US financial news summary | 11 september 2023
US Financial News: Latest Updates
Headlines: Monday 11 September 2023
- Consumer Price Index shot up 0.6 percent in August: how will the Federal Reserve respond?
- Gas prices could spike 35-55¢ per gallon in the Corn Belt
- Home-sale prices rise 4.5% as supply as mortgage applications slump
- Employment report: 736,000 people enter job market, unemployment at 3.8%
- Labor force participation rate ticked up to 62.8% in August, highest rate since February 2020
- Job openings fell in July to a more than 2-year low, pointing to slowdown
- Social Security payment increase due to COLA projected to be 3%
- New requirements to receive SNAP benefits in 2024 to take effect soon
IRS uses AI to crack down on rich tax evaders
The Internal Revenue Service will be using artificial intelligence to go after wealthy tax evaders. They will be prioritizing high-income cases including over 1,600 millionaires in the country.
Meta developing new, more powerful AI system
Meta Platforms is working on a new artificial-intelligence system intended to be as powerful as the most advanced model offered by OpenAI, the Wall Street Journal reported, citing people familiar with the matter.
The Facebook parent is aiming for its new AI model to be ready next year, the Journal said, adding it will be several times more powerful than its commercial version dubbed Llama 2.
The Senate is in session after the summer recess, and it is facing a new fight over government funding. If the House and Senate are unable to agree on any of the 12 spending measures that are on the table in a couple of weeks, a government shutdown could take place as federal agencies run out of cash at the end of this month.
When is the deadline and how can a shutdown be prevented?
Walmart has launched a new design of shopping carts which have been implemented in some branches throughout the United States.
The giant retailer revealed the new design through a video shared via social networks. In this, one of the employees can be seen showing the new features of the shopping cart, which include a division to place your smartphone and a cup holder.
Why are some customers unhappy with the new look?
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.
Smucker to buy Twinkies maker Hostess in $5.6 billion deal
J.M. Smucker has agreed to buy Twinkies maker Hostess Brands for $5.6 billion including debt in a deal that unites two major American snack makers.
The deal was worth about $4.6 billion excluding debt, with Jif peanut butter maker Smucker paying Hostess shareholders $34.25 per share. The cash-and-stock offer represents a premium of 54% on the stock since the day Reuters reported the company was exploring a sale.
Hostess shares have surged 27% since the report about the sale process and were up 19% at $33.49 in early trading on Monday, while Smucker's shares were down 7% as investors viewed the deal as too expensive.
Smucker said the deal, which is expected to close in the third quarter of its current fiscal year, represents adjusted earnings before interest, taxes, depreciation, and amortization of about 17.2 times based on its estimate of Hostess Brands' 2023 results.
The Supplemental Security Income program provides monthly payments to seniors, as well as people with disabilities, including children.
This year, thanks to the 8.7% cost-of-living adjustment (COLA) increase, average monthly SSI payments are about $550 a month. The maximum monthly benefit is up to $914 for an individual and $1,371 for a married couple where both spouses are eligible for the program.
This reports explains in more detailwho qualifies to receive the monthly payments.
Each month, the Social Security Administration sends different payments: retirement benefits, survivor benefits, as well as disability benefits, including Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).
The Russian invasion of Ukraine last year sent commodity prices upside down. Many things were impacted: wheat, fertiliser, and especially oil. This sent gas prices hurtling upwards, reaching peaks in the US of $5.02 per gallon on 14 June, 2022.
While people living in the US thought they had it bad, and in relative terms they did, other countries around the world were affected more. Despite prices decreasing wholesale in 2023, there are still many countries with prices far outstripping the US.
When was the last government shutdown in the US?
There have been a total of ten government shutdowns in US history, ranging from just four hours to 35 days. The first was in 1980, when the Federal Trade Commission had to be shut down for a day after Congress failed to pass a bill for the agency.
The most costly in history was the shutdown over the holidays of 2018 to 2019 which lasted for 35 days, costing an estimated $11 billion.
Shutdowns are nothing new in US politics, but since the 1990s they have become more frequent and more damaging. Once again the Democrats need a resolution to the stand-off, lest the lack of a new spending package means government workers will be furloughed and new spending ceases.
This is all down to a quirk in the way the US is governed that no other country has to deal with.
Starting next month, there will be new eligibility criteria for Americans wishing to receive SNAP food stamps.
Gas prices spiking in the Corn Belt
GasBuddy, which tracks the price of filling up around the US and Canada, on Thursday warned that gas prices could jump between 35 and 55 cents in the Corn Belt. Des Moines, Iowa has seen prices spike by 50 cents as of Saturday morning. The disruption is expected to be brief after which prices should begin to ease once again.
Some Social Security beneficiaries will receive two payments in September.
Home-sale prices jump 4.5%, the biggest increase in almost a year
During the pandemic mortgage rates dropped to historic lows falling below 3%. However, as the Federal Reserve has tightened monetary policy implementing the most aggressive rate hikes in four decades to stamp out inflation, mortgage rates have also risen.
For the week ending Thrusday 7 September the weekly average stood at 7.12% for a 30-year fixed-rate mortgage. The higher mortgage rate along with elevated prices has homeowners who locked in ultra-low rates reluctant to sell. That has aggravated a supply crunch in the market which in turn has helped drive up prices once again.
The median home-sale price rose 4.5% year over year during the four weeks ending September 3 according to recent Redfin data. This in turn in reducing homebuying demand with mortgage applications dropping to a nearly three decade low.
The Fed has slowed the pace of monetary tightening to tame inflation, but policymakers are “looking at the broader picture” to determine future rate hikes.
Here's what the experts think will happen at policymakers' September meeting.
Eligibility for unemployment insurance depends on immigration status during two time periods: first, the time the worker applies for and receives benefits, known as the “benefit period”; and second, the time the worker performed the work, known as the “base period.”
Generally speaking, workers must have valid work authorization during the base period, at the time they apply for benefits, as well as for the entire period during which they are receiving benefits.
Under current state and federal systems, undocumented workers are not eligible to receive unemployment benefits.
Welcome to AS USA's live financial blog!
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.