Relief checks news summary | 28 May 2023
- Biden, McCarthy reach tentative US debt ceiling deal
- The day the US could default on its debts, otherwise known as the 'X Date', extended from 1 June to 5 June
- US employment still going strong with fewer initial UI claims than expected, continuous UI claims drop
- The median selling price of homes sold in the US fell to $420,800 in April, the lowest level recorded in the last year.
- Experts remain divided over whether the Fed will announce another rate hikein June.
- The impact of a default could present greater challenges for some states over others.
- Can President Biden use theFourteenth Amendment to increase the debt limit?
Read more from AS USA:
Center on Budget and Policy Priorities criticises debt ceiling plan
News that Congress is close to agreeing a deal to end the debt ceiling stand-off came as a relief to many, but there is still concern about the nature of the compromise that was struck. The Center on Budget and Policy Priorities has warned that the level of future spending cuts included in the provisions pose a real risk to very low-income older adults.
President Biden has struggled to improve his approval ratings in recent months and it does not look like this deal will do much to change that.
What have Biden and McCarthy said about debt ceiling deal?
Late on Saturday evening it emerged that Congress was close to agreeing a deal that would prevent the US from breaching the debt limit and get government working to full capacity once again.
“The agreement represents a compromise, which means not everyone gets what they want,” President Biden said in a statement announcing the news. “It prevents what could have been a catastrophic default and would have led to an economic recession, retirement accounts devastated, and millions of jobs lost.”
On Sunday Senate Majority leader Kevin McCarthy said: “We still have a lot of work to do," but added: "I believe this is an agreement in principle that’s worthy of the American people.”
Home buyers' pessimism about market hits new low
Only 21% of adults say it’s a good time to buy a house, according to a new Gallup poll, a record low since 1978 when the company began conducting its annual poll. It’s down nine percentage points from a year ago, and it's the second time the figure has dipped below 50%.
The latest results are from Gallup’s annual Economy and Personal Finance poll, conducted April 3-25, and comes at a time when elevated mortgage rates, high home prices and low inventory levels have slowed the housing market.
Workers' mental health taking a beating
A new survey shows that American workers’ mental health is plummeting.
The Conference Board, a business think-tank, polled over 1,100 workers. Around 34% of workers reported their mental health levels were lower than six months ago.
Workers feel overwhelmed and unable to take a break. According to the study, 37% said their level of engagement is lower than six months ago, although employees are working harder than ever.
Companies may have to offer more flexible work arrangements, including vacation time off and hybrid work, to help improve their workers’ well-being.
IMF says US should tighten fiscal policy to help cut inflation
The International Monetary Fund said interest rates will likely need to remain higher for longer to tame inflation, and Washington needs to tighten fiscal policy to bring down its federal debt.
The IMF said in a statement issued after its review of US policies that the economy has proved resilient in the face of tighter monetary and fiscal policy, but this means that inflation has been more persistent than anticipated.
The fund's review included a full-year growth forecast of 1.7% for 2023, slightly above its 1.6% estimate in April, and lower output of 1.2% on a fourth-quarter comparison basis.
It forecast the federal funds rate peaking this year at 5.4% - above the nominal 5.25% Fed rate - easing to 4.9% in 2024.
Americans celebrate Memorial Day every year to honor and remember US military personnel who have sacrificed their lives in the line of duty.
The holiday is also considered by many to herald the start of summer, and the long weekend provides the perfect opportunity to make that first beach excursion.
Whether you decide to go on a road trip, hold a barbecue cookout with friends and family, or simply relax at home, it is likely that you will be needing some supplies. Here’s a list of stores that will be open.
Inflation to cause costlier Memorial Day barbecues
Most of the fixings for your Memorial Day weekend barbecue will cost more, especially condiments. Inflation may not be rising as rapidly as this time last year, but food prices are still pinching pocketbooks, according to Axios.
While the latest consumer price index found food prices were up 7.7% in the 12 months through April, prices for classic barbecue staples like ketchup, mustard, and relish have had much larger increases, research firm Datasembly told Axios.
Hot dogs and hamburger and hot dog buns also went up in line with rising flour and bakery product costs.
The only item among the barbecue essentials with a slight price decline was a pack of 80% lean fresh ground beef burgers.
Although the pandemic has reached manageable levels, inflation continues to be high and many families continue to have difficulties with putting food on the table. This has prompted some states to offer their help in the absence of a fourth federal stimulus check.
