US financial news summary | 14 May 2023
US Finance Feed: Latest Updates
Headlines: Sunday, 14 May 2023
- Failure to raise debt ceiling could jeopardize Social Security payments
- Linda Yaccarino selected by Elon Musk as Twitter's next CEO
- A look back at Elon Musk's time as Twitter CEO
- Donald Trump argues that Republicans should force Democrats to cut $5 trillion in federal spending in CNN Townhall
- Prices for summer travel are likely to be lower this year compared to last
- Inflation rose 0.4 percent in April, leading to a year-over-year increase of 4.9 percent
- Negotiations continue in Washington DC over raising the debt ceiling
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Since January 1940, the Social Security Administration (SSA) has sent monthly payments to certain beneficiaries, most notably retired workers.
Receiving Social Security requires a Social Security Number (SSN), as well as meeting certain credit, earnings, and retirement age requirements. We will take a look at if changes in your credit score impact your benefits.
Read more in our full coverage on which entities are able to garnish benefits.
Each year the Social Security Administration (SSA) announces a Cost-of-living adjustment (COLA) that will be applied to the benefits it distributes to offset the impact of inflation. During times of high inflation, like the economic situation of many Social Security beneficiaries over the last year, the COLA can make a huge difference in one’s purchasing power.
The 2023 COLA reached 8.7 percent after unprecedented inflationary pressure racked the US and global economies. Although prices are still rising, the pace has slowed, and the COLA is likely to be a fraction of what beneficiaries saw this year.
Across the Golden State, cities and non-profit organizations are using money allocated by the legislature to implement pilots of guaranteed income programs to test their efficacy in supporting economically vulnerable households to meet their basic needs. In particular, the state is interested in examining how guaranteed income can prevent homelessness. Researchers monitoring the pilots will assess whether the direct monthly payments made to impoverished individuals and families can prevent their financial situation from becoming so severe that they are evicted and forced to live in their vehicles, shelters, or on the streets.
Read our full coverage for more on how these programs differ from Universal Basic Income.
The Biden government and Congress continue to be at an impasse regarding lifting the debt ceiling, and unless the situation is resolved, the US could default on its debt as early as June 1, which would spell disaster for the economy.
Economists have been making predictions about how a default or even a breach of the ceiling could affect the country.
Most of the US would be affected by a breach of the debt ceiling, but as our report indicates, the economic damage would be felt differently across states.
Fed chief believes the US can avoid recession
Federal Reserve Chair Jerome Powell believes the US economy can avoid recession, despite the odds being stacked against this, taking into account turmoil in the banking sector, and the politics involved in the debt ceiling impasse.
Powell is banking on the strength of labor markets which showed an increase last month, to pave the way for a soft landing, despite the past year's interest-rate hikes.
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Due to inflation, several states in the US approved the sending of stimulus checks or tax refunds as relief last year. Since then, inflation has fallen but financial support continues in certain locations, with payments up to $1,500.
Tax credits and relief checks are on their way to eligible residents in several states, and our coverage discusseswhere they are being sent.
Biden government cancels $66 billion student debt
The US Department of Education has in recent years canceled more than $66 billion in education debt.
More than 2 million borrowers have benefited from that relief, including defrauded students and those who work in the public sector.
Walmart is the biggest employer not only in the US but in the world; and now, the retail giant is closing down some of its stores in different cities across the US.
The giant retailer had warned earlier in 2023 that it would be a tough year ahead for them. They are closing 20 locations, saying these branches had poor financial performance, although they did not give specifics.
Below-par numbers are certainly a solid reason for closing up shop, but as this report tells us, there are underlying factors that could be blamed for poorer sales.
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Two states in the US are sending payments and tax refunds to their residents of up to $3,000: Alaska and Georgia. In the case of the former, it is the Permanent Fund Dividend. In Georgia, the government has started sending a refund thanks to the budget surplus.
Our coverage gives the details on who are qualified to receive them.
The changing food prices this year
According to figures from the United States Department of Agriculture, these were the foods that increased in price the most between April 2022 and April 2023:
Margarine: +23.8%
Eggs: +21.4%
Frozen vegetables: +18.9%
Flours and mixes of prepared flours: +17.8%
Cookies: +15.9%
Beef, veal and pork also rose considerably, although not to the level of the listed products. The fall in food inflation began to be noticed more significantly during the last quarter of 2022, especially in beef, pork and fresh fruits.
