Relief checks news summary | 8 May 2023
US economic and financial news: live updates
Headlines: Monday, 8 May 2023
- Binance cryptocurrency exchange pauses Bitcoin withdrawals twice in 24 hours, digital coin drops
- Dow posted biggest one-day gain since January on Friday, concerns about slowdown remain
- US economy added 253,000 jobs in April; the unemployment rate fell slightly to 3.4 percent
- The unemployment rate for Black workers hits a historic low.
- Positive news from the labor market came as the Fed increased rates by 0.25 percent, leading them to climb above five percent for the first time in over a decade.
- Around 1.8 million workers are currently receiving unemployment benefits.
Read more from AS USA:
California banking regulator admits poor SVB oversight
California's financial regulator failed to press leadership at Silicon Valley Bank to address known problems quickly enough before the lender imploded in March, according to a report in which the agency pledged to do better in the future.
The post-mortem by California's Department of Financial Protection and Innovation follows a scathing Federal Reserve report released last month in which the central bank blamed its own poor oversight, reckless bank management and loosened regulations for contributing to SVB's failure.
Regulators have since vowed tougher oversight of the banking sector while lawmakers have also complained that officials were too slow to address its poor risk management. Former SVB chief executive Gregory Becker is due to testify before Congress next week.
Under the Employee Retirement Income Security Act, there are several qualified retirement plans in the US.
A qualified retirement plan is any plan that meets the requirements of Section 401(a) of the United States Revenue Code. This report talks about how to determine if you have one of these plans, which you will need when you stop working.
The chief of one of the country's regional reserve banks has sounded the alarm for more financial turmoil approaching the US economy.
Federal Reserve Bank of Chicago President Austan Goolsbee has warned of a recession due to rising interest rates despite voting for one himself.
“The credit crunch or at least the credit squeeze is beginning,” said Goolsbee. This report tells us more about why Goolsbee believes that recession is a possibility.
Residents of California, particularly those living in Palm Springs, have been chosen to participate in a guaranteed income program.
Under this program, eligible individuals will be able to receive a monthly payment of $800 if they apply to the new pilot program that intends to implement a universal basic income.
This report details who are qualified to receive the checks, which will start being released this month.
Federal Reserve confident the banking sector can bounce back
The banking sector appears well-positioned to weather recent industry turmoil, but the experience could still weigh on credit conditions in the future, according to the Federal Reserve.
The central bank said overall funding risks for banks remained low and firms still have ample liquidity. Furthermore, additional policy efforts by bank regulators following the abrupt collapses of Silicon Valley Bank and Signature Bank in March should continue to backstop the system if further stresses arise, the Fed said.
While the central bank noted there were spillover concerns following the failures of SVB and Signature, it maintained that the issues that sank those regional banks do not appear broadly across the banking sector, calling them "outliers" in terms of heavy reliance on uninsured deposits.
Those firms, as well as First Republic Bank, which was closed by regulators earlier this month and sold to JP Morgan Chase, also were grappling with large amounts of unrealized losses spurred by rapidly rising interest rates. Depositors fled SVB within days after it appeared the firm was in trouble, precipitating its sudden closure.
Five Guys could finally be wrapping up its long-standing class action lawsuit in California. Facing down the wrath of some 2,000 workers who alleged their rights had been trampled, the gourmet burger company reached an initial settlement nearly five years ago only for courts to push against it.
According to the allegations in the lawsuit, the plaintiff leading the class-action worked at a Five Guys location in California from August to November 2016 as a “manager-in-training.” He claimed he and a class of 2,206 employees were not provided with meal breaks or rest breaks in accordance with California labor law.
Recession fears grow say experts
Federal Reserve Bank of Chicago President Austan Goolsbee warned Monday that a credit tightening is under way and recession is a possibility.
“The credit crunch or at least the credit squeeze is beginning,” Goolsbee told Yahoo Finance LIVE in an exclusive interview, when asked how he views credit conditions in light of several bank failures over the last two months.
The comments from Goolsbee follow his vote last Wednesday to raise the Federal Reserve's policy rate by a quarter point.
Who qualifies for the TurboTax compensation?
- TurboTax customers who used the product in the 2016, 2017 or 2018 tax years and were also eligible to use an Intuit IRS Free File;
- Must have begun their tax returns using a Product but then have been informed that they were ineligible to use that product, and thus paid for a TurboTax product;
- Consumers must also have not used the IRS Free File Product in a previous tax year.
