US financial news | Summary news 16 August
Headlines: Wednesday 16 August 2023
- Consumer Price Index report released with inflation in July revealed to be 3.2%.
- $39 billion of student debt being wiped this week.
- Gas prices are up this summer as extreme heat hampers oil refinery operations
- 187,000 jobs added in July, unemployment falls to 3.5%
- 20% of student loan borrowers to pay $500 monthly when payments resume, according to study
Shares of Walmart have reached a year-long high after 13% year-to-date gains. This is particularly impressive when compared to the performance of its competitor Target, which has plunged 13%.
Walmart shares are performing very well because the retailer is perceived to have the ability to get a large share of the market heading into 2024.
Here are other reasons why the giant retailer's stock is surging.
Michael Burry, the investor who shot to fame because of his accurate prediction of the collapse of the housing market 15 years ago, is now betting $1.6 billion that Wall Street will crash.
According to a securities filing released earlier this week, Burry’s fund, Scion Asset Management, bought put options against a fund that tracks the S&P 500 and Nasdaq 100 Index worth a combined $1.6 billion at the end of the second quarter.
Medicare drug costs are soaring
Medicare drug costs are off the charts: The 25 top Medicare Part D drugs, on average, have more than tripled since they first entered the market, according to a new report out last week from AARP’s Public Policy Institute. That far surpasses "the corresponding rate of general inflation," according to the research.
This does not bode well for retirement budgets: Fidelity’s retiree healthcare cost estimate shows that if you retire this year at age 65, you can expect to spend an average of $157,000 on medical expenses throughout retirement.
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Tesla is seeking to boost sales by launching cheaper versions of its popular Model S sedan and Model X SUV standard range electric cars. However, the $10,000 price slash on Tesla’s oldest models comes at the expense of the vehicles’ driving ranges- they can’t go as far as their predecessors on a single charge.
The company run by billionaire Elon Musk is offering the new options as it faces more competition in the electric car industry.
President Biden signed legislation in August 2022 that was aimed at lowering health care expenses, bringing down prices and making big companies pay more taxes.
A year later, the president says his government "brought down inflation, lowered energy and health care costs, and made corporations pay their fair share."
Oliver Povey takes a look at the bill's provisions.
Strong retail sales underscore US economy's resilience
Retail sales increased more than expected in July as Americans boosted online purchases and dined out more, suggesting the economy continued to expand early in the third quarter and keeping a recession at bay.
The report from the Commerce Department also showed consumers splurging on hobbies, sporting goods and clothing, underscoring their resilience despite the Federal Reserve's aggressive interest rate hikes to tame inflation.
It prompted economists at Goldman Sachs to raise their third-quarter gross domestic product tracking estimate by a whopping seven-tenths of a percentage point to a 2.2% annualized rate. The economy grew at a 2.4% pace in the April-June quarter.
Demand is being underpinned by strong wage gains from a tight labor market. Though consumer spending continues to show signs of persistent strength, economists did not expect the Fed to raise rates next month, with inflation retreating.
(REUTERS)
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Why is this debt forgiveness possible?
The forgiveness is a result of a payment count adjustment, announced in April last year. Errors made either tracking payments or advising properly on the payment process by companies tasked with helping guide borrowers has led to millions falling further behind on settling the debts they took out to get a higher education.
A review from the Education Department “revealed significant flaws” in the system that suggested borrowers were “missing out on progress toward IDR forgiveness.”
Borrowers involved in the IDR plans who made the necessary 240 or 300 monthly payments, the equivalent to 20 or 25 years of qualifying months, are eligible for forgiveness. This was tallied wrong, meaning these hundreds of thousands of borrowers should have had their debt reduced long ago.
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The announcement in July that billions of dollars of student debt was to be forgiven is being resolved this week.
More than 804,000 people with debt that their federal student loans will be automatically discharged, relating to accounting errors in relation to Income Driven Repayment (IDR) plans. The funds available to these borrowers amount to $39 billion.
Food sees big price rises in July
Four of the six major grocery store food group indices increased during the month. The meat, poultry, fish and eggs index increased 0.5% in July, while the beef index increased 2.4%
The fruit and vegetable index increased 0.4% during the month and the other food at home index increased 0.2%. The Dairy and Allied Products Index rose 0.5% in July after declining in each of the previous four months.
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Universal basic income (UBI), sometimes known as guaranteed income, would provide a regular payment to citizens whether they were in work or not. The idea behind it is that it would decrease poverty and prevent homelessness by giving everyone money to subsist.
While there are no federal UBI plans, a number of US cities have taken it upon themselves to trial the plan.
With the new month ticking along, SNAP recipients are keen to know the arrival dates of their new payments.
As you no doubt know, the US has various forms of economic aid with which it provides relief to those who need it most. One noteworthy program is the Supplemental Nutrition Assistance Program, popularly known as SNAP coupons.
Biden speaks on US economy
President Biden delivered remarks on the economy while in Milwaukee earlier today. Watch and listen as he discusses FEMA efforts in Hawaii and pulls up some of his late dad's comments on the integrity behind a job.
Did you have an active Facebook account between 2007 and 2022?
If your answer is yes, and you reside in the United States, then it is possible that you were the victim of a data breach by Meta’s social network and this means that you are eligible to claim part of a million-dollar compensation.
Find out the amount that is up for grabs and how you can get some of it.
JP Morgan modestly positive over US outlook
Lucía Gutiérrez-Mellado, JP Morgan AM's Director of Strategy for Spain and Portugal, forecasts a scenario of modest yet positive growth for developed economies due to robust labor and consumption markets. Recession seems unlikely in the remaining half of the year.
The presentation of the firm's market outlook and strategy reveals Gutiérrez-Mellado's prediction of the US Federal Reserve's interest rate hike to 5.25-5.5%, despite hints of only two hikes by government members. The European Central Bank (ECB) is expected to raise rates with two 0.25% hikes to 4.5%. Both central banks will maintain these higher rates longer than expected to tackle inflation. The Eurozone's technical recession, influenced by Germany, is viewed as temporary, with recovery underway due to strong labor markets and business profits. A similar trend is anticipated in the US, with attention on the impact of a regional banking crisis.
Gutiérrez-Mellado projects future regulatory alignment between major and regional banks following the regional crisis. US families' lower leverage is seen as an advantage in navigating financial tightening. While US inflation is improving, European levels remain high, influenced by service demand.
JP Morgan's stance has turned more positive, with minor shifts like increasing equity allocation. Fixed income remains favored, and bond quality rises with lower recession odds. In equities, earnings expectations correction aligns with economic slowdown predictions. Adjustments involve adding weight to Japan and the UK.
The Supplemental Nutrition Assistance programme (SNAP) is designed to provide financial assistance for low-income households. The monthly payments are a supplement for the household food budget to ensure that recipients can afford to purchase healthy food.
The programme, also known as food stamps, is jointly overseen by federal and state authorities, meaning that the delivery of the support varies across the country. In California the programme is known as CalFresh; a state-supervised and county-operated initiative.
Oliver Povey explains more on how you qualify and what's available.
IRS tax bill support
Can’t pay your tax bill in full?
Check out this video to see if you’re eligible to apply for a payment plan online to pay off your balance over time.
Good morning and welcome to AS USA's live financial blog!
New CPI inflation data for July was released last week. According to the Bureau of Labor Statistics, inflation climbed to 3.2% in the year leading up to July, driven by increased expenses in housing, car insurance, and food.