The indices that decreased the most from March to April include: oranges and mandarins (-3.8%), frankfurter sausages (-2.9%), citrus (-2.7%), bacon and related products (-2.2%) and fresh whole milk (-2.1%).
Walmart will be closing down various locations to cut costs and improve its financial performance. According to a statement issued by the company, the locations that will close are those that have had a “lower-than-expected performance.” The retail giant did not provide further details.
Daniela Barrera gives us the complete list of Walmart supermarkets that will close in 2023 by state.
Rent for single-family homes on the rise
Amid an overall cooling of rent prices in the US, a study shows that single-family rentals are going up.
Monthly rental rates increased from $2,212 to $2,330 at the close of the first quarter of 2023 compared with the same period last year, which translates to a 5.3% increase. At the moment, demand for these kinds of homes outweigh supply.
Hundreds of families across California have been selected and enrolled in pilots to evaluate the impact of guaranteed income programs.
Families are receiving monthly payments through their participation in the pilot programs, some of which have already started. The Los Angeles County Guaranteed Income Demonstration Project has been sending 1,000 families $1,000 payments since last spring and will do so through spring 2025.
There are no programs currently enrolling participants, but as our coverage details, this could change in the future if the state legislature allocates more funding for these pilots.
10 worst states to retire in
Personal finance website WalletHub ranked all 50 US states based on three key categories: affordability, quality of life and health care, to determine how good a state was for retirement living. Ranking was determined by how well the state scored across all three categories.
According to these measures, these are the worst states to retire in: Kentucky, New Jersey, Mississippi, Oklahoma, New York, Louisiana, Illinois, Washington, Maryland, and Arkansas.
Americans have had to carefully watch what they have been purchasing due to high levels of inflation. In June 2022, this reached its highest rate in decades with year-on-year inflation reaching a mighty 9.1 percent.
According to data from the US Bureau of Labor Statistics, the rate last month fell to 4.9 percent. This is the inflation data for all products, but as our coverage reports, food prices only play a part in the data and are in fact increasing at a rate higher than the average.
Data from the United States Department of Agriculture shows the products that have been the worst hit by rising prices.
Job openings are in free fall: what could this mean for wages?
The number of job openings fell to 9.6 million in March, which is down over one million since December. The number of openings falling indicates that the demand for labor is falling, which could lead wages to drop as there are fewer jobs for those searching for one.
Thus, workers looking for a new job have to compete for a shrinking number of openings.
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Elon Musk announced that he had hired a new CEO for Twitter who would take over his job in six weeks. On Friday, he finally revealed that his replacement would be Linda Yaccarino.
The billionaire will continue to play an active role in the social media platform. According to this report, he will become executive chair and chief technology officer, overseeing the product, software, and operating systems.
Elon Musk says he will do a live Q and A on Twitter with the new CEO
Elon Musk announced that he would be stepping aside as CEO of Twitter, naming NBCUniversal executive Linda Yaccarino as his successor.
Musk told his followers that soon the duo would participate in some Twitter spaces to talk with users as the leadership transition begins.
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Last week, Treasury Secretary Janet Yellen notified Congress that the US could default on its debt as early as June 1, which would have serious consequences on the economy.
The Congressional Budget Office has a similar prediction, warning that the country is at significant risk of defaulting on its debt in the first two weeks of June.
As our coverage details, this could have a big impact on Social Security.
Debt ceiling risks cannot be overstated, says Yellen
The debt ceiling is the maximum amount the US government can spend on its existing financial obligations, such as Social Security and veterans’ wages, as well as Medicare or Medicaid.
Faced with a scenario in which the US government reaches said limit, Congress must increase or suspend that debt ceiling to avoid serious economic consequences. However, Congress has not reached an agreement with the White House.
Hello and welcome to AS USA's live blog on financial news.
We will bring you the latest from Wall Street to Washington for all you need to know about interest rates, the debt ceiling negotiations, inflation, and Social Security.
The Bureau of Labor Statistics reported that inflation increased 0.4 percent in April, leading to a year-over-year increase in prices of 4.9 percent.
On Thursday, the Department of Labor reported that the number of initial unemployment claims made the week before, 264,000, hit the highest level seen since October 2021. Meanwhile, unemployment remains at a historic low.
The US Treasury has said that the country could hit its debt ceiling by 1 June, and still, no deal has been struck on an increase to the limit. Former president Donald Trump has told Republicans that they should allow the country to default if Democrats do not cave to their demands.
Thanks for following along.