Nothing needs to be done to secure the compensation. Expect an email in the coming weeks from a settlement fund administrator.
Tax filing company Intuit have found themselves in hot water with prosecutors after the company was accused of unfairly getting customers to pay for what should be a free process. A $141 million settlement was found with some 4.4 million consumers qualifying for compensation.
The case was brought as prosecutors argued that the company diverted low-income Americans away from free tax filing assistance options towards their own paid version. They were pointed towards the TurboTax free product, then later told they needed to pay. The IRS has its own free-filing product that is totally free for qualifying taxpayers.
The Federal Trade Commission (FTC) reported at the end of 2021 that it had received reports from almost 40,000 people of gift card scams in the first nine months of that year. Crooks had made off with almost $150 million in that period, but the consumer protection agency says that is just a fraction of what was most likely stolen as the vast majority of frauds are not reported.
Scammers prefer gift cards as a way to get their hands on your money, but not just any card will do. The agency says that “over twice as much money was reported lost on Target gift cards than any other brand.” The next most popular gift cards were Google Play, Apple, eBay, and Walmart.
But, how do youknow if yours has been scammed?
Failed to file a 2019 tax return? You may have an almost $900 tax refund waiting
The IRS says if you’re one of the nearly 1.5 million people with an unclaimed tax refund from 2019, you still have time to redeem it until July 17, 2023.
Those refunds are worth almost $1.5 billion in total, with an average payout of $893.
The three-year deadline to claim tax refunds was extended for the year 2019 due to the onset of the pandemic.
While Texas isn’t the cheapest state in The Union, it does have some cities that have been determined to some of the most affordable. One of several factors that determine the affordability of a city is housing costs.
They are also one of the biggest expenses, can make up over thirty percent of the basket for household expenses when analyzing the cost of living in any given area. Fortunately, in Texas, for those that rent their dwelling, several markets have seen rates drop recently.
Many companies have aggressively hired workers over the past two years as incomes rose and demand stored to new highs. However, with inflation cutting into purchasing power, general uncertainty in the market, and the Federal Reserve moving up interest rates, some stock prices are starting to fall. While 2022 saw the second-largest increase in new jobs in the history of the country, 2023 could tell a completely different story.
The initial response to these ever-evolving economic conditions from the tech sector was mass layoffs. Now, the world’s largest employer, Walmart, will follow suit by closing down various locations to cut costs and improve its financial performance.
The Social Security Administration provides basic financial assistance to adults age 65 and older and people with disabilities, regardless of age, when they have limited income or resources. What is the difference between supplemental insurance and disability?
This report tells us who are qualified to become beneficiaries of disability insurance.
Social Security benefits include disability insurance, which is for people who have not reached their full retirement age, but because of a disability can no longer work. To be a beneficiary, the person must demonstrate that he or she has a severe illness and has received treatment for at least one year, or that there is no cure for what they are suffering from.
Some people who are qualified for this benefit may be living outside of the US. This report details how you can apply for this assistance even if you don’t live in the country.
As Kevin McCarthy, as Speaker of the House, meets with the White House, it’s imperative that he arrives in a position of negotiating power. And to that end, we’ve got not only the Republican conference in the Senate backing what the Republican’s in the House passed a week before last, we’ve got enough to block any so called “clean debt ceiling bill” from moving forward.
43 Senate Republicans will not support a clean debt ceiling increase
In a letter sent to Democratic Senate Majority Leader Chuck Schumer over the weekend, 43 Republican senators said that they would not support raising the debt ceiling without a negotiation on spending cuts. Senator Mike Lee of Utah led the initiative with the support of Minority Leader Mitch McConnell to call for "substantive spending and budget reforms" as a "a starting point" for negotiations.
The aim is to give House Speaker Kevin McCarthy “a position of power” when he arrives at the White House to discuss raising the debt ceiling with President Biden. Secretary of the Treasury Janet Yellen has warned of “an economic and financial catastrophe” if Congress doesn’t raise the debt ceiling before the US can no longer meet its financial obligations. That is expected by as soon as 1 June.
The IMF has predicted which countries will have the top economies in 2028, and by their projections, China will overtake the US in the number one position.
The projection also indicates that China will be one of four Asian countries that make up the top six with the highest gross domestic product by purchasing power parity values at that period.
Our coverage reports on which countries are expected to comprise the top ten economies in five years.
Yellen warns of "constitutional crisis" if Congress doesn't raise debt ceiling
There is no way to protect our financial system in our economy, other than Congress doing its job and raising the debt ceiling and enabling us to pay our bills and we should not get to the point where we need to consider whether the President can go on issuing debt. This would be a constitutional crisis.
