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The true cost of inflation: How many Americans are living paycheck to paycheck?

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Amid the Federal Reserve’s persistent efforts to rein in inflation, a study has revealed that over 60% of Americans are grappling with living paycheck to paycheck, highlighting the enduring impact of high price escalations.

Conducted by LendingClub, the survey unveiled that 61% of adults struggled to make financial ends meet in July—a surge from 59% recorded in the same month of the previous year.

The survey’s findings correlate with recently released federal government data, indicating a 0.2% increase in the Personal Consumption Expenditures index, a pivotal gauge of inflation closely monitored by the Federal Reserve.

Core prices, excluding the more volatile food and energy components, have surged by 4.2% over the past year.

The report further elucidates that Americans are allocating more funds to dine out, attend live events, buy toys, clothing, and prescription drugs. Ordering dishes containing beef and veal has escalated by nearly 11% in July compared to the previous year. Similarly, having a beer at a bar or restaurant became around 4% costlier last month than in the corresponding period last year.

Clothing and footwear prices have risen by over 2.4% year-over-year in July, while children’s clothing experienced a steep 5.4% surge. Medical expenditures have also seen an uptick, with pharmaceutical costs soaring by 3.4% and prescription drug prices rising by 2.8% in July.

Healthcare expenses have amplified as well, with dental visits costing 5.3% more in July compared to the same period the previous year.

As the Federal Reserve contemplates whether to raise interest rates once more during its upcoming meeting, the latest data provide context. Expectations remain that the central bankers will retain the current rate range of 5.25%-5.5%, following a 25 basis point increase in July.

A recent statement from Moody’s Analytics Chief Economist highlighted that Americans are now shelling out an additional $709 monthly for essential goods and services compared to just two years ago.

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Money

Federal Reserve lowers rates amid eased job market

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The Federal Reserve has cut interest rates by a quarter-point, bringing the benchmark rate to a range of 4.5% to 4.75%, as economic growth continues but job gains slow.

The Fed noted that labour market conditions have “generally eased,” even with low unemployment, signalling a more cautious approach amid a stable economic expansion.

The statement marks a shift in Fed language, now saying inflation has “made progress” toward the 2% goal instead of the prior “further progress.”

With inflation holding steady around 2.6%, policymakers aim to keep economic risks balanced, despite pressures from slower job growth.

This rate cut reflects a strategic move to sustain economic momentum while cautiously watching inflation’s gradual trend toward the Fed’s target.

The decision was unanimous, aligning Fed priorities with a balanced approach to support both employment and price stability.

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Money

Trump victory sparks market surge as Wall Street soars

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Donald Trump’s election victory has sparked a massive rally in the stock market.

Banks and industrial companies led the surge as investors bet that Trump’s plans for deregulation and tax cuts will boost economic growth.

Shares of big banks, like JPMorgan and Goldman Sachs, soared as investors predicted fewer regulatory restrictions.

Meanwhile, industrial giants such as Caterpillar and steelmakers like Nucor also hit record highs, reflecting optimism about U.S. manufacturing.

In contrast, clean-energy stocks took a hit, as Trump’s policies are expected to favour traditional energy sectors.

This surge comes amid rising Treasury yields and falling gold prices as investors gain confidence in the transition to a Trump administration.

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Money

Australian Treasurer and RBA chief clash over economy

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A rare dispute has emerged between Australia’s Treasurer Jim Chalmers and Reserve Bank Governor Michele Bullock over the nation’s economic trajectory.

Governor Bullock argues the economy remains overheated, even as growth data shows recent slowdowns.

Treasurer Chalmers, however, warns that sustained high interest rates are “smashing the economy.”

This debate is critical for Australians, as it will influence the future of interest rates and inflation.

Data shows a mixed economic picture: while inflation is down, it’s still above target, and the jobs market remains historically strong.

Ultimately, deciding who’s right may come down to theory and perspective on economic health.

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