US financial news summary | 8 June 2023
US Finance news, Thursday, June 8, 2023
Headlines | Thursday, 8 June 2023
- Initial unemployment claims rose by 28,000 to 262,1000 last week
- Federal Reserve officials meet to discuss further changes to US monetary policy, including the possibility of another rate hike in June
- The strength of the US dollar, explained
- Save $100 or more filling up on gas
- Food shortages could lead to increases in prices once again later this year
- The rules regarding using your 401(k) to purchase your home
- Consumer Price Index to be released on 13 June
- Debt ceiling deal: 750,000 may lose SNAP benefits due to new work requirements
- 250,000 Medicaid members have lost coverage in Florida, reports the Kaiser Family Foundation
- 10 Jobs that could be at risk in the future due to AI
Social Security benefits are most often associated with payments to retired workers. While those make up the vast majority of the tens of millions the Social Security Administration (SSA) issues each month, retirees aren’t the only ones. The disabled and survivors also receive income from the agency as well as low-income individuals that qualify for Supplemental Security Income (SSI).
Certain people in the latter group of recipients will see an increase in their monthly checks starting this month. This is thanks to the complementary payment plan approved in 33 states across the nation.
Changes coming to SNAP benefits with the debt ceiling bill
The deal, called the Fiscal Responsibility Act, would expand requirements for SNAP, which was formerly known as food stamps. As the program currently stands, there are already work requirements in place for most able-bodied adults without children from the ages of 18 to 49.
These recipients must either be earning wages equivalent to 30 hours per week, looking for a job, or signed up for a SNAP employment training program for at least 80 hours a month.
The Supplemental Nutrition Assistance Program (SNAP) is a crucial federal assistance programme in the United States that aims to provide food support to individuals and families with limited financial resources. Formerly known as the Food Stamp Program, SNAP plays a significant role in combating hunger and improving nutrition for vulnerable populations.
Eligibility for SNAP benefits is primarily based on income and household size. Generally, households with gross incomes at or below 130% of the federal poverty level (FPL) qualify for assistance.
Wealth not generated through labor contributes greatly to inequality
The St. Louis Fed has released a new blog highlighting the ways wealth that is not generated through labor contributes to economic inequality.
Researchers said that for the vast majority of workers (up to 90%), using their "human capital" (i.e., their education, skills, muscles, etc,) is how they are able to accumulate wealth.
However, for the top ten percent of wealthiest households, only 29 percent comes from their labor. The other sources include the increase in value for financial assets like stocks. Stocks in companies where the other ninety percent of households work, and that through that work, those who own stock are able to see the benefits.
Initial unemployment claims surged by nearly 30,000 last week
Last week, initial unemployment claims (i.e., the number of workers claiming unemployment insurance for the first time) rose by 28,000 to 261,000. This is the highest level recorded since late October 2021.
The Bureau of Labor Statistics (BLS) reported that in May, the unemployment rate increased to 3.7 percent, and if these initial claims trends continue, more workers could be stripped from the labormarket this month.
Zooming out we also see that at the end of May, the total number of unemployed workers claiming benefits fell by over 20,000 to 1,757,000.
Each month, the Social Security Administration sends money to millions of people in the United States.
This includes retired workers, recipients of Supplemental Security Income, as well as remitting disability and survivor benefits. It’s now time to send payments of more than $1,800 for the month of June.
Payments are calculated on an individual basis based on the “Primary Insurance Amount”. The amount of benefits may be affected by the age of the beneficiaries, as well as the increase in the cost of living adjustment.
Gen X is not prepared for retirement
The so-called slacker generation appears to have been slacking off in terms of preparing for retirement.
Yahoo Finance reports that over half of Generation X- born between 1965 and 1980- have little to nothing socked away for retirement, according to research by Prudential Financial of 2,000 pre-retiree Gen Xers conducted between March 31 to April 6, 2023. Thirty-five percent of the 65 million US Gen Xers have less than $10,000 saved, and 18% have no savings.
