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US financial news summary | 15 september 2023

U.S. President Joe Biden delivers remarks on his economic agenda at Prince George's Community College in Largo, Maryland, U.S. September 14, 2023. REUTERS/Jonathan Ernst

US Business News: Latest Updates

Headlines: Friday 15 September 2023

- Federal Reserve officials will meet next week to discuss a possible rate hike 

- White House says it has been in touch with leadership from both the Big 3 and UAW. 

- Various locations of major banks will close across the country next year 

- United Auto Worker members went on strike at midnight after the 'Big 3' automakers do not meet worker demands 

- Consumer Price Index shot up 0.6 percent in August:how will the Federal Reserve respond? 

- Grocery prices are up three percent compared to last year 

Read more from AS USA:
How will the UAW strike impact car prices?

The Big 3 companies have made over $20 billion in profits this year alone, which is no surprise considering that the average price of a new car has increased 22.8 percent over the last four years. By comparison, from 2015 to 2019, the average cost of a new car fell by 1.7 percent. The high profits seen by these companies over the last four years show that inflation is not hurting their bottom line.

Whether or not these companies will exploit the strike to increase car prices even further remains to be seen. The strike, like all work stoppage, aims to hurt the company’s bottom line to encourage corporate leaders to meet worker demands. Passing along the costs of the strike to customers is unlikely to garner public support, particularly after a recent Gallup poll found that seventy-five percent of those surveyed supported the UAW members.
What date is the next Fed meeting in September? Will they raise interest rates again?

The Federal Open Market Committee of the US Federal Reserve will meet on 20 September to discuss any changes to interest rates. The current Federal Funds Rate (FFR), which is the baseline interest rate in the US, stands at 5.33 percent. The last rate increase came at the end of July when officials opted for a 0.25 percent bump. At the July meeting, the FOMC reported that most committee members expected the “July rate hike would be the last of this tightening cycle.”

Read more on what will influence the central bank's decision in our full coverage.

President Biden makes short remarks about UAW strike 

"Over the last decade, auto companies have made record profits, including the last few years because of the extraordinary skill and sacrifices of the UAW workers. Those record profits have not been shared fairly in my view with those workers." 

Joe Biden , US President

Senator Sanders makes support for UAW clear

The senator from Vermont has made public his support UAW members over the last week, and since the strike began sent a message to his followers saying that he "stands with the courageous UAW workers." For many leaders in Washington, and those following around the country, the strike is about more than the conditions of UAW members, but a symbolic fight for better conditions for the working class.
Stimulus checks and refunds in September 2023: which states pay them and amounts

Some states continue to send stimulus checks or tax refunds to their residents to give their residents a financial lift.

Here are all the details...
What are the reasons behind bank closures in the US?

The US banking sector has been going through major changes over the past two decades. The number of banks has nearly halved while large financial institutions have become the majority share of the banking industry.

In recent years there has been an acceleration of branch closures, California has been one of the states especially hard hit but is not alone.

Here's what's behind communities around the US are seeing local branches of banks shuttered.
How much do auto workers make per hour? Will they get paid while on strike?

One of the UAW’s key demands is an increase of pay similar to that seen by the CEOs of the companies they work for. But while they are striking will they get paid? If so, how much?
Why are auto workers going on strike? What do UAW members want?

Automotive workers in the US have begun huge strike action against the ‘Detroit Three,’ General Motors, Ford, and Stellantis (once known as Chrysler).

Talks to find an agreement between the United Automotive Workers (UAW) union and the companies ended on Thursday night without an agreement being found. 13,000 workers have begun the strike with the first plants affected being GM’s Wentzville assembly plant, Stellantis’ Toledo assembly complex, and the Ford Michigan assembly plant. In total, the UAW represents some 146,000 workers who are ready to drop their tools at any moment.

What do UAW members want?
How can this month’s inflation numbers affect the Fed’s decision on interest rates?

The US Bureau of Labor Statistics (BLS) released August’s Consumer Price Index (CPI) last Wednesday, and it was slightly worse than expected. The consumer price index rose a seasonally adjusted 0.6% for the month, and was up 3.7% from a year ago. Economists had expected year-on-year inflation to be 3.6%.

