Money Management

Job growth exploded in January, and the unemployment rate dropped even more. 

For months on end, economists have been warning about a potential recession — either in 2023 or shortly after. And when we hear the word “recession,” we can’t help but associate it with the word “unemployment.”

The good news, though, is that today’s labor market is absolutely thriving. And so if you’ve been losing sleep about the idea of a recession, January’s jobs numbers might help put some of your concerns to rest.

A strong month for job growth

In January, the national unemployment rate fell to 3.4%. That’s the lowest reading on record since 1969. All told, the U.S. economy added 517,000 jobs last month despite the fact that many economists were expecting a slowdown.

If companies are hiring at a rapid clip, it means they not only have money to spend, but also, they may not be so concerned about an impending economic downturn. And if they’re not worried, why should you be?

It pays to prepare nonetheless

At this point, it’s somewhat easy to make the argument that we’re not going to reach recession territory in 2023. But you never know what the next 11 months might have in store. And so either way, it’s a good idea to get yourself recession-ready so you’re prepared for a downturn at all times — even during periods when the economy is booming.

How do you become recession-ready? The first step is making sure you have a solid amount of savings.

Ideally, you’ll want to aim for enough money in your savings account to cover at least three full months of essential bills. That way, if you lose your job, you’ll have cash reserves to tap while you look for work.

Another good way to gear up for a recession is to shed costly debt, like credit card debt. To be clear, you don’t have to rush to pay off your mortgage loan ahead of a recession. Chances are, that loan has a reasonable interest rate attached to it, and you’re probably scheduled to be paying it off for many more years.

But any sort of debt with a variable interest rate, like credit card debt, is debt you’ll want to tackle sooner. Plus, you could be paying five times the amount of interest on your credit card balance than on your mortgage, so shedding that debt could save you money, all the while giving you one less expense to deal with if economic conditions decline.

Finally, make sure you’re up to date on your job skills. If there’s a skill you’re missing to do well at work, learn it. That way, if economic conditions worsen and layoffs hit your company, you may be less likely to end up on the chopping block.

It’s clear that today’s labor market is nice and strong. But that doesn’t mean you shouldn’t try to prepare for a recession anyway. Doing so could give you peace of mind — even if the economy manages to stay strong for the foreseeable future.

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Don’t leave the Dollar Tree without them! 

As a parent, finding affordable ways to keep my kids entertained is crucial for my bank account — and for my sanity. Fortunately, the Dollar Tree provides me with plenty of opportunities to buy fun activities to keep my children occupied without giving my credit cards too much of a workout.

While there are many great Dollar Tree items I buy for my children, here are three of the best bargain items from the Tree that any parent would absolutely love

1. Paint With Water books

My 3-year-old adores crafts, and I like to encourage his creativity. What I do not love, however, is cleaning up giant messes which are inevitable when we do most craft projects. But, there’s one awesome Dollar Tree product that is completely mess free, that I can leave him to do without close supervision and that we can even bring with us in the car.

What is this miraculous product? It’s the Paint With Water books the Dollar Tree sells. As the name suggests, these books allow you to “paint” or make beautiful colors appear just by running a wet paint brush over the pages.

This product has kept my son busy at restaurants, on planes, and at home for hours. I never have to worry about anything staining, either, because the worst that can happen is he spills a cup of water. It’s truly like magic — both for me, and for him, as colors appear on the page perfectly within the lines to create a beautiful finished product.

2. Learning Activity Workbooks

Although my son attends an amazing preschool, we try to do some educational activities at home. And the Dollar Tree Learning Activity Workbooks actually make this fun.

There are dozens of different activity workbooks available at my local Dollar Tree at any given time, and they target a wide array of different age groups and subjects. We’ve done some really fun books that have provided a great introduction to numbers and letters. And because the books only cost $1 (or $1.25), I don’t worry too much if my son just wants to color on some pages rather than doing the assigned activity.

3. Make-It Blocks

Building with Legos actually has some educational benefits for kids, including improved hand-eye coordination and development of problem-solving skills. But, let’s face it, Lego sets can be expensive — especially for a 3-year-old who doesn’t necessarily keep all the pieces together after constructing a masterpiece.

