US financial news summary | 3 July 2023
Headlines | Monday, 3 July 2023
- US manufacturing PMI dips to lowest level since May 2020
- Supreme Court ruled 6-3 against Biden's Student Loan Forgiveness Program
- 16 million student loan borrowers had debt relief approved, what will happen now?
- When do student loan repayments restart?
- PCE data shows both headline and core inflation declined in May year-on-year to 3.8% and 4.6%, respectively
- The weekly average mortgage rate ticked up this week to 6.71% for 30-yr FRM
- Initial unemployment claims dropped last week to 239,000, a decrease of 26,000 from a week prior
- Fed Chair Powell doesn't discount two consecutive rate hikes in future
- US consumer confidence jumps to highest level since January 2022
- Dates for Social Security payments in July
PCE inflation data lower than expected, bets jump Fed will increase rates in July
Both headline and core inflation data declined in May according to Bureau of Economic Analysis. The Personal Consumption Expenditure (PCE) Price Index for May showed headline inflation running at 3.8% while once more volatile food and energy prices were removed, core inflation was 4.6%, lower than the 4.7% expected.
Even though the PCE price index data for May came in lower than expected, investors are predicting that the Federal Reserve will raise rates once again when they meet in July. Expectations that policymakers would vote to hike interest rates by 25 basis points jumped by nearly 20 percent.
Investors now believe that there is almost an 87 percent chance that the FOMC will increase the federal fund rate next month.
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Drivers seeing cheaper gas prices for Independence Day
Despite a surge in drivers for the Fourth of July holiday weekend, the AAA forecast over 43 million Americans would hit the road this year, 2 million more than last year, gas prices have been easing for most oart of the US.
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Gas prices are dramatically cheaper going into the Fourth of July weekend than they were a year ago as over 43 million Americans plan to hit the road.
California is still the home of the most expensive gas prices, but Washington State as a whole has overtaken the Golden State for pain at the pump.
US manufacturing PMI drops to lowest level since May 2020
The Institute for Supply Management (ISM) showed on Monday that the US manufacturing Purchasing Managers' Index (PMI) dropped to 46 in June from 46.9 in May, its lowest level since May 2020. Economists had predicted that it would rise last month when polled by Reuters.
The ISM survey would indicate that the economy is in recession, but other data show that the US is continuing to chug along. Consumer confidence recently hit its highest level since January 2022, first-time unemployment claims dropped by the most since October 2021 and job growth continues to be robust.
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Every month, the Social Security Administration (SSA) issues millions of payments to Social Security recipients, most of which are retired workers.
The data provided by the SSA from May will give insights into how much beneficiaries can expect to receive next month. In May, the SSA sent Social Security checks to 66 million people, of which 74 percent were retired workers. The average check was worth 1,836.06, with the maximum benefit amount for this year being $4,555.
Read our full coverage for details on the July payment schedule.
The White House moved fast after the Supreme Court struck down the student loan debt forgiveness program releasing the finalized structure of “the most affordable” payment plan ever.
250 House members support $300-a-month child tax credit payments
Some 250 members of Congress are trying to put the $300-a-month child tax credit payments back in American wallets, along with a $2,000 baby bonus, per USA Today.
It's a Democratic proposal with enough Republican support that would make permanent the expanded child tax credit signed into law under the American Rescue Plan. The legislation, one of President Biden’s signature programs in office, boosted the 2021 tax credit, with the most significant increases going to lower-income families with children.
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If you need to be hospitalized and have paid the right premiums, you could make use of Medicare Part A, the portion of the Medicare program that covers hospital insurance. It primarily involves inpatient hospital care, skilled nursing facility care, hospice care, and some home health care services.
Here’s a breakdown of the services that is offers, and the costs involved in this coverage.
Median salary and average salary often get confused, with the terms used interchangeably. However, the difference between the two can be quite substantial.
Due to the celebration of Independence Day, Congress established the Fourth of July as a federal holiday, which means that government offices and institutions do not conduct operations on this day. But what about private businesses and companies such as supermarkets? Do they operate during normal hours?
This report lists the store hours of various stores and supermarkets in the US during the holiday.
Thousands of hotel workers in Southern California go on strike
Thousands of hotel workers in Southern California began striking, seeking to negotiate a contract with higher wages and other benefits, according to the union representing the workers, per CNBC.
Members of UNITE HERE Local 11, which says it represents more than 32,000 hospitality workers in Southern California and Arizona, are striking at more than a dozen hotels throughout Los Angeles and Santa Monica after their contract expired just after midnight.