Yellen warns against negotiating debt ceiling with 'a gun to the head of the American people'
US Treasury Secretary Janet Yellen was asked repeatedly by George Stephanopoulos on ABC’s “This Week" about the possibility of President Biden invoking the 14th Amendment to avoid a US debt default. This option, never used before, would allow him to continue issuing debt without raising the limit on borrowing should Congress fail increase the debt ceiling.
Yellen sidestepped the question, saying that it was “among the not good options” and that doing so would trigger a "constitutional crisis." The Treasury Secretary has warned that the US will be unable to meet its financial obligations as soon as 1 June when emergency measures, which have been in place since January, can no longer be taken.
Beyond that point any emergency option would result in “an economic and financial catastrophe” according to the Yellen. “There is no way to protect our financial system in our economy, other than Congress doing its job and raising the debt ceiling and enabling us to pay our bills.”
Republican lawmakers want Democrats to agree to deep cuts to the US federal spending before they will vote for an increase of the debt ceiling. Any such negotiations said Yellen, “should not take place with a gun really to the head of the American people.”
Binance pauses Bitcoin withdrawals twice in 24 hours as digital coin value drops
Bitcoin hit a high water mark in mid-April breaking topping out just over $30,500. Its value once again dived a week later shedding over $3,000 before regaining two-thirds of the loss. Over the weekend the latest rebound in the digital coin’s valuation was put into doubt.
Binance was forced to pause withdrawals twice in 24 hours on Sunday as congestion in its exchange system pushed unconfirmed transactions to close to 500,000. Once the latest halt was lifted the company said that higher fees were implemented to encourage mining pools to pick them up. It also said that it was working to integrate its BTC Lightning Network withdrawals.
Bitcoin is now trading below $28,000 and Binance’s trading position for bitcoin trading volume has declined significantly, falling out of the top 10 exchanges for bitcoin trading pairs.
The United States Department of Justice has secured nearly $4 million in remission of a Walmart gift card scam. The Walmart gift card scams allegedly began in 2015 when scammers instructed victims to purchase Walmart gift cards ranging from $500 to $1,000.
Walmart is the top retailer in the world, with 240 million customers going into their stores every week, and many more shopping online. With such a big number of potential victims to choose from, scammers have targeted the store’s clients with various schemes, some of which involve gift cards.
They target these cards because they are difficult to trace once they are sent out. If scammers are able to get hold of your gift card number, they can use up your balance online before you are even aware of what happened.
This report discusses some schemes you should be careful of and report to authorities.
The Federal Open Market Committee (FOMC) wrapped up its May meeting on Wednesday with a unanimous decision to raise interest rates by another 25 basis points. That’s the tenth hike since March 2022 pushing interest rates above the 5 percent mark for the first time in over a decade. Policymakers have ratcheted up borrowing costs at the fastest pace since the 1980s to tame inflation not seen in four decades.
Chairman Jerome Powell, speaking at a press conference after the meeting, signaled that the US central bank may pause further rate hikes. However, it will assess if more action is needed to bring down inflation on a meeting-be-meeting basis.
What's pushing mortgage rates increase...
Typical mortgage rates in the United States are not specifically tied to the federal funds rate, rather they track the yield on 10-year Treasury Bonds. The value of the bonds is related to the Fed’s economic outlook, and further interest rate hikes do not convey confidence from the central bank.
The Federal Reserve released updated figures for both 15-and-30-year fixed-rate mortgages, which are 5.76 percent and 6.39 percent, respectively. Compared to this time last year, both rates have increased by more than 2.5 percentage points. However, in recent months these rates have softened slightly, compared to the levels recorded when the Fed first began raising rates.
Inflation is falling as job market stays hot
Inflation has been sliding since the middle of last year with the consumer price index falling from 9.1% annually last June to 5% in March.
That’s still above the Federal Reserve’s target rate of 2%, but prices have been falling without an accompanying rise in unemployment. As a matter of fact, the recent April jobs report exceeded expectations once again with 253,000 jobs created. Unemployment also dropped slightly to 3.4%, contrary to predictions.
Wages are also slightly higher than are consistent with 2% inflation, according to Friday’s employment report.
Many economists agree inflation is largely being driven now by companies keeping prices higher simply because they can.
In late March, the Social Security Board of Trustees released the annual report on the financial status of the Social Security Trust Funds. These include the trust funds for Old-Age and Survivors Insurance and Disability Insurance.