These states have chosen to provide their own form of financial assistance. Here are six states with aid projects for 2023.
Companies talking less about recession
Executives at S&P 500 companies are talking about recessions less on earnings calls for the third straight quarter, per FactSet. S&P Global showed US economic output reached a 13-month high in May. Even the consumer slowdown teased by some companies doesn’t appear widespread quite yet, per Yahoo! Finance.
“The economy is still on sound ground, with consumers willing to spend and businesses continuing to hire and invest despite fears that a recession is around the corner,” Oxford Economics Lead US Economist Oren Klachkin wrote in "Recession remains out of sight".
"We maintain our call for a mild recession to begin in Q3 but see a risk that it might start later. Consumers-the main engine of the US economy- will keep spending so long as incomes continue to rise."
President Joe Biden and Republican House speaker Kevin McCarthy have tentatively agreed on a deal to raise the federal government’s $31.4 trillion debt ceiling. However, as McCarthy stated after the latest discussions had come to a conclusion, “there is still a lot of work to do”.
Economists have attempted to predict the consequences of a “catastrophic default”, the term used by President Biden on social media. What effect will the new debt ceiling deal have on the economy?
Tax season was over for most people a month ago, with many already getting back their returns. It’s a good time to think about next year since you can look at your 2022 return to help you plan for the next filing.
Here are some ways to save on your taxes next year.
It’s springtime and that generally means the rush to go house hunting. This year, however, would-be homebuyers are entering a market where fewer homes are available than had been the norm prior to the covid-19 pandemic but slightly better than the past two years. Homebuyers also have to contend with higher mortgage rates on top of elevated home prices.
As prospective homeowners look for a new residence, they can look to these cities for a better deal.
You have until July 17 to claim your 2019 tax refund
The IRS is reminding nearly 1.5 million people with unclaimed refunds for tax year 2019 that they face a July 17 deadline to submit their tax return.
The agency estimates almost $1.5 billion in refunds remain unclaimed because people haven't filed their 2019 tax returns yet. The average refund is $893 for the year, and the IRS has done a special state-by-state calculation to show how many people are potentially eligible for these refunds.
"The 2019 tax returns came due during the pandemic, and many people may have overlooked or forgotten about these refunds," said IRS Commissioner Danny Werfel. "We recommend taxpayers start soon to make sure they don't miss out."
Under the law, taxpayers usually have three years to file and claim their tax refunds. If they don't file within three years, the money becomes the property of the US Treasury.
Biden on debt ceiling deal: "Not everyone gets what they want"
Following news of the tentative deal being agreed, President Biden posted this lengthy message on Twitter (maybe unverified accounts will be part of the spending cuts...?).
Neither he nor House Republican speaker Kevin McCarthy seemed especially overjoyed at the agreement, with Biden calling it "a compromise, which means not everyone gets what they want. That’s the responsibility of governing".
The good news, however, is that "it prevents what could have been a catastrophic default and would have led to an economic recession, retirement accounts devastated, and millions of jobs lost".
US Labor data for May expected to show growth
US Labor data for May will be released on Friday with figures expected to follow a similar trend. Unemployment dropped to 3.4 percent in April, equalling a 50-year low of 3.4 percent set in January while job growth accelerated to add 253,000.
Non-farm payrolls for May are expected to register job growth of 180,000, according a Reuters poll - down on last month's figures but up on March's.
Meanwhile, US weekly wages fell during 2022, according to figures released by the Bureau of Labor Statistics. Average weekly wages were $1,385 in the fourth quarter of last year which represents a 2.3% decline from the same period in 2021.
After negotiations lasting several months, United States President Joe Biden has agreed a tentative deal with his Republican opponents to raise his government’s $31.4 milion debt ceiling and avert a default.
The Treasury had warned that the US would run out of money and be unable to meet its financial obligations by 5 June if no deal was reached.
Almost 38 million Americans living in poverty
According to the latest report from the United States Census Bureau, 37.9 million Americans live in poverty, accounting for 11.6% of the total population, even as the US ranks first as the richest nation in the world in terms of GDP.
“Poverty and economic insecurity are widely common,” Shailly Gupta Barnes, policy director at the Kairos Center for Religions, Rights, and Social Justice told CNBC.
The number reported by the Census Bureau is based on the official poverty measure, which is virtually unchanged since the mid-1960s.
