US financial news news summary | 26 May 2023
Headlines | Friday, 26 May 2023
- Agreement close to being found in debt ceiling debate
- US employment still going strong with fewer initial UI claims than expected, continuous UI claims drop
- The median selling price of homes sold in the US fell to $420,800 in April, the lowest level recorded in the last year.
- Experts remain divided over whether the Fed will announce another rate hike in June.
- The day the US could default on its debts, otherwise known as the 'X Date', could come as soon as 1 June
- The impact of a default could present greater challenges for some states over others.
- Can President Bidenuse the Fourteenth Amendment to increase the debt limit?
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Strong consumer spending puts Fed in tough spot
Consumer spending increased more than expected in April, boosting the economy's growth prospects for the second quarter, and inflation picked up, which could prompt the Federal Reserve to raise interest rates again next month.
The growth picture was further brightened by other data from the Commerce Department on Friday showing a surprise rebound last month in orders of manufactured non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans.
The reports added to labor market resilience, a rebound in factory production and a pickup in business activity in suggesting the economy was experiencing a spring revival after hitting a speed bump in the first quarter. They also increased the chances that the central bank would hike rates in June.
(REUTERS)
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Tens of thousands of clients of Maxim Healthcare Services are about to receive a payment of up to $5,000 in compensation for a data breach. The private medical personnel company based in Columbia, Maryland; agreed to pay 2020 data breach claims filed in a class action lawsuit by residents of the state of California.
Here's who will be eligible and how to make a claim.
A debt ceiling breach would have a number of wide-reaching consequences for Americans and funds will not be available for every federal need.
Initial unemployment claims tick up, long-term claims drop
The US Labor Department released unemployment insurance claims data for the week ending 20 May which showed a slight increase of 4,000 in the number of first-time claims rising to 229,000. Economists polled by Reuters had predicted the number to be 245,000.
Data for the previous two weeks was revised down sharply as fraudulent applications from Massachusetts were stripped out. In early May the Massachusetts Department of Unemployment Assistance sounded the alarm that it was "experiencing an increase in fraudulent claim activities” from people attempting to gain access to current UI accounts as well as individuals using stolen personal data to fraudulently obtain unemployment benefits.
Strength in the US labor market was further indicated by a reduction of over 48,000 continuing UI claims suggesting another month of strong employment gains and a lower jobless rate. Jobs growth data for May is due out on Friday 2 June. The Federal Reserve will be watching the incoming economic data closely as they weigh whether to implement another interest rate hike or not at their next meeting 13 and 14 June.
Walmart is the biggest retailer in the world, raking in more than $600 billion in sales in the last 12 months.
The company’s profits are on the rise, but so are the incidents of retail theft. Theft has been higher than what it has been historically: they are suffering losses not just through shoplifting, but also through organized retail crime, where criminals methodically steal small or expensive items.
Here is a list of the most commonly stolen items at the giant retailer
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Negotiations over raising the debt ceiling remain ongoing in Washington DC. Treasury Secretary Janet Yellen has warned Congress that her department could run out of money to pay its debts by 1 June.
One of the groups left most vulnerable during a default would be US veterans who receive healthcare, job training, disability assistance, or a pension through the Veterans Adminstration (VA).
Walmart is the biggest retailer in the world, raking in more than $600 billion in sales in the last 12 months.
The company’s profits are on the rise, but so are the incidents of retail theft. Theft has been higher than what it has been historically: they are suffering losses not just through shoplifting, but also through organized retail crime, where criminals methodically steal small or expensive items.
Here is a list of the most commonly stolen items at the giant retailer
Every year, millions of senior high school students confront major decisions about what to do after graduation. One option for those who don’t want to invest too many years in acquiring a college diploma is to go for an associate degree.
The Social Security Administration continues to send monthly benefits to retired workers in 2023. The SSA is also responsible for sending Supplemental Security Income benefits, disability and survivor benefits.
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The US has various economic assistance programs with the aim of providing relief to people with limited resources. Among these is the Supplemental Nutrition Assistance Program.