According to the report, the combined asset reserves of both the OASI and DI funds will be depleted by 2034.
As Corinna Gonzalez tells us, if Congress does not act before then, there will only be enough revenue to pay for 80% of scheduled benefits.
Warren Buffett wants executives of failed banks held accountable
Billionaire business magnate Warren Buffett says executives of banks who collapsed should be held accountable for the lenders' failure. He said the mistakes that they made were hiding in "plain sight".
Buffett also criticized regulators for providing the wrong incentives to banks, as well as bad communication by regulators, politicians and the press to the public regarding the turmoil in the banking sector.
US government selloff of failed banks set expectations of sweeteners in future
Three major regional US banks have failed in the span of six weeks requiring intervention from the Federal Deposit Insurance Corporation (FDIC). The sudden downfall of Silicon Valley Bank in mid-March pulled Signature Bank under at the same time and thrust the US banking sector into turmoil.
While federal intervention to backstop the deposits at those two financial institutions brought some stability as a whole, some banks continue to flounder. Most recently, First Republic Bank in San Francisco succumbed after revealing that over half of bank’s deposits that had been withdrawn during the first three months of the year.
JP Morgan stepped in to purchase the bank from the FDIC for $10.6 billion and locked in a loss-share agreement on commercial loans and residential mortgages. The transaction will cost the FDIC Deposit Insurance Fund an estimated $13 billion. JP Morgan also got $50 billion in financing for five years at an undisclosed fixed rate as part of the deal.
The FDIC says that the mega-banks did not receive any special advantages in their acquisitions of the failed financial institutions. However, analysts are concerned that would-be buyers of ailing banks will now wait for them to collapse in order to get sweeteners. FDIC officials counter that would-be buyers risk losing out if they allow the value of an acquisition target to deteriorate over time while waiting for an FDIC receivership.
"For potential acquirers, there is a motivation to wait for a receivership and FDIC assistance," head of North American banks at Fitch Ratings, Christopher Wolfe, told Reuters.
Dow posts biggest gain since January, second best of the year
Stocks closed the week on a high note, with the Dow posting its biggest one-day percentage gain since Jan. 6. Shares of Apple surged more than 4% after upbeat results and jobs data pointed to a resilient labor market.
Adding to the bullish momentum, regional bank shares rebounded from declines tied to the collapse of First Republic Bank.
PacWest rallied 81.7% and Western Alliance jumped 49.2%, while the KBW regional bank index advanced 4.7%.
Apple's quarterly results also cheered investors worried about a potential recession. The iPhone maker's shares hit their highest level in about nine months, and the stock ended up 4.7% in its biggest daily percentage gain since November.
The stock was the biggest positive influence on all three major US stock indexes.
The Labor Department report showed job growth accelerated in April and wage gains increased solidly, suggesting the labor market has stayed strong despite recent interest rate hikes from the Federal Reserve.
Investors have been worried that the rate hikes may eventually push the economy into recession.
The US is on the brink of its first-ever default this summer, as Congress and the White House continue its standoff on the issue of raising the debt ceiling.
The country owes trillions of dollars to foreign institutions, including governments, central banks, corporations, and other investors. Foreign governments own a big part of the public debt, which includes treasury bonds and other securities.
This report tells us more about which countries own the most US debt.
This week, Treasury Secretary Janet Yellen notified Congress that the United States could default on its debt soon. Yellen stressed that it is impossible to predict with certainty the exact date the US will run out of cash, but said it could be as soon as 1 June.
“If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” Yellen told lawmakers.
What would happen if there is a debt default?
Welcome to AS USA’s live blog on the latest financial news
Throughout the day we'll bring you news on personal finance and the wider US economy. Some of the leading stories at the start of the new week:
On Sunday, Binance cryptocurrency trading platform was forced to pause withdrawals of Bitcoin twice in 24 hours. Exceptional demand came as the value of the oldest digital coin slumped, dropping nearly $2,000 in a 48 hour period.
The US economy added 253,000 jobs in April according to the latest report from the Bureau of Labor Statistics, beating expectations. Unemployment also dropped slightly contrary to predictions showing that the labor market continues to be resilient in spite of successive rate hikes by the Federal Reserve.
The US central bank raised interest rates once again on Wednesday pushing them above the 5% mark for the first time in over a decade. Wall Street reacted positively to the new jobs data with the Dow Jones surging over 540 points, the biggest one-day gain since January.