Fortunately, the Make-It Blocks from the Dollar Tree are a really affordable option that allow my son to build all kinds of cool stuff including everything from dinosaurs to construction trucks. My husband and son adore putting them together as a team, and we can buy a whole bunch at once since they only cost $1.25. The best part is, they are also fun to play with after they have been built (at least for a short period, before they end up taken apart!)

Each of these three items are some of the best deals for kids at the Dollar Tree, and parents should check them out if they want affordable entertainment for their own kids.

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Some parts of the U.S. are still paying extra SNAP money this month. 

February will be the last month that states can pay extra food benefits to SNAP recipients. A number of states have already stopped making the emergency payments, but some will continue to do so for this final month. These include states like Oklahoma, Texas, and Louisiana, which have high levels of poverty and hunger.

What are emergency allotments?

At the start of the pandemic, the government introduced more flexibility to the Supplemental Nutrition Assistance Program (SNAP). The idea was to reduce the administrative pressure by making it easier to manage SNAP payments as well as giving extra money to households that were struggling.

The emergency payments meant states could pay households the maximum allowance rather than making the normal reductions. Households that already receive the maximum could get up to $95 each month. That money can only be spent on certain categories of food such as meat, dairy, produce, and cereals. For some families, the extra cash for food freed up money to cover the higher costs of other essentials such as housing or utility bills.

There’s some uncertainty about what impact the end of these payments will have on people’s bank accounts. Food Research and Action Center research from 2021 estimates it could mean an average of $82 less each month for SNAP households. Given that the maximum payment amounts have changed since then, the income change may be different.

These states will continue to make additional payments in February

According to the USDA, as of Feb. 3 the following states have said they will continue to pay emergency allotments this month:

AlabamaCaliforniaColoradoDelawareDistrict of ColumbiaHawaiiIllinoisKansasLouisianaMaineMarylandMichiganNew HampshireNew JerseyNew YorkNorth CarolinaOhioOklahomaOregonPennsylvaniaRhode IslandTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsin

Some states don’t confirm emergency allotment payments at the start of the month, so this list may get longer in the coming days.

How SNAP households can prepare for an end to emergency allotments

If you live in one of these states, the idea of losing that money may be worrying to say the least. Here are some steps you can take:

Update your information with your local SNAP office: States will no longer automatically pay the maximum for every household. This means making deductions based on your income and other factors. Make sure you’re getting everything you are entitled to by updating your details.Save some of your SNAP money: You don’t have to spend all the money on your EBT card each month, you can roll some of it over. If you can save some of your February money to use in the following months, it might ease the pressure a little.Readjust your budget: Work out how much less money you will receive in March and how that’s going to impact your bottom line. You may already feel like you’ve drastically cut your costs back, but it’s important to figure out how you’ll balance your books. If you can’t see any space for more cuts, perhaps there’s a way you can bring in some extra cash or get additional help.Maximize your SNAP money: Use coupon apps and cash back apps to make your grocery money go further, especially for more expensive items. See if there are any double up food bucks programs in your area. They let you get two-for-one on fruit and vegetables at participating stores and farmers markets.Look into other assistance programs: Depending on your situation, you may qualify for other financial assistance. Go to benefits.gov or speak to United Way on 2-1-1 to see if you’re eligible for additional help. It’s not only about food assistance, you might also get help with rent or utility payments.

Emergency help is available

If you aren’t sure how to put food on the table right now, find out what food pantries and soup kitchens operate near you. If you haven’t used one before, know that they are there to help. You may need to provide proof of ID or other information, and you’ll need to find out when different places open and how they work. Try to get there early and don’t be afraid to visit more than one.

The end to emergency food benefits is going to be a blow to many households. The steps above will help you manage and hopefully minimize the impact. The most important thing is to not ignore the problem — the more proactive you are, the more likely you are to keep your head above water.

