USA finance and payments news summary | 23 April 2022
US Finance News: Latest Updates
Headlines: 23 April 2022
- Friday was a grim day on Wall Street, with all major indices down. Nasdaq Composite closed18 percent lower compared to the start of the year.
- President Biden drags his feet on student loan forgiveness.
- Average gas price holds at $4.12, down from the March high of $4.33
- Parents have more timeto receive the Child Tax Credit if they have yet to receive the payments.
Helpful information & links
- Can federal student loans be forgiven after 10 or 25 years?
- Which cryptocurrencies have risen the most in value in April?
- Tax benefits for married vs single filers.
- Which states do not require state income tax?
There have been three federal stimulus checks in the US since the outbreak of the covid-19 pandemic.
When it comes to taxes, ideally, you’d get ahead of the game and plan out your tax burden over the course of the fiscal year, paying taxes due on time, or having a portion of your income withheld and sent to the IRS. If all goes to plan, you could be looking at welcome bit of cash back the following year through a tax refund.
However, if your calculations weren’t right or some unforeseen change in your financial fortunes leaves you with an unpaid bill with Uncle Sam you can be sure the IRS will be in touch. But you don’t need, nor want, to wait around. You can get a jump on the situation through a few simple channels the agency provides to save yourself a heftier tax bill.
A sweet bright spot in the gloom of rising prices
Disruptions in the supply chain and resurgent demand backed with a surplus of savings from the pandemic and stimulus have fueled ever-rising inflation over the past year. Russian's invasion of Ukraine only excellerated the trend pushing energy and food prices sky-high.
While those who snack on salty biscuits may need to fork out more at the register, those with a sweettooth for chocolate may be spared, at least if they're hooked on the high-quality stuff. Cocoa is one of a few commodities that is actually cheaper today and could buck the inflationary trend according to the Wall Street Journal.
The majority of taxpayers managed to file their 2021 tax returns on time, but there were a fair number of filers who still need to turn in their tax declaration. The IRS advises to get your tax filing in as soon as possible, not only to receive your tax refund but to avoid any potential late penalties.
That is especially true for taxpayers that have an outstanding bill with Uncle Sam. Even if you file on time or requested a six-month extension, interest and penalties start to accrue from the tax deadline, which was 18 April in 2022.
Hourly wage tracker finds companies paying well-below living wage
The current federal minimum wage for non-federal workers is $7.25 an hour, which has not changed since 2009. According to research from MIT, the living wage in the United States was $16.54 per hour in 2019.
A collaboration between Economic Policy Institute and The Shift Project created a new Company Wage Tracker, which looks at the earnings gap between front-line workers and CEOs at 66 large retail and food service firms.
Rolling Stone analyzed the data from the tracker and found that only 22 of the 66 companies paid at least half of their employees more than $15 per hour.
Tax refund maybe delayed due to error when claiming certain tax credits
Typically the IRS can process a tax return and send a tax refund within 21 days for those who filed electronically and chose direct deposit to receive payment. However, if the tax agency finds that it needs to do a manual review due to for example an error when claiming certain tax credits it may take longer.
The advance payments on the 2021 Child Tax Credit, although a boon to many American families, need to be reconciled with the remaining amount that can be claimed. Likewise, other tax credits such as the Recovery Rebate Credit, to claim unreceived stimulus check funds, or the Earned Income Tax Credit may require further processing.
Lowering US tariffs on Chinese goods 'worth considering'
US Treasury Secretary Janet Yellen on Friday said it was worth considering taking steps to lower US tariffs on Chinese goods given the "desirable effects" such a move could have on lowering US inflation, which has hit 40-year highs this year.
"We want to do everything that we can to lower inflation," Yellen told Bloomberg TV, citing steps by President Joe Biden to release oil from the Strategic Petroleum Reserve and moves to address supply chain disruptions.
Cutting tariffs was also "worth considering," she said. "There would be some desirable effects. It's something we're looking at," she added.
Yellen's comments come a day after a top White House adviser, Daleep Singh, suggested the United States could lower tariffs imposed on a host of non-strategic Chinese goods such as bicycles or apparel to help combat inflation.
Singh, who serves as deputy national security adviser to Biden, said tariffs imposed by the Trump administration may have given it some negotiating leverage, but they served no strategic purpose.
Lowering those tariffs and focusing on more strategic areas, including critical technologies, could present a good opportunity, he said.
Inflation is a critical concern for Biden, whose approval ratings are falling as the costs of energy, food and other staples increase, and his Democrats are at serious risk of losing their majorities in Congress in midterm elections in November.
