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Personal Finance Weekly News Roundup January 14, 2023

roundup january 14

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Credit Sesame’s personal finance weekly news roundup January 14, 2023. Stories, news, politics and events impacting the personal finance sector during the last week.

  1. Tesla price cuts may signal broader inflation easing
  2. Stocks have a strong positive response to jobs report
  3. Consumer inflation expectations ease
  4. Average credit card rates surge past 20%
  5. Small business owners are becoming less optimistic
  6. Financial regulator takes action against aggressive debt collector
  7. Consumer Price Index declined in December
  8. Illegal crypto activity hit a new high in 2022

1. Tesla price cuts may signal broader inflation easing

Tesla has cut prices for its vehicles in several major markets, including the United States, China and Europe. China is Tesla’s second biggest market, behind only the United States. The price cuts announced varied by model and market, but some were as high as 20%. The move to cut prices is a reversal for Tesla, which has generally enjoyed strong demand for its products. It caused some hard feelings among current Tesla owners, who had paid premium prices for their vehicles. A combination of increased competition and weakening demand is thought to be the reason behind the price cuts. Those factors could contribute more broadly to an easing of the global inflation trend. See full article at Reuters.com.

2. Stocks have a strong positive response to jobs report

The stock market reversed a weak start to 2023 with big gains on Friday, January 6. The Dow Jones Industrials Average was up about 700 points. That represents a 2.1% single-day gain. The S&P and Nasdaq indexes posted even larger gains. The jobs report hit the right best-of-both-worlds note, with job gains indicating continued growth while slower wage gains signaled less inflation pressure. See article at Yahoo.com.

3. Consumer inflation expectations ease

A new survey from the Federal Reserve Bank of New York showed that consumers expect less inflation over the next year. They also report seeing tighter credit conditions and plan to rein in their spending increases. The average inflation expectation for the next 12 months is 5.0%. That would be lower than 2022’s inflation rate of 6.5%, and is the lowest inflation expectation since July of 2021. Households expect spending to increase by 5.9% over the next 12 months. That’s down sharply from a 6.9% expected increase in spending as of the November survey, and not much more than the percentage price increase consumers expect. A relatively high percentage of consumers say it’s harder to get credit now than it was a year ago. See full report at NewYorkFed.org.

4. Average credit card rates surge past 20%

The latest Federal Reserve figures show the average interest rate charged on credit cards is now 20.4%. This is the highest rate ever reported by Fed credit card data that goes back to the mid-1990s. That average credit card rate has risen by just over 4% since the first quarter. The surge in credit card rates comes just as the amount of credit card debt continues to reach new all-time highs. Credit card debt grew at an annual rate of 16.9% in November, compared to just 3.9% for other forms of consumer debt. See Consumer Credit data at FederalReserve.gov.

5. Small business owners are becoming less optimistic

A survey of small business owners found that the percentage who expect business conditions to improve over the next six months fell in December. The National Federation of Independent Business reported that its Small Business Optimism Index dropped to its lowest level since last June. The index has been below its historical average for a year now. Inflation and staffing problems were cited as key challenges facing small businesses. See article at Reuters.com.

6. Financial regulator takes action against aggressive debt collector

The Consumer Financial Protection Bureau (CFPB) has reached a settlement to impose penalties on a law firm the CFPB says took part in improper debt collection practices. The settlement is subject to court approval. The CFPB claims the firm of Forster & Garbus launched more than 99,000 debt collection lawsuits without having proper documentation of the debts owed for many of those cases. The settlement would require Forster & Garbus to drop any lawsuits where it doesn’t have sufficient documentation. It would also levy a $100,000 fine. Firms for which Forster & Garbus pursued debts included consumer financial giants Citibank and Discover. See full press notice at ConsumerFinance.gov.

7. Consumer Price Index declined in December

The Consumer Price Index (CPI), a widely-followed measure of inflation, showed that prices actually declined in the final month of 2022. The CPI fell by 0.1% during December, largely because of a 4.5% drop in energy costs. This marked the first decline in the CPI since May of 2020. CPI for the full year was up by 6.5%. However, that 12-month figure isn’t indicative of the recent trend. Over the last six months of 2022 inflation rose by less than 1%. The only slightly sour note in the CPI release is that so-called core inflation, which excludes energy and food prices, ticked up slightly last month, from 0.2% to 0.3%. See full release at BLS.gov.

8. Illegal crypto activity hit a new high in 2022

Blockchain analysts Chainalysis released a study saying that illicit flows of cryptocurrencies reached a record high of $20.1 billion last year. Much of the activity involved the deposit of crypto into accounts under U.S. sanction. These accounts were often in countries such as Russia and North Korea. Besides these illegal transfers, there were $3 billion worth of crypto funds stolen through hacks. The Chainalysis accounting for criminal activity in crypto does not include the estimated $7 billion that is missing from the FTX trading platform. Read full article on Yahoo.com.

Weekly News Headlines from Credit Sesame

Richard Barrington
Financial analyst for Credit Sesame, Richard Barrington earned his Chartered Financial Analyst designation and worked for over thirty years in the financial industry. He graduated from St. John Fisher College and joined Manning & Napier Advisors. He worked his way up to become head of marketing and client service, an owner of the firm and a member of its governing executive committee. He left the investment business in 2006 to become a financial analyst and commentator with a focus on the impact of the economy on personal finances. In that role he has appeared on Fox Business News and NPR, and has been quoted by the Wall Street Journal, the New York Times, USA Today, CNBC and many other publications.

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