Participants include cooks, dishwashers, servers, front desk workers and room attendants, the union said in a news release.
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Amazon projected to become number one US retailer next year
Amazon is set to become the largest retailer in the US next year, according to JPMorgan analysts.
If this projection proves accurate, Amazon will be unseating Walmart, which has been the country's largest retailer since 1990. It would be a seismic shift, one driven by increased e-commerce penetration and faster delivery times.
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The 2023 tax season ended on April 18- the deadline for taxpayers to file their returns as well as pay what they owe to the Internal Revenue Service. However, some people who have filed the paperwork have still not received refunds from the IRS.
Here’s what you can do if you are still waiting to get your money back.
New York City drivers unhappy with new tolls
New York drivers are unhappy that they will be charged a daily variable toll for vehicles entering or remaining within the central business district.
The city plan for the new charges last week got a boost from the US Department of Transportation, which said the city had adequately assessed how the congestion charge would help the environment.
Three Democratic lawmakers from New Jersey - Senator Bob Menendez and representatives Josh Gottheimer and Bill Pascrell blasted the decision saying the plan was "nothing more than a cash grab to fund" the New York Metropolitan Transportation Authority.
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Tax Forums on tour!
The IRS Nationwide Tax Forum is back in-person this summer as tax professionals meet up to earn Continuing Professional Education Credits, network with other tax experts, learn about the latest information from the IRS and news about tax law changes, resolve difficult tax cases, and hear directly from the National Taxpayer Advocate in her Town Hall.
This year the Nationwide Tax Forum is taking place in five cities across the country starting in New Orleans, and closing out in Orlando, Florida.
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Who will first receive SNAP payments of up to $4,223 in July 2023?
Large families in Missouri will be able to obtain a maximum payment of up to $4,223 per month, since the SNAP Program grants an extra $211 for each additional member, up to a maximum of 20 people by family.
Payments will begin to be issued from 1 July, although the exact date will depend on the initial of the last name of the beneficiaries and their month of birth. Those who were born in January and have the initials A - K in their last names will be able to receive the money as of 1 July, while those whose initials go from L - Z, will receive it on 2 July.
Alaska, North Dakota, Rhode Island and Vermont will distribute all payments on July 1, regardless of the month of birth or initial of the last name of the beneficiaries.
However, the distribution of payments is administered by state and, on many occasions, depends on the month of birth, the initials of the beneficiaries, or the last digit of their Social Security number, here is some of the list of states that will begin distributing SNAP coupon payments on July 1 and will continue to do so throughout the month:
Arizona: July 1 - 13
California: July 1 - 10
Florida: July 1 - 28
Texas: July 1 - 28
Washington: July 1 - 20
Our coverage has the full list of states including the dates of the payments.
Borrowers are not getting anymore extensions of the moratorium due to the debt ceiling deal reached between the White House and Republican leadership in the House of Representatives. As the Federal Student Aid website states: “Congress recently passed a law preventing further extensions of the payment pause.”
As part of the deal, President Biden managed to avoid throwing out his broad-based federal student loan forgiveness program that was then awaiting a Supreme Court ruling but set a fixed expiration to the pause on payments and interest.
The program offered $10,000 in debt relief for borrowers with an individual income of no more than $125,000 per year or $250,000 for couples who file jointly.
There was an additional $10,000 in debt forgiveness for borrowers who received a Pell Grant while in college, allowing them to write off up to $20,000 in student loan debt. The Pell Grant is typically awarded to undergraduate students from low-income households.
AS USA's Maite Knorr-Evans has the full story.
Hello and welcome to AS USA's live blog covering financial news
The Supreme Court ruled 6-3 that President Biden didn’t have the authority to issue his broad student loan debt forgiveness executive order. Now millions of student loan borrowers who had hoped to benefit from the debt relief will need to reassess how to deal with what they owe.
The moratorium on student loan repayments and interest, in place for more than three years, cannot be extended under law. Experts worry that once repayments start in the fall it could take a toll on the economy, others are concerned that many borrowers could drown under debt.
But for now, American consumers feel the most confident about the economy since January 2022 as the US economy continues to chug along. The latest data showed initial unemployment claims dropping by the most in 20 months and the new PCE inflation report showed price increases slowing more than expected. Despite that good news, and because of it, the chances of the Federal Reserve resuming interest rate hikes in July jumped.