US financial news | Summary news 25 August

Americans think they need millions to afford retirement

In a recent New York Life survey, today's workers said it would take an average of $4,342,378.86 in savings to be able to retire comfortably. But given where savers are at today, that sort of balance may be unrealistic.

While Americans might think it will take around $4.3 million to retire without financial worries, their current 401(k) and IRA balances tell a much different story. The average saver today only has $135,161.50 squirreled away.

INSURANCE

What does pet insurance typically cover and not cover?

Pet insurance is designed to help cover the cost of veterinary care for your pets. However, coverage can vary significantly depending on the specific insurance provider and the plan you choose.

Here’s a general overview of what pet insurance typically covers and what it may not.

Fed stands ready to raise interest rates further, as needed

The Federal Reserve may need to raise interest rates further to ensure inflation is contained, Fed Chair Jerome Powell said on Friday, nodding both to easing price pressures and the surprising over-performance of the economy.

Powell said Fed policymakers would "proceed carefully as we decide whether to tighten further," but also made clear that the central bank has not yet concluded that its benchmark interest rate is high enough to be sure that inflation returns to the 2% target.

Recent data has raised a new concern, said Powell.

"We are attentive to signs that the economy may not be cooling as expected," with consumer spending "especially robust" and the housing sector possibly rebounding".

TECHNOLOGY

What is Nvidia and why is its stock surging so much?

Nvidia is not a household name, but not being very well-known does not get in the way of its success.

The stock market has done well in 2023, and one reason for the uptick is this technology company that specializes in designing and manufacturing graphics processing units (GPUs), as well as related software and hardware technologies.

The Santa Clara, California based company has jumped 222% this year as a result of spectacular sales. It recorded year-over-year sales growth of 101% to $13.5 billion for the three months ending in July, which was a new high for Nvidia.

The reason for this impressive performance? The artificial intelligence boom.

FINANCE

The 15 US cities with the highest cost of living in 2023

The cost of living is an important factor when deciding where to live. This refers to the amount of money needed to pay basic living expenses such as food, shelter and utlilities among a few.

Because the prices of certain goods and services change from place to place, so does the cost of living. Since 1968, the Council for Community and Economic Research (C2ER) has collected and published data of the cost of living index.

Here are the 15 most expensive cities in which to live in the United States.

Continued strength of economy could merit more interest rate hikes

We are attentive to signs that the economy may not be cooling as expected. We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.

Justice Department sues SpaceX for alleged discrimination in hiring

 The Justice Department has sued Elon Musk-owned rocket and satellite company SpaceX for allegedly discriminating against asylum recipients and refugees in hiring.

"The lawsuit alleges that, from at least September 2018 to May 2022, SpaceX routinely discouraged asylees and refugees from applying and refused to hire or consider them, because of their citizenship status, in violation of the Immigration and Nationality Act," the Justice Department said in a statement.

In job postings and public statements over several years, SpaceX wrongly claimed that under federal regulations known as export control laws, SpaceX could hire only US citizens and lawful permanent residents, sometimes referred to as "green card holders," the Justice Department said.

The Justice Department also pointed to online posts from the company's billionaire owner as example of "discriminatory public statements."

(REUTERS)

Investor anxiously awaiting tea leaves to read from Fed chair speech

Federal Reserve Chair Jerome Powell is set to speak at Jackson Hole meeting of central bankers is less than an hour. Investors are nervously waiting to hear what he has to say about economic conditions to get insight into what policymakers will do down the road.

The expectation is that he will take a hawkish tone with regards to interest rate policy. Boston Fed President Susan Collins sat down with Jennifer Schonberger of Yahoo! Finance to discuss her vision for what will determine interest rate policy for her.

Initial unemployment claims drop for a second week

The US Department of Labor released the latest jobless claims data on Thursday. For the week ending 19 August first time unemployment claims dropped by 10,000 from the week before to 230,000.

Will Jerome Powell “mess things up” at Jackson Hole?

As much as investors want to focus on Nvidia and want to focus on tech - and it's been a good year so far - this is still a market that is Fed obsessed. This is still all about what is Jay Powell going to say tomorrow to mess things up... that may lead investors to be sellers instead of buyers.

Wall Street erases Wednesday gains as investors brace for Fed chair speech

Investors had high expectations for Nvidia’s earnings report that was due to come out after the closing bell on Wednesday. That sent the share price of the company that makes chips used for artificial intelligence (AI) soaring and along with it Wall Street indexes.

While Nvidia’s revenue exceeded expectations, the sharp gains markets made were completely reversed and then some on Thursday as investors turned their attention to what Federal Reserve Chair Jerome Powell will say about the economic outlook and interest rate policy.

Powell is due to speak at a meeting of central bankers in the ski-resort town of Jackson Hole on Friday. Investors are expecting the head of the US central bank to strike a hawkish tone on interest rate policy to control inflation going forward. Policymakers, since March 2022, have implemented the most aggressive rate hikes since the 1980s to tame rampant inflation. Despite a slowdown in prices rises, which are approaching the Fed’s target, the current expectation is that inflation and interest rates will remain higher for longer.

High mortgage rates cutting homebuyers’ purchasing power

Freddie Mac reported the weekly average for 30-year fixed-rate mortgages on Thursday which climbed for a fifth straight week. The latest average rate is now 7.23% for the week ending 24 August according to Freddie Mac data. However, daily rates have been approached 7.5% earlier this week.

