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News roundup August 19, 2023

Weekly Personal Finance News Recap - AUGUST 19, 2023

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Credit Sesame’s personal finance weekly news roundup August 19, 2023. Stories, news, politics and events impacting the personal finance sector during the last week.

  1. Ratings agency sees challenging 2nd half of 2023 for U.S. banks
  2. Oil prices threaten to revive inflation
  3. Consumer economy sentiment slips
  4. Experian fined by FTC
  5. Consumers see spending growing faster than income
  6. Credit cards show rising balances and delinquencies
  7. Mortgage rates reach highest level in over 20 years

1. Ratings agency sees challenging 2nd half of 2023 for U.S. banks

FitchRatings, an institutional credit analytics company, cautioned that U.S. banks will see continued financial headwinds through the second half of this year. This is expected to extend a rough period for bank earnings. Challenges include higher costs of attracting deposits, as consumers demand higher interest rates on their savings. Banks are increasingly having difficulty earning asset returns that can keep up with those costs. Also, anticipated stricter regulatory reserve requirements are expected to restrict lending activity. FitchRatings anticipates that these challenges will especially hurt the performance of small to mid-sized institutions. See release at FitchRatings.com.

2. Oil prices threaten to revive inflation

A slump in oil prices in late 2022 and early 2023 helped slow inflation down over the past year. Now though, oil prices have risen to their highest levels since January. The International Energy Agency (IEA) said those prices could rise faster in the remainder of 2023 due to supply restrictions by OPEC and other oil producers. Those restrictions in the face of high demand are reducing oil inventories and causing prices to rise. This could give inflation a second wind after it has faded considerably over the past year. However, the IEA expects demand for oil to start to ease considerably next year due to a slowing global economy and increased use of electric vehicles. See article at Reuters.com.

3. Consumer economy sentiment slips

The University of Michigan’s consumer sentiment index showed that Americans became less optimistic about economic growth in August. The overall index of expectations for the economy dipped to 71.2 this month, down from 71.6 in July. However, the index reading was slightly better than economists’ consensus expectation for a 71.0 index level. While consumers aren’t as optimistic about growth, they feel somewhat better about inflation. Inflation expectations for the year ahead eased down to 3.3% this month after coming in at 3.4% in July. Read article at Reuters.com.

4. Experian fined by FTC

The Federal Trade Commission (FTC) fined Experian for violations of anti-spam regulations. The fine involves marketing emails Experian sent to consumers who had signed up for a free credit monitoring account. Experian then sent consumers credit card offers under the cover of emails claiming to include important information about their credit accounts. These emails failed to include an “unsubscribe” option, which is a violation of federal law. In response to an FTC lawsuit, Experian agreed to pay a $650,000 penalty and stop the illegal practice. See news release at FTC.gov.

5. Consumers see spending growing faster than income

The Federal Reserve Bank of New York’s July 2023 Survey of Consumer Expectations found people expecting income and spending to grow in the year ahead. However, the consensus is that spending will grow faster than income. The survey found a median expectation of 5.4% spending growth over the next year. This was up from an expected 5.2% spending growth as of June. The anticipated increase in spending growth exceeds the 3.2% median expected growth in household income over the next year. If consumers correctly expect that spending will grow faster than income over the next year, it could result in even more household debt. See news release at NewYorkFed.org.

6. Credit cards show rising balances and delinquencies

TransUnion’s Credit Industry Snapshot for July showed Americans are carrying larger balances and credit limits on their credit cards and are having a more challenging time keeping up with the bills. The average balance is now $5,982, and the average credit limit is now $25,821. Both numbers are up slightly from last month. Delinquency rates, which measure the percentage of customers behind on their payments, are also up. 4.31% of credit card customers are now at least 30 days behind on their payments. See full report at TransUnion.com.

7. Mortgage rates reach highest level in over 20 years

30-year mortgage rates surged by 13 basis points last week. The increase brought 30-year rates above the 7% mark for the first time this year. At 7.09%, 30-year rates are now at their highest since April 2002. This continued a recent trend of a 30-year rate rise for four consecutive weeks. 15-year rates have also risen for four weeks in a row. Last week they were up by 12 basis points, bringing them to 6.46%. See rate details at FreddieMac.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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