The Federal Reserve has been working to bring inflation under control since March 2022 and while inflation is down considerably from its peak in June last year, it's proving stubborn.

So what will policymakers do when they meet next week?
What are fixed-income investments and why are they useful in retirement?

Fixed-income investments, also known as fixed-income securities or bonds, are financial instruments that pay a predictable stream of income over a period of time.

These investments are essentially loans made by investors to issuers, which can be governments, corporations, or other entities. In return for the loan, the issuer agrees to pay periodic interest payments and return the initial amount at the maturity date.

Why are they useful investments in retirement?

Huge automotive worker strike begins

13,000 US auto workers stopped making vehicles and went on strike Friday after their leaders couldn’t finalise a deal with companies.

The United Auto Workers (UAW) union are striking at a General Motors assembly plant in Wentzville, Missouri; a Ford factory in Wayne, Michigan, near Detroit; and a Stellantis Jeep plant in Toledo, Ohio. This is the first time the big three have been hit with a simultaneous strike in the union's 88-year history.
Will the US ever pay its debt?

Another looming government shutdown is coming up. By now, they should probably be pencilled in each year as sure as the Super Bowl final.

These shutdowns come about when the US government has exceeded its limits on borrowing. This borrowing is at the expense of national debt.

Which foods saw the largest increases in price from July to August?

Food: July to August  (%) August 2022 - August 2023 (%)

Dairy and related products: -0.4, +0.3

Fruits and vegetables: -0.2, +2.1

Nonalcoholic beverages and beverage materials: -0.2, +4.8

Cereals and bakery products: +0.5, +6

Meats, poultry, fish, and eggs: +0.8. +0
Why are car insurance rates increasing so much?

The average full-coverage car insurance policy had risen to $2,064 per year at the end of the first half of 2023. That breaks down to $172 per month, according to Insurify data, far surpassing predictions made last year.

However, the rise in car insurance hasn’t been uniform from state to state.
Grocery food prices: What got more expensive and what got cheaper in the last month?

Unprecedented inflation driven by corporate greed, geopolitical conflicts, and supply chain challenges left over from COVID shutdowns have forced families to confront higher prices across commodity markets, namely food, energy, and housing. From July to August, grocery prices rose 0.2 percent on average and are up three percent compared to this time last year.

Read our full coverage for details on which food products saw the largest price increases in August.
What is the lowest and highest income to qualify for Medicaid?

Medicaid is a health insurance program that is funded jointly by federal and state governments which strives to help low-income individuals have access to healthcare. It was established to provide medical coverage to children, parents, pregnant women, the elderly and the disabled who have limited income.

Although the federal government sets some basic ground rules, each state can choose whether to offer more healthcare services than those mandated. The Affordable Care Act allocated funding for states to expand coverage to all adults with income no more than 133% of the Federal Poverty Level (FPL). It also allows 5% of income to be ignored so the threshold is 138% of FPL in reality.

All states, the District of Colombia, and US territories offer Medicaid, although the extent of that participation varies. States can set their own income thresholds higher, or in the case of the non-expansion states lower, than the federal level, meaning that there is no uniform income threshold for Medicaid eligibility.

Read our full coverage for the details on Medicaid income caps from state to state.

Google is the latest company to fire staff

“It’s not something that was an easy decision to make, and it definitely isn’t a conversation any of us wanted to have again this year,” Brian Ong, Google’s recruiting vice president said.

“Given the base of hiring that we’ve received the next several quarters, it’s the right thing to do overall.”
2024 COLA increase: What other benefits are affected besides Social Security?

Every year, the Social Security Administration (SSA) increases monthly payments for the various programs it oversees, including Social Security and Supplemental Security Income. The percentage of the increase depends on the Cost of Living Adjustment (COLA), which is calculated using consumer price data provided by the Bureau of Labor Statistics.

Read more in our full coverage for details on the programs that see an increase in value thanks to the COLA.

Welcome to AS USA's live financial blog!

We'll be reporting on other financial news affecting US consumers as inflation ticks up, consumer spending slows, and the Federal Reserve prepares to decide if interest rates will be increased once again at their next meeting.