enforcement, including expanded use of AI, could result in catching higher-end tax issues within a few years.
Many Social Security beneficiaries have been waiting for the announcement regarding the cost-of-living adjustment that will be determined this year, as this will have an effect on how much the corresponding increase will be for Social Security payments.
The COLA calculation takes into account the CPI-W data from the third quarter of the previous year and compares it with that of the third quarter of the current year.
Consumer prices increased by the most in 14 months in August
Consumer prices increased by the most in 14 months in August as the cost of gasoline surged, but the annual rise in underlying inflation was the smallest in nearly two years, likely giving the Federal Reserve cover to leave interest rates unchanged next Wednesday.
The mixed report from the Labor Department on Wednesday was published a week before the Fed's policy meeting and followed data this month showing an easing in labor market conditions in August.
Economists, however, believe officials at the central bank will continue to signal an additional rate hike this year given the stickiness in services inflation.
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Choosing a college major can be a great investment when you think about what your future earnings could be after graduating. The area of study can make a big difference in the average salary when you finish your university studies.
Here are the 10 college degrees with the highest average salaries in the United States.
Illinois is one of the highest-paying states for construction workers in the United States. Both the average hourly salary, as well as the average annual salary, exceed the numbers at the national level.
Find out how much these workers earnper hour and per year.
Gas and diesel prices rose last week
Gas prices were a significant driver of inflation in August. Today, the BLS reported that the Consumer Price Index rose 0.6 percent last month, with gas prices surging over ten percent.
This month, these trends have continued, with the St. Louis Fed reporting that gas and diesel prices rose in the week ending on 11 September. However, the price for both commodities still remains below what was seen in early 2022 as the economic fallout from the covid-19 pandemic and the Russian invasion of Ukraine led to a global energy crisis.
Real wages fell half a percent in August
August saw one of the most significant decreases in real wages this year, falling 0.5 percent. Compared to August 2022, real wages are up by 0.5 percent, but since January, no increases have been seen.
Real wages account for how changes in the Consumer Price Index impact a worker's purchasing power. The CPI tracked a 0.6 percent increase in average prices last month, meaning that while workers may have seen nominal increases in their paychecks, they were not enough to overcome the impact of inflation. This is especially true when we consider the sectors that drove inflation in August: gasoline, shelter, and food. These are essentials for many households making upward changes in their prices more noticeable.
Many people rely on Social Security benefits to finance their lifestyle after retirement. So, they make regular contributions while they are still working, expecting or hoping to receive checks that will be able to cover their monthly expenses when they finally decide to retire.
Although Social Security payments are taxable, the District of Columbia and 39 states do not tax these benefits. Find out in which areas your retirement income will have no tax deductions.
Taking into account the SSA payment schedule, the beneficiaries who will receive an average check of $1,827 Wednesday, September 13, are those who were born between the 1st and 10th of the month.
The data has just been released and inflation is staying stubborn. The Federal Reserve has still not got on top of it despite eye-watering interest rates.
How will the latest data affect policymakers decision for going forward when they meet next week.
Gas price spike in Corn Belt plateauing, relief could come soon
Drivers across the Midwest saw gas prices spike at the end of last week some areas over 30 cents per gallon. According to Gas Buddy data, the price increases appear to have plateaued. Relief should be coming by the weekend when most of the nation switches over to the cheaper winter blend.
"We should see more price decreases for most of the nation in the weeks ahead, barring further refinery disruptions and hurricane season," says Patrick De Haan, head of petroleum analysis at GasBuddy. "Fall tends to bring falling gas prices, and I’m hoping this year won’t be any different.”
Households report that they facing food insecurity as SNAP benefit cuts kick in
A food bank in the Washington DC area has reported that nearly a third of households surveyed that saw their SNAP benefits cut earlier this year have skipped or cut down on the size of their meals. More than forty percent have turned to food banks and other free options to receive their groceries, while others are using credit cards or borrowing money to cover the added costs. The fact that inflation continues to increase the cost of food has made the situation very difficult for many households receiving assistance. From July 2022 to July 2023, grocery prices have risen by an average of 3.5 percent nationally. The Capital Area Food Bank also noted that 76 percent of the food-insecure surveyed were employed.
If you’re looking for work with strong prospects that pays $100,000 or more, you could try to seek employment in the technology or healthcare industry. You may understandably be wary of shifting careers, but people who job-hop have been known to increase their salaries at a much faster rate than those who simply stay put in the same job.
CPI data shows inflation higher than expected
The CPI rose 0.6% month on month in August. Gasoline was the largest contributor, accounting for over half of the increase. Shelter rose for the 40th consecutive month.
Month on month increases: Food +0.2% Energy +5.6% Shelter +0.3% Core: +0.3% Services: +0.4%
Wells Fargo likely to see more layoffs
Wells Fargo could see its headcount decline further as it aims to improve efficiency, according to Chief Financial Officer Mike Santomassimo.
The bank has been trimming its workforce since the third quarter of 2020. It has already reduced its employee base by nearly 40,000 and cuts are likely to continue, Santomassimo said.
"I do think that there's more to do, and you'll see that through the headcount number," he added.
After numerous extensions under two administrations over the last three years, the student loan moratorium has ended.
As borrowers make payments again, the Federal Trade Commission (FTC) has warned that scammers may attempt to exploit the confusion. Loan servicers have decreased communication during the moratorium. Scammers may pose as them to extract financial data from borrowers.
To avoid falling for these scams, we offer three tips that can ensure your financial and personal data remains protected.
Inflation expected to rise in August as oil prices surge
On Wednesday, one of the most important data points the Federal Reserve will consider in its next interest rate decision will be released: August's Consumer Price Index.
The report, set for release at 8:30 a.m. ET, is expected to show headline inflation of 3.6%, an acceleration from July's 3.2% annual gain in prices, according to estimates from Bloomberg. Over the prior month, consumer prices are expected to have risen 0.6% in August, a higher rate than July's 0.2% monthly increase.
McDonald's to drop self-serve beverage stations in US by 2032
Self-serving soda machines inside McDonald's restaurants won't exist within a decade.
The slow transition away from beverage stations in dining rooms across the country will be completed by 2032, McDonald's announced. Customers will be required to ask for refills at the counter.
Thanks to an agreement reached on Monday, 11 September between the unions and the fast-food industry, fast food franchise workers in California will see a considerable increase in their paychecks starting next year.
Under the agreement, the minimum wage for workers in the industry will increase to $20 per hour. The rise in the minimum wage will come into force on April 1, 2024 and workers will have annual increases until 2029.
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We'll be reporting on other financial news affecting US consumers as the job market cools, consumer spending slows, and the Federal Reserve prepares to decide if interest rates will be increased once again at their next meeting.