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Image source: Getty Images
What happenedNonfarm payroll increased by 517,000 in January and the unemployment rate fell to 3.4%, according to a report from the U.S. Bureau of Labor Statistics. Job growth significantly exceeded the Dow Jones estimate of 187,000, and the unemployment rate is the lowest on record since May 1969.So whatThe U.S. labor market was strong in 2022, with average monthly gains of 401,000. That trend has continued into 2023, and the January jobs report is especially promising considering how much it exceeded expectations. It also comes at a time when inflation has been falling and the U.S. economy grew by 2.9%, two other positive economic indicators.”Like $20 bills on the sidewalk and free lunches, falling inflation combined with falling unemployment is supposed to be the stuff of economics fiction,” said Julia Pollak, chief economist at ZipRecruiter. She also called the news “almost too good to be true.”For U.S. workers, this is definitely great news. It doesn’t necessarily mean the economy has completely recovered from a turbulent 2022. Prices are still high, putting a strain on people’s personal finances, and there remains the possibility of a recession this year. However, job growth, low unemployment, and decreasing inflation are steps in the right direction.Now whatIf you’re interested in making a career move, it’s a fantastic time to go job hunting. Based on the job growth and low unemployment rate, there’s quite a bit of demand for workers. Also, many companies do the bulk of their hiring in the first quarter of the year, as that’s when new budgets are approved and managers know which roles they can fill.Even if you have a job, it still doesn’t hurt to see what else is available. A new job is often how workers increase their income the most, so it can be a big boost for your bank account. Here are a few ways to maximize your chances of finding a job:Polish up your resume. Make sure it accurately reflects your skills and accomplishments.Build and maintain professional relationships. Keep in touch with others in your field. LinkedIn is an easy way to do this.Set up job alerts. Many top job boards let you set up alerts of jobs that match what you’re looking for, so that you don’t need to check them yourself regularly.Alert: highest cash back card we’ve seen now has 0% intro APR until 2024If you’re using the wrong credit or debit card, it could be costing you serious money. Our expert loves this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee. In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes. Read our free reviewWe’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy. 

What happened

Nonfarm payroll increased by 517,000 in January and the unemployment rate fell to 3.4%, according to a report from the U.S. Bureau of Labor Statistics. Job growth significantly exceeded the Dow Jones estimate of 187,000, and the unemployment rate is the lowest on record since May 1969.

So what

The U.S. labor market was strong in 2022, with average monthly gains of 401,000. That trend has continued into 2023, and the January jobs report is especially promising considering how much it exceeded expectations. It also comes at a time when inflation has been falling and the U.S. economy grew by 2.9%, two other positive economic indicators.

“Like $20 bills on the sidewalk and free lunches, falling inflation combined with falling unemployment is supposed to be the stuff of economics fiction,” said Julia Pollak, chief economist at ZipRecruiter. She also called the news “almost too good to be true.”

For U.S. workers, this is definitely great news. It doesn’t necessarily mean the economy has completely recovered from a turbulent 2022. Prices are still high, putting a strain on people’s personal finances, and there remains the possibility of a recession this year. However, job growth, low unemployment, and decreasing inflation are steps in the right direction.

Now what

If you’re interested in making a career move, it’s a fantastic time to go job hunting. Based on the job growth and low unemployment rate, there’s quite a bit of demand for workers. Also, many companies do the bulk of their hiring in the first quarter of the year, as that’s when new budgets are approved and managers know which roles they can fill.

Even if you have a job, it still doesn’t hurt to see what else is available. A new job is often how workers increase their income the most, so it can be a big boost for your bank account. Here are a few ways to maximize your chances of finding a job:

Polish up your resume. Make sure it accurately reflects your skills and accomplishments.Build and maintain professional relationships. Keep in touch with others in your field. LinkedIn is an easy way to do this.Set up job alerts. Many top job boards let you set up alerts of jobs that match what you’re looking for, so that you don’t need to check them yourself regularly.

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Since 1931, only about 1 in 12 petitions have succeeded. 

As the country continues to barrel towards an economic catastrophe, some House Democrats are working on a plan to raise the debt ceiling without Republican leadership’s go-ahead. The proposal, a so-called discharge petition, would require only a handful of GOP defectors to be effective. Could the latest scheme in this year’s fiscal showdown actually help the Treasury avoid default?

What’s going on in Washington?

Financial drama is brewing in Washington following the Treasury’s announcement that it hit the debt ceiling on Jan. 19. The Treasury is responsible for paying the financial obligations of the United States government, including making payments on government bonds and distributing Social Security and Medicare benefits. The federal government, which has run a deficit since 2001, will be unable to honor its obligations once the Treasury’s short-term “extraordinary measures” run dry in June. Such an event would have devastating consequences for the personal finances of millions of Americans.

