US Financial News: news summary | 27 July 2023

Unemployment insurance claims fall again

The number of Americans filing new claims for unemployment benefits fell for the second week running - the advance figure for seasonally-adjusted initial claims was 221,000, a decrease of 7,000 from the previous week's unrevised level of 228,000.

The 4-week moving average was 233,750, a decrease of 3,750 from the previous week's unrevised average of 237,500.

The largest increases in initial claims for the week ending 15 July were in Georgia (+4,879), California (+3,875), South Carolina (+2,376), Oregon (+1,354), and Texas (+1,267), while the largest decreases were in Michigan (-3,620), Kentucky (-2,730), New Jersey (-2,036), New York (-1,917), and Indiana (-1,360).

US economy grew faster than expected in Q2

The US economygrew faster than expected in the second quarter of 2023 as labour market resilience supported consumer spending and an increase in state and local government spending, while private businesses boosted investment in equipment, potentially keeping a much-feared recession at bay.

Real gross domestic product (GDP) increased at an annual rate of 2.4 percent in Q2, according to the "advance" estimate released by the Bureau of Economic Analysis. In Q1, real GDP increased 2.0 percent. 

WELFARE

WIC: What kind of help does the Special Supplemental Nutrition Program for Women, Infants and Children offer?

The federal government, through the Department of Agriculture (USDA), implements several nutritional programs. The best known is the Supplemental Nutrition Assistance Program (SNAP), but there is another one called the Special Supplemental Nutrition Program for Women, Infants and Children (WIC).

Find out what it is and what types of help it offers.

FINANCE

The 10 states where people earn the most money in the US

It can be challenging to determine which state provides the most comfortable economic living conditions due to several variables to consider, including cost of living and income. Income is a significant factor, and to compare the average income between states, we will examine the per capita value.

To calculate per capita income, we add up all sources of income within the same region, including salaries, dividends, interest, rent, and benefits, and then divide it by the total population. The higher the per capita income, the greater the wealth of the region.

Keeping this in mind, we took a look at the top ten US states with the largest per capita incomes.

FINANCE

How to avoid paying taxes on your retirement fund

You’ve saved for your retirement for most of your working life, and when you’re ready to stop working, the last you thing you want to see is your retirement fund dwindling because of taxes.

There are some legal ways to protect your retirement savings from the IRS, and with some planning, you could enjoy more of your hard-earned dollars when you retire.

AI and automation likely to kill jobs sooner due to covid-19

Automation was already expected to wipe out millions of jobs, but the pandemic hastened this process.

According to USA Today, nearly nine million workers switched occupations during the health crisis from 2019 to 2022, 50% more than in the prior three years, per a new study by McKinsey Global Institute.

Most left low-wage jobs in food services, customer service, office support and production. Meanwhile, high-wage positions grew in fields such as science, technology, health care, business, legal and management, says the report.

Tesla owners happy with their cars; with Elon Musk, not so much

It's been five years since Tesla began mass-producing electric cars, churning out more than 5,000 Model 3 units a week.

Soon after the mass production of EVs began, Bloomberg surveyed those who bought them to learn more about the experience of having one of Tesla's creations. The media company recently touched base with the people they originally surveyed, to see how the cars were holding up.

The results? The owners loved their cars, but didn't care much about the company's boss, Elon Musk. Many of them said that the billionaire's recent public pronouncements have greatly harmed the reputation of Tesla.

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 program that includes discounts on selected products at Walmart. Members also get a subscription to the streaming service Paramount+.

Daniela Barrera has the lowdown.

Stocks close little changed after Fed rate hike

Stocks ended Wednesday little changed following a Federal Reserve rate hike that left the door open for future hikes, but the Dow scored a 13-day winning streak.

The Fed lifted its benchmark overnight interest rate by a widely expected 25 basis points, marking the 11th hike in the central bank's past 12 policy meetings.

Fed Chair Jerome Powell said the central bank will make decisions meeting by meeting, closely watching economic data, but noted that a rate cut is very unlikely this year.

Goldman Sachs said in a note to clients that the Fed's statement did not signal a slower pace of hikes in the future, but that the bank was expecting a hold in September.

"The message for the market was that it didn't move the needle. There's always a fear of a big surprise," said Angelo Kourfafas, investment strategist at Edward Jones.

Powell's message was clearly that the Fed will wait for economic data to make new decisions, said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management. "I think the Fed won't stop until they see wage inflation down."

(REUTERS)

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, here is a useful video explainer by the Economist.

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

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.

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.

Powell on the labor market

"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, labor 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 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".

US finance news: welcome

Hello and welcome to our daily financial news feed for Thursday 27 July 2023.

We'll be looking at the aftermath of the Federal Reserve's decision 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.