Yellen told CNBC in a separate interview that inflation may have peaked in the United States, but cautioned that prices may remain elevated "for a while longer."
For young people, 2022 has been a year of high inflation, exacerbated by a predatory student debt system which forces many at the very minimum to put their lives on hold for years to pay it off. Social spending has been cut while significant investment has been made into weapons and production of fossil fuels, two issues that American youth are largely not in support of. Biden needs to do something to generate some enthusiasm in the youth for the elections, and cancelling of student debt would go a long way.
Wall Street sees largest drop in weeks over rate hike news
Federal Reserve chair Jerome Powell speaking at an IMF discussion on Tursday indicated that the central bank would move "more quickly" to rein in inflation that is at its highest in four decades. It is more than likely Fed policymakers will vote to raise interest rates by half a point when they meet in early May, and may do so again in at the June meeting.
Despite companies weathering the current economic uncertainty, reporting strong profits and better-than-expected forecasts, Wall Street saw the S&P 500 and Nasdaq indexes have their worst day in almost seven weeks down 2.8 and 2.6 percent respectively. The Dow Jones lost nearly 1000 points before rebounding to finish trading 2.8 percent lower, the biggest drop in 18 months.
Interest in electric vehicles grows
In response to the surge in gasoline prices across the US, more than sixty-percent of voters are reporting that they would consider purchasing an electric vehicle. Efforts to increase charging locations are picking up and some funding was allocated for this purpose in the Bipartisan Infrastructuer package.
Intital unemployment claims have flatlined
Since January, initial unemployment claims in the US have held steady at around 180,000. The Department of Labor reported late last week that for the week ending on 16 April, initial unemployment claims hit "184,000, a decrease of 2,000 from the previous week's revised level."
States with the highest number of initial claims for the previous week were Missouri (+7,194), Michigan (+5,950), California (+3,215), Indiana (+3,193), and Texas (+2,617). The largest decreases were tracked in Ohio (-3,886), Wisconsin (-1,159), Oklahoma (-776), Utah (-270), and Hawaii (-219).
When borrowing to cover educational expenses, students have private and public options. Private student loans are a great option for some borrowers, but there are a few differences with federal options that should be known before signing.
Which states saw the greatest GDP growth in Q4 2021?
The Bureau of Economic Analysis has reported that between July and September of 2021, the US GDP increased 6.9 percent. States with the highest level of growth included Texas (10.1%), Oregon (9.8%) and California (9.1%). Those with the lowest were Iowa, North Dakota, and Nebraska which all saw GDP fall.
Have yet to receive your stimulus check payments? There is still time!
Those who are missing a payment, or received less than their full entitlement, can claim a back payment in the form of a Recovery Rebate Credit on their 2020 or 2021 federal tax return. Although the tax deadline for 2020 and 2021 returns have both passed, the tax agency gives filers up to three years from the due date of the return to file and receive a tax credit refund. Read more.
Financial expert describes efforts to combat inflation as a game of "tug-of-war"
The Dow Jones Industrial Average had its worth day of the year Friday, leading to greater concerns that the Russian invasion and the economic impact of the covid-19 pandemic are creating issues for the stock market.
In response to inflation, the Federal Reserve has announced that the central bank will increase interest rates. Increasing rates means that credit and money move more slowly through the economy. The stock market did not respond well to the news. This news from Chairman Powell led to a major sell off on Wall Street, which contributed to major decreases seen across various stock market indices.
Most financial experts do believe that the US' energy independence will be able to protect against a recession this year as there are more options to keep fuel prices down.
Import prices increased 12.5 percent over the last year
The BLS has reported that since March 2021, import prices increased more than twelve percent. The majority of this increase comes from the 66.7 percent surge in fuel prices, with "prices for petroleum and natural gas advanced 66.5 percent and 79.7 percent, respectively, over the same period."
On the lower end of the scale, non-fuel imports increased on average 7.5 percent.
How long will it take to receive my tax refund?
Depending on when one filed their taxes, receiving a refund could take longer than the typical twenty-one days estimated by the IRS. Understaffed and underfunded the IRS has fewer professionals reviewing returns this year, which could delay the refund distribution process. The Office of the Taxpayer Advocate has said that "the effects of COVID-19, new tax law changes, and possible errors made on the tax return," could create further delays this season.
For those who filed a paper return, the IRS will take at least four weeks to provide a refund. Due to a high amount of paper return backlogs, it could take much longer.
Hello and Welcome to AS USA's live blog covering all the financial news you need. We will be looking into how those who missed the federal tax filing deadline can still submit, possible gas rebates, and the impacts of the Russian invasion on inflation.