Congress has the sole power to borrow money on behalf of the federal government, and so must pass a bill raising the debt ceiling or risk a Treasury default. While the Democratic majority in the Senate is expected to authorize a debt-ceiling increase, Republicans holding a majority in the House may be a key hold-out.

Republican lawmakers are demanding significant cuts to government spending in exchange for a debt limit-raising vote. The circumstances have created a standoff between President Biden, seeking a “clean,” no-strings attached resolution, and Republican leadership.

What is a discharge petition?

Hundreds of years of policymaking have left a legacy dictating how, when, and by whom certain functions of government are performed. However, occasionally conditions are right, and legislators desperate enough, to institute certain lesser-known maneuvers.

Included in the many rights and privileges of the Speakership, which Republicans ascended early this year, is the ability to kill bills in committee. If a certain bill is unpopular among the House’s majority party, the Speaker may refer it to a committee, the chair of which may never place it on the agenda, effectively preventing a vote on the floor. Currently, House Speaker Kevin McCarthy could use this authority to neutralize any so-called “clean” debt ceiling-raising bills that do not have the approval of Republican leadership.

A successful discharge petition could change all of that. The discharge petition provides an off-ramp to legislation in committee limbo, allowing bills to be “discharged” or released from a committee’s custody and instead placed on the floor for a vote. The override is easier said than done however, requiring an absolute majority of votes, 218 in today’s House.

Could it actually work?

In many Congresses, that would be the end of the story. The House minority Democrats could never whip up enough votes to make a discharge petition viable. However, in the 118th House of Representatives, the Republicans have only a narrow majority — and a few potential dissenters.

As Representative Brian Fitzpatrick (R-PA) observed, only five GOP lawmakers would have to endorse a discharge petition for it to succeed. And for the Republicans who have voiced concern over the debt ceiling, the chance to pass a more moderate bill than what is eventually put forth by GOP leadership could be the push they need to cross the aisle.

Since 1931, of 563 discharge petitions filed, only two have ultimately resulted in a passed law. That said, the political pressures on House Republicans might be the catalyst needed for such a proposal to work today. If we see a discharge petition at all, it likely won’t be until late spring. Until then, Americans will have to wait and watch as talks between the House and White House continue.

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You need to read this if you ran up a big credit card bill over the holidays. 

The holidays are a time to make family memories. Unfortunately, the holiday season is also a time of year when many people overindulge in shopping and end up charging a lot more than they planned on their credit cards.

If your bills have started coming in and you’re dismayed about the balance due after your holiday spending binge, here are some steps you can take to try to pay off what you owe ASAP.

1. Consider getting a side gig

If you want to make real progress in paying off your credit card debt, you’ll need to send as much extra money as you can to your creditors. Getting a side job and making extra money is a great way to do that.

If you work as much as you are comfortable with for a short time, you can bring in a ton of extra cash and send that right to your creditors so you can avoid being stuck with your debt for months.

2. Use your tax refund

If you’re due a tax refund this year, consider using the entirety of it to pay off what you owe — or at least pay it down dramatically. Making a big lump sum payment could perhaps wipe out your balance or at least enable you to make real progress on it.

3. Make drastic temporary spending cuts

If you’ve found yourself in debt, dramatically reducing your spending temporarily can free up cash to send to your creditors. You don’t have to permanently give up everything that makes life fun, but opting out of dining out and slashing entertainment expenses for a short period of time could help you get out of the hole quickly.

4. Refinance your cards to cheaper debt

If you don’t think you can pay off your credit card debt right away, you may want to think about doing a balance transfer. A balance transfer involves getting a new card and transferring your current credit card balance to it. The new card should be one offering a 0% promotional interest rate on the balance you transfer over.

There’s an upfront fee when you do a balance transfer (usually around 3% to 4% of the balance). So it’s not worth doing this if you’re going to pay off your cards pretty quickly. But if you’re paying a very high rate on your current debt, most of your monthly payment could be going toward the interest rather than paying down what you owe. A balance transfer could fix that by giving you a long time — usually around 12 to 15 months — to pay 0% interest.

Paying the upfront fee in order to avoid future interest charges could be worth it if you think you can pay down the debt by the time the 0% rate expires. Just be sure you have a plan in place to do that.

By trying out these four steps, hopefully you can put your holiday debt behind you ASAP so you can start working on other important financial goals in 2023.

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