US financial news summary | 26 July 2023

"In relation to goods, it's really an indication that supply chains and shortages are easing. I don't think we are targeting wage inflation - what we are looking for is a broad cooling in the labor market conditions, and that's what we are seeing. Wages have actually been gradually moving down, they are still at levels what would be consistent over a long period of time with 2% inflation. Nonetheless, we're making progress there and by so many indicators, labot market demand is cooling - you can look at surveys by workers and businesses who see that, you can look at the quits rate normalizing, you can look at jobs openings coming down... job creation is still at a high level but it was at an extraordinary high level for most of the last two years. So you see cooling, particularly in the private sector in the last report. It's happening at a gradual pace, that's not a bad thing in a sense because if what we see is a very strong demand for labor, which is the engine of the economy, people are getting hired, many people are going back to work, getting wages, spending money but it's gradually cooling, that's a good prescription for where we want to get". 

Fed raises interest rates to 5.5%

The Federal Reserve Committee announced in this afternoon's FOMC press conference that it has decided to raise the target range for the federal funds rate from 5.25% to 5.5%.

A statement read: "Recent indicators suggest that economic activity has been expanding at a moderate pace. Job gains have been robust in recent months (240,000 jobs per month), and the unemployment rate has remained low (3.6%). Inflation, at 3.8%, remains elevated.

"In determining the extent of additional policy firming that may be appropriate to return inflation to 2% over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments".

EMPLOYMENT

How much money do servers make in California? This is the hourly wage

The service industry is one of the most in-demand fields in the United States, especially during the holiday season. This is particularly true for California, which is the state with the highest level of employment for waitstaff. Also, by law, it has a minimum wage that is higher than what is dictated at the federal level.

Find out how much money servers in the Golden State earn per hour and per year.

WELFARE

Stimulus checks in July 2023: Which states pay and how much

After inflation reached historic levels last year, several entities in the US approved the sending of stimulus checks or tax refunds to help those who were most affected.

Although inflation has fallen considerably in recent months, several states across the country continue to send out checks or tax refunds to help their residents.

Corina González and Gidget Alikpala take a look at the states that are sending financial assistance in July, and how much they are giving out.

Fed decision due at 2pm ET

The Federal Reserve is scheduled to announce its decision on a potential interest rate hike at 2pm ET/11am PT today, before the body's chairman, Jerome Powell, speaks to the media half an hour later.

SNAP BENEFITS

SNAP benefits: get Walmart discounts and a Paramount+ subscription

Beneficiaries of the SNAP food-assistance scheme can get half-price membership to Walmart+, a rewards programme that includes discounts on selected products at Walmart. Members also get a subscription to the streaming service Paramount+.

Daniela Barrera has the lowdown.

MEGA MILLIONS

What are the winning numbers for Tuesday’s $820 million Mega Millions jackpot?

Tuesday's Mega Millions draw involved a jackpot of $820 million - but there were no winning tickets, so the top prize rolls over again to Friday, when it will be $910 million.

While nobody scooped the jackpot, there were plenty of smaller pots of gold up for grabs, too. Check out Tuesday's Mega Millions numbers.

Why do central banks raise interest rates to half inflation?

By the way, if you're wondering exactly why central banks like the Fed tend to combat inflation by raising interest rates, let me point you in the direction of this useful video explainer by the Economist.

Essentially, it all boils down to quelling consumer demand - but not by too much...

"The Fed should be done already"

Many are expecting the Federal Reserve to up interest rates by another 0.25%, having halted its run of 10 successive hikes in June.

Some experts, however, believe the Fed should hold off on any more rises for the moment, with US inflation at 3% in June.

“The Fed should be done already,” Kathy Jones, the chief fixed income strategist at Charles Schwab, has told CNBC. 

“They’re walking a difficult line here. To me, the decision would be, hey, we’ve done enough for now, and we can wait and see. 

“But apparently the folks at the Fed think they need one more at least.”

(Photo: REUTERS/Jason Reed/File Photo)

US finance news: welcome

Good morning and welcome to our daily financial news feed for Wednesday 26 July 2023.

We'll be looking ahead to the Federal Reserve meeting, which begins on Wednesday and is set to see the body decide on whether or not to raise interest rates in a bid to curb inflation in the US.

You can also follow our live blog for news on SNAP benefits, IRS refunds and Social Security benefits.