Although SNAP is a federal program, the payments are administered by the state government.
The amount one can receive varies, depending on the person and their economic situation. Also, since the programs are state-run, requirements can also be different depending on the state.
In the case of Florida, payment is based on monthly income and expenses.
Every month, the Social Security Administration (SSA) issues millions of payments to beneficiaries of the Social Security Program, who are mostly retired workers and people who receive Supplemental Security Income (SSI).
In fact, the latter will see an increase in their monthly checks starting in June thanks to the complementary payment plan approved in 33 states across the nation.
Failing to raise the debt ceiling would have dire economic effects such as spending cuts, as well as a reliance on incoming revenues to help the government pay its obligations. A possible slash in spending if the ceiling is not raised could mean late monthly Social Security payments or reduced benefits.
This could pose financial hardship for many recipients, especially for the millions whose monthly checks serve as the main source of income. For about four out of 10 Social Security beneficiaries, the payments represent 90% of their income.
What are the two main Social Security programs?
Millions of people receive monthly payments from the Social Security Administration. Beneficiaries include retired workers and people on Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI).
When mapping out a future career path people generally seek to enter a profession that will provide a good salary. Many would also like to be of service to society, having the chance to help others.
In 2023, a good number of the top paying jobs combine both the opportunity to earn well above the country’s median pay and to be of service, although you need advanced education to practice these professions.
While debt ceiling negotiations continue between Democrats and Republicans, the consequences for a debt default are still serious. An immediate impact of the US government failing to increase the debt ceiling would be a recession, plunging household spending and rapidly increasing unemployment.
There would be another impact too, for Americans loaded with debt. People would be struck by increased interest rates as the cost of government borrowing increases as credit ratings fall. Investors would demand higher returns to compensate for the increased risk. Ramsey Solutions estimates that the average debt per adult is $58,604 and more than three in every four adults have some kind of debt.
Weekly average 30-year fixed mortgage rate nears 6.6%
The weekly average 30-year fixed mortgage rate rose again this week jumping from 6.39% to 6.57% for the week ending on Thursday 25 May. The cost of borrowing to buy a new residence is tracking interest rates in the bond market which have been increasing as the US nears debt default.
The economy of the United States could be facing a crisis very soon if the White House and Congress fail to agree on raising the debt ceiling.
The ceiling refers to the limit of money that the federal government can borrow. While the Biden administration seeks to increase funding, lawmakers- mostly Republicans- refuse to do so unless spending is cut. The last time the ceiling was raised was in December 2021, increasing the total budget to $31.4 trillion.
According to Treasury Secretary Janet Yellen, the federal government may no longer be able to meet its financial responsibilities as of June 1, and would therefore face a default. This would affect a broad range of payments from the military to civil servants, as well as those receiving Social Security.
Fed lending to banks lowest since crisis began in March
Federal Reserve emergency lending to banks fell in the latest week to its lowest level since the banking sector ran into trouble in March.
Lending to banks via the central bank’s discount window, its main tool to provide liquidity to deposit taking banks, hit $4.2 billion on Wednesday, from $9 billion on May 17, according to Fed data.
Loans given through three programs stood at $288.7 billion, versus $304.5 billion on May 17. The total size of the Fed’s balance sheet hit $8.486 trillion, from $8.507 trillion last week.
(REUTERS)
Walmart tries to catch up to Amazon
Walmart is the number one employer in the world, and has stores which are within 10 miles of 90% of Americans.
However, when it comes to e-commerce, they are way behind Amazon, which has cornered 39.5% of the market share, compared to their 7%. Under new leadership, Walmart is trying to close this gap.
Hello and welcome to AS USA's live blog on finance and economic news
To the dismay of many progressive Democrats, the White House seems to have placed itself in a situation where social spending cuts must be made to raise the debt ceiling. Some members of the caucus, particularly leaders in the Senate, have continued to call on President Biden to use the Fourteenth Amendment to override Republicans. As talks between Congressional Republicans and the White House continue, we will bring you the latest.