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Personal finance weekly news roundup April 1, 2023

news roundup April 1

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Credit Sesame’s personal finance weekly news roundup April 1, 2023. Stories, news, politics and events impacting the personal finance sector during the last week.

  1. First Citizens buys Silicon Valley Bank
  2. Federal Reserve lending to banks soars
  3. Lenders becoming more cautious as late payments rise
  4. Despite slight improvement, consumers expect a recession
  5. Pending home sales make surprising improvement
  6. Investors flee crypto exchange following regulatory action
  7. GDP growth lower than previously thought
  8. Mortgage rates continue to ease
  9. Key inflation indicator cooled off last month

1. First Citizens buys Silicon Valley Bank

The Federal Deposit Insurance Corporation (FDIC) has agreed to a deal which will allow First Citizens BancShares to buy the remnants of Silicon Valley Bank. Having another bank take over the failed Silicon Valley Bank helps limit the hit that the FDIC’s insurance fund will take to bail out depositors. Investors responded positively to the news, which followed an earlier takeover of the failed Signature Bank by New York Community Bancorp. However, these solutions do not address the fundamental problems that are challenging the balance sheets of some other banks. See article at Reuters.com.

2. Federal Reserve lending to banks soars

Emergency lending to banks by the Federal Reserve topped $100 billion in consecutive weeks. This included a record $152.9 billion for the week ending March 15. While much of the focus has been on the FDIC insurance fund as a safeguard against bank failures, emergency lending by the Fed helps banks avoid failure. It allows them to borrow against securities rather than having to liquidate securities to meet depositor demand. See article at Yahoo.com.

3. Lenders becoming more cautious as late payments rise

The latest VantageScore CreditGauge report showed that lenders are slowing the pace at which they issue new credit. New accounts for credit cards, personal loans and mortgages all slowed in February. Auto loan activity was flat. Lending standards may be tightening in response to rising rates of payment delinquencies. Late payments rose across all credit tiers, though credit scores on average remain fairly strong. See details at VantageScore.com.

4. Despite slight improvement, consumers expect a recession

The Conference Board’s Consumer Confidence Index made a slight improvement in March, but the news isn’t all good. Consumers’ assessment of current conditions declined a bit in the past month even though their expectations for the the months ahead improved slightly. The combination of the two changes was enough to edge the index up for the month. However, despite the improvement, consumer expectations remain at a level that is often followed by a recession within the next year. See press release at Conference-Board.org.

5. Pending home sales make surprising improvement

According to the National Association of Realtors, contracts for the sale of previously-owned homes increased by 0.8% in February. Though the increase was slight, it was better than the 2.3% decline economists had forecast. This was the third straight monthly increase in sale agreements for existing homes. As a result, in February the monthly volume of those contracts reached its highest level since last August. The Northeast region led the way in February, with a 6.5% rise in the number of sales contracts. See article at Yahoo.com.

6. Investors flee crypto exchange following regulatory action

$1.6 billion worth of cryptocurrency was withdrawn from Binance in the first two days following announcement of a lawsuit by the U.S. Commodity Futures Trading Commission (CFTC). The CFTC has alleged that Binance is running an illegal trading exchange with a sham compliance program. Binance is the world’s largest crypto trading exchange. See article at Yahoo.com.

7. GDP growth lower than previously thought

The third estimate of fourth quarter 2022 GDP growth is 2.6%. That’s lower the third quarter growth rate of 3.2%. The latest revision to the fourth quarter growth rate is also lower than the original estimate of 2.9% and a previous revised estimate of 2.7%. The Bureau of Economic Analysis regularly issues three estimates of GDP growth – an advance estimate about a month after the end of the quarter, a second estimate about a month after that and a third estimate about three months after quarter end. The growth rates are annualized and adjusted for inflation. See news release from BEA.gov.

8. Mortgage rates continue to ease

Mortgage rates declined for the third straight week. Last week 30-year rates declined by 10 basis points, to 6.32%. They are now 10 basis points below where they were when 2023 began, and 0.76% below their peak of 7.08% reached in November of last year. See mortgage rate update at FreddieMac.com.

9. Key inflation indicator cooled off last month

The Personal Consumption Expenditures (PCE) Price Index rose by 0.3% last month. That represented a much slower pace of price increases than January’s 0.6% increase. The core PCE Price Index also rose by 0.3%. That means price increases are slowing generally, and not just in the volatile food and energy sectors. The PCE Price Index is significant because it is the Federal Reserve’s preferred measure of inflation. A 0.3% monthly increase would represent almost a 3.7% annual increase if continued for a full year. While that’s still above the Fed’s 2.0% target, it would represent a substantial slowing from recent rates of inflation. See news release from BEA.gov.

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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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