The combination of high mortgage rates and high home prices has eaten into would-be homebuyers purchasing power. As Redfin points out, a homebuyer with a monthly budget of $3,000 can now afford a $429,000 home compared to a $500,000 at the same time last year when mortgage rates were 5.5%.

Tips to help you follow valuable money lessons

Looking for a "valuable money lesson"? Well, you've come to the right place. 

Most Americans say the learned it at a young age, but a whopping 84% say that don't actually stick to it. It probably won't come as too much of a surprise to learn than the "it" is budgeting and tracking expenses, but why are we so bad at it? 

Here are a few tips that can make sure you are part of the 16% that do it. 

Study highlights food insufficiency after SNAP discontinuance

Comparing trends in food insufficiency in states that ended emergency allotments before the federal government ended them altogether in March 2023 with the rest of the U.S., the researchers found that after the temporary increases to households’ SNAP benefits ended, SNAP recipients experienced a 21% relative increase in both food insufficiency and food insufficiency among children.

These findings imply that more than two million more American households faced food insufficiency when emergency allotments ended in all states.

Trump tariffs could hurt US economy

You may have noticed that the Republican presidential candidates are starting to up the ante ahead of the 2024 elections, with one man leading the way in the polls. But with that in mind, the White House issued a statement on Wednesday expressing concern over former President Donald Trump's proposal to implement new tariffs on all foreign imports, asserting that such a move would adversely affect American working families, disrupt the economy, and contribute to inflation.

According to reports, Trump convened a meeting with his key economic advisors at his private golf club in New Jersey last Wednesday, dedicating two hours to outline an economic plan with a focus on trade for his potential 2024 presidential campaign. This initiative was detailed in an article by the Washington Post on Tuesday.

During the meeting, one of the proposals discussed was Trump's intention to establish a comprehensive baseline tariff on nearly all imports to the United States, should he be reelected, as outlined in the report.

In response to these developments, White House spokesperson Andrew Bates remarked, "Combining a sweeping tariff tax on the middle class with more trickle-down tax welfare for rich special interests would stifle economic growth and fuel inflation,"

Bates emphasized that President Biden is firmly opposed to such a strategy, citing concerns that it would result in elevated prices and increased inflation. The Biden administration remains committed to collaborating with international allies to address "trade abuses committed by countries like China."

Social security and a future with AI

One of the pillars of Social Security is that most of it is funded through payroll taxes, meaning that the program is self-sustaining. Workers, employers and independent contractors all contribute taxes to Social Security, and those taxes pay benefits for current Social Security recipients.

This system works best in periods of low unemployment because more workers equal more tax funding.

But if a large number of workers are suddenly replaced by ChatGPT and other types of artificial intelligence, Social Security could be in trouble.

Vance Cariaga asks whether AI could push SS into insolvency faster.

What will Federal Reserve chair Jerome Powell say on Friday?

As the United States economy continues to experience relentless growth Jerome Powell, Chair of the Federal Reserve, will give a speech outlining the central bank's take on the economic outlook. After consistent interest rate hikes, there is a sense that the Fed may be approaching the end of its inflation-busting measures. 

FINANCE

SAVE: How does Biden’s new student loan repayment plan work? How to sign up

The White House launched its new plan to reduce monthly student loan repayments for borrowers which will also provide a shorter path to debt forgiveness.

Read more...

EDUCATION

What is a 529 plan? How does it work?

Going to college, or paying for your child to go to college, is not cheap. That, in fact, is probably quite the understatement. 529 plans, however, are tax-advantaged savings plans in the United States designed to help individuals and families save for education expenses.

There are two types of 529 plans - college savings plans and prepaid tuition plans - both of which could get you out of a financial muddle. 

Here's Oliver to explain the difference between the two and how they work. 

WELFARE

Payment schedule for SNAP Benefits in August 2023 in each state: dates, amounts...

Bearing in mind that the deposit of the coupons is under the administration of state governments, below are the payment dates of SNAP benefits in August for each state of the country.

WELFARE

SNAP: These are the new requirements to receive food stamps in 2024

To receive SNAP benefits, it is necessary to meet certain requirements such as meeting gross and net income limits, resources, among others. Despite being a federal scheme, each state administers its program, and the requirements may vary in different areas.

The Food and Nutrition Service of the United States Department of Agriculture establishes certain general criteria, which usually change each year, taking effect each October. Benefit amounts also change annually.

After the Fiscal Responsibility Act of 2023 was signed into law, some requirements to be able to receive SNAP benefits have changed and will go into effect very soon.

WELFARE

Double Social Security payments in September 2023: who will receive them and payment dates

The end of August is just a week away but the Social Security Administration is still working through this month's payments while preparing for the September payment mailing.

Alongside the most widely-received payments, the retirement benefits, the agency sends disability benefits too. These include the Supplemental Security Income (SSI) program and Social Security Disability Insurance (SSDI).

Sometimes the monthly payment schedule falls in a way that means that recipients will receive two checks in a single month. For some people, September will be a two-check month...

Read more

Good morning and welcome to AS USA's live financial blog!

We will be bringing you the latest on SNAP benefits news Social Security updates and student debt plans, as well as other financial news affecting US consumers as policymakers continue work to tame inflation.