Grace Bonilla, president of United Way of New York City, said the official poverty measure doesn’t take important indicators into consideration, such as family composition or the cost of child care.
The Census Bureau developed the Supplemental Poverty Measure in 2011 as an improvement over the existing measure. It incorporates the cost of basic needs like food, clothing, as well as geographical differences and household size.
But Bonilla says that is not enough. “It’s a step in the right direction but it falls so short of actually giving us an accurate count of poverty in the United States,” she said.
Americans increasingly delaying health care due to cost
A new Federal Reserve survey found that 28% of respondents went “without some form of medical care” due to cost in 2022, which represented a 4 percentage-point year-over-year increase, according to Yahoo! Finance.
The survey found that dental care was the most frequently skipped medical service, followed by a doctor’s visit, prescription medication, a follow-up visit, and mental health care or counseling.
Yellen: US has enough reserves to push off a potential debt default until 5 June
Treasury Secretary Janet Yellen confirmed that the United States has enough reserves to push off a potential debt default until Monday 5 June.
Yellen wrote in a letter to House Speaker Kevin McCarthy: “We now estimate that Treasury will have insufficient resources to satisfy the government’s obligations if Congress has not raised or suspended the debt limit by June 5. We will make more than $130 billion of scheduled payments in the first two days of June, including payments to veterans and Social Security recipients. These payments will leave Treasury with an extremely low level of resources. During the week of June 5, Treasury is scheduled to make an estimated $92 billion of payments and transfers, including a regularly scheduled quarterly adjustment that would result in an investment in the Social Security and Medicare trust funds of roughly $36 billion. Therefore, our projected resources would be inadequate to satisfy all of these obligations".
Last year, after inflation reached historical levels, several states across the US approved the sending of stimulus checks and tax refunds to their residents to provide economic relief in the face of high prices.
The number of states that are sending money is decreasing, but residents of some cities and counties in the United States may be eligible to participate in pilot guaranteed income programs that have been set up and that will issue payments of $500 or more each month.
Here's a look at programs providing those who are eligible with monthly payments as part of these initiatives.
With June just a few days away, here is some important news.
Every month, the Social Security Administration (SSA) issues millions of payments to beneficiaries of the Social Security Program, who are mostly retired workers and people who receive Supplemental Security Income (SSI).
In fact, the latter will see an increase in their monthly checks starting in June thanks to the complementary payment plan approved in 33 states across the nation.
Half of Americans say US debt ceiling should be separate from federal spending negotiations
A Monmouth University poll released Wednesday showed 51% of Americans want the debt ceiling issue to be dealt with separately from the debate over spending cuts — a so-called “clean” inc.
When asked whether raising the debt limit be dependent on federal spending cuts, 25% of those who took part in the Monmouth poll believed that “raising the debt ceiling should be tied to negotiations over spending on federal programs”
You may remember that this isn’t the first time that lawmakers have played chicken with the hitting the “X Date.”
Those previous moments have had their own economic consequences for the US public even resulting in the US credit rating being downgraded for the first time ever. The 2011 standoff is estimated to have raised borrowing costs by a total of $1.3 billion that fiscal year according to the Government Accountability Office (GAO).
Strong consumer spending puts Fed in tough spot
Based on last month's figures, consumer spending increased more than expected in April, boosting the economy's growth prospects for the second quarter, and inflation picked up, which could prompt the Federal Reserve to raise interest rates again next month.
The growth picture was further brightened by other data from the Commerce Department on Friday showing a surprise rebound last month in orders of manufactured non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans.
The reports added to labor market resilience, a rebound in factory production and a pickup in business activity in suggesting the economy was experiencing a spring revival after hitting a speed bump in the first quarter. They also increased the chances that the central bank would hike rates in June.
"I just got off the phone with the president a bit ago. After he wasted time and refused to negotiate for months, we've come to an agreement in principle that is worthy of the American people"
A debt ceiling breach would have a number of wide-reaching consequences for Americans andfunds will not be available for every federal need.
Finance and economic news: welcome
To the dismay of many progressive Democrats, the White House seems to have placed itself in a situation where social spending cuts must be made to raise the debt ceiling.
Some members of the caucus, particularly leaders in the Senate, have continued to call on President Biden to use the Fourteenth Amendment to override Republicans. As talks between Congressional Republicans and the White House continue, we will bring you the latest.