The results, echoed in two other recent surveys, reflect the burdens this generation faces and are a big wake-up call — especially for the oldest members who are about a decade from retirement age.
In April, the IRS announced that nearly 1.5 million people nationwide were still eligible to receive a tax refund worth up to $900.
It may not just be a $900 refund either, as many low- and moderate-income taxpayers might also be eligible for the Earned Income Tax Credit. For tax year 2019, the credit was $6,557.
The United States has various economic aid programs with the aim of offering assistance to low-income people. One of the best known is the Supplemental Nutrition Assistance Program, also known as SNAP.
There is assistance that is quite similar but not as well known. This is the WIC Program, for Women, Infants & Children only.
Can you receive these two benefitsat the same time?
Unemployment increases even as the economy added over 330,000 jobs in May
Unemployment inched up to 3.7 percent in May from 3.4 percent.
Although the rate rose, the US economy continued to add jobs, with over 339,000 workers being added to the payroll. However, this was not enough to offset the 440,000 increase in unemployed workers, which in May reached 6.1 million people.
The professional and business services added 64,000 jobs, more than any other sector tracked by the BLS. Healthcare, construction, and leisure and hospitality together added more than 125,000 jobs, representing a high percentage of all jobs created in May.
Can shopping around for gas save you money?
Being smart about filling up your tank can save you hundreds of dollars over the course of the year. Prices can vary widely from one gas station to the next but also depending on which day you head to the pump can make a difference too.
US and European hotel rates may continue rising
If you're planning a holiday this summer, expect to shell out a bit more for your getaway.
Hotel room rates in the US and Europe are rising and may get even more expensive as supply has failed to keep up with demand, industry executives said.
US hotel room supply is barely growing as tighter lending standards from regional banks make it harder for developers to secure funding, even as travel demand has grown after the covid-19 pandemic. This is helping to sustain higher prices that executives say should have been reached years ago.
"We had robust supply growth over an extended period of time, which did keep rates down," IHG Hotels and Resorts CEO Keith Barr said.
Supply is not expected to pick up significantly for the next year or two, Barr added.
In addition to the health crisis, the covid-19 pandemic brought with it economic problems, to which the US government responded by approving three stimulus checks with the aim of providing economic assistance to those most in need.
Although the pandemic has reached manageable levels, inflation continues to be high and many families continue to have difficulties with putting food on the table. This has prompted some states to offer their own help in the absence of a fourth federal stimulus check.
Supplemental Security Income amounts will increase for some recipients in June.
Here’s who will get an extra boost to their monthly payments.
Recession still not averted
The signing of the debt ceiling lift has done little to steady the finely-balanced financial system in the US.
Over the next two years, $1.5 trillion in mortgages will be due in the next economic hazard that policy makers will have to deal with as high interest rates batter Americans with loans.
In light of inflation from the previous year and a budget surplus, several states are continuing to distribute stimulus checks and tax refunds for relief.
Here’s a breakdown of the states sending out payments in June, as well as information on how to request them and the respective amounts.
Senators worried about state of mortgages
Am I worried? The short answer is yes. I hope the Federal Reserve and the banking regulators are worried as well, and I hope they won’t be caught flat-footed like they were with the bank failures that we’ve had so far.
Right now, we have the double whammy of much higher interest rates and the commercial real estate market going through a shock post-Covid. So I don’t think we can presume that... we’re going to be able to simply glide through [without a crash].
I have encouraged the White House, though, that we need to do some more intervention on these regional banks right away.
Finance and economic news: Welcome!
The bipartisan debt ceiling bill finally signed into law by President Joe Biden over the weekend averted a historic and potentially catastrophic debt default. The measure will affect many beneficiaries of the Supplemental Nutrition Assistance Program.
Meanwhile, the May jobs report blew past expectations yet again. Despite the robust hirings data, investors are betting that the Fed will hold off hiking interest rates when they meet on 13-14 June, so that policymakers can analyze economic data thoroughly.
The Consumer Price Index and inflation report will also be released next week.