US financial news summary | 4 July 2023
US Financial News: latest updates
Headlines | Tuesday, 4 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 last 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
Home prices are barely lower than where they were last year with the median US home-sale price just $4,000 lower than the June 2022 peak according to Redfin data. That represents a 0.9 percent decrease year-over-year and the smallest decline in four months. A typical home in the United States is selling for $383,000.
The main culprit is high mortgage rates, which are more than double their historic lows at the end of 2021. Through the month of June the weekly average for a 30-year fixed-rate mortgage hovered around 6.7 percent according to Freddie Mac data. This has created a situation where millions of homeowners who locked in rates around 3 percent, and many more under 5 percent, feel trapped by those low rates and the high price of switching to a new home.
Thus they are not selling, and sufficient new completions have yet to come onto the market which is creating a dearth of supply while demand remains, albeit less than what would be expected, that there are more buyers than sellers. Those that are able to close a deal are paying list price on average helping to sustain the higher values.
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.
Who will first receive SNAP payments of up to $4,223 in July 2023?
Thanks to the distribution of SNAP coupons, these people could receive up to $4,223 in July 2023.
SNAP payments for July have started but they vary from state to state across the nation. Here are the benefit payment dates for July 2023 in each state.
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.
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.
If you're looking to buy a car, the best time to do it might be coming soon.
In February, JP Morgan noted that after new car prices reached an all-time high in December 2022, they were likely to remain above pre-pandemic levels, but with a slight drop within the year.
As this reports tells us, some factors that have developed since that period indicate that this will indeed be the case, as car supply exceeds demand.
Elon Musk's limits on Twitter could undermine new CEO
Elon Musk's move to temporarily cap how many posts Twitter users can read on the social media site could undermine efforts by new CEO Linda Yaccarino to attract advertisers, marketing industry professionals said.
Musk had announced that Twitter would limit how many tweets per day various accounts can read, to discourage "extreme levels" of data scraping and system manipulation.
Users posted screenshots in reply, showing they were unable to see any tweets, including tweets on the pages of corporate advertisers, after hitting the limit.
The limits are "remarkably bad" for users and advertisers already shaken by the "chaos" Musk has brought to the platform, according to Mike Proulx, research director at Forrester.
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.
Gen Z workers are the most disgruntled
Gen Z workers aren’t happy on the job, and that's a problem for employers.
Per Yahoo Finance, of the four working generations, those born starting in the late 1990s are more likely to say their work is frustrating and overwhelming, according to one survey. Another found that Zoomers are more likely to say they have little energy for non-work activities at the end of the day.
The obvious result? The youngest generation is more likely to report looking for a new job or have quit recently, a third survey found.
That’s a problem for employers, which lose a lot of money for each departing worker. But experts say managers can retain these young workers by better understanding their needs and implementing strategies to meet them.
Every month, the Social Security Administration 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 this 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.
US manufacturing PMI drops to lowest level since May 2020
The Institute for Supply Management (ISM) showed 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.
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.
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 parts of the US.
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.
Gas prices were dramatically cheaper going into the Fourth of July weekend than they were a year ago as over 43 million Americans planned to hit the road.
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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.