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News roundup December 9, 2023

Finance news roundup December 9

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Credit Sesame’s personal finance weekly news roundup December 9, 2023. Stories, news, politics and events impacting the personal finance sector during the last week.

  1. Government survey finds household finances closer to the edge in 2023
  2. Corporate default rates predicted to peak next year
  3. Revolving debt rising to pre-pandemic levels as a percent of income
  4. Job openings and job seekers moving more into sync
  5. Regulators cracking down on lenders
  6. Bank executives push back against regulators
  7. Oil prices drop to lowest level since June
  8. Mortgage rates continue to ease
  9. Job growth remains steady

1. Government survey finds household finances closer to the edge in 2023

The Consumer Financial Protection Bureau’s Making Ends Meet survey found that American households find it a little more challenging to get by this year than last. The survey found that 37.8% of families have trouble paying bills or expenses, up from 35.7% last year. However, this is still better than the 40.4% struggling to make ends meet in 2019. 39.7% of households are unprepared to meet expenses for a month if they lose their primary source of income. This is worse than the 37.3% figure last year and the 38.1% from 2019. See details at ConsumerFinance.gov.

2. Corporate default rates predicted to peak next year

It’s not just consumers struggling with debt as interest rates rise. Fitch Ratings, a firm that scores corporations’ creditworthiness, expects corporate debt default rates to rise next year. Fitch expects default rates on high-yield corporate debt to grow between 5.0% and 5.5% in 2024. That’s a significant increase from this year’s range of 3.0% to 3.5%. Fitch forecasts that higher interest rates and slowing demand will be to blame for rising default rates. The silver lining is that they expect default rates to subside in 2025. See details at InvestmentExecutive.com.

3. Revolving debt rising to pre-pandemic levels as a percent of income

The Federal Reserve Bank of St. Louis reported that while revolving credit outstanding is far and away at an all-time high, it is not at an unusually high level as a percentage of income. Revolving credit includes lines of credit consumers can access at any time, mainly comprising credit card debt. As a percentage of household income, revolving credit ranged between around 95% to 100% from mid-2016 through the first quarter of 2020. During the pandemic, it dropped as low as 74% but has recently increased to 96%. The big difference this time is that credit card interest rates are about 6% higher than before the pandemic. This makes similar levels of debt much more expensive to maintain. See details at StLouisFed.org.

4. Job openings and job seekers moving more into sync

The proportion of job openings for unemployed workers has fallen to 1.34, its lowest since August of 2021. For much of the past two years, there have been many more job openings than job seekers. This imbalance has contributed to inflationary pressures. A better balance between the numbers may help ease inflation without causing hardships to workers. See article at Yahoo.com.

5. Regulators cracking down on lenders

After being burned by bank failures earlier this year, bank regulators keep a tighter rein on bank lending practices. Measures include surprise examinations, application of special risk measures, and new requirements for how some banks do business. This adds to conditions likely to make credit more difficult to obtain in the months ahead. See article at Reuters.com.

6. Bank executives push back against regulators

Executives of some of America’s largest banks appeared before Congress to complain about proposed new regulations and capital requirements. The bankers argue that the new rules would hinder lending and thus disrupt the economy. These rules have been proposed to reduce the risk of additional bank failures. The banking executives characterized those failures as isolated and not deserving of systematic reforms. See article at Yahoo.com.

7. Oil prices drop to lowest level since June

The price of a barrel of oil fell to its lowest level in over five months this week on concerns about shifting supply-and-demand dynamics. Gasoline stockpiles rose more quickly than expected at a time when refiners have updated production and demand is experiencing its seasonal decline. There are also longer-term worries on the part of oil producers that a slowing global economy in 2024 could suppress demand. This bad news for oil producers is good news for the fight against inflation, as oil significantly impacts price trends in general. See article at Yahoo.com.

8. Mortgage rates continue to ease

30-year mortgage rates took another significant step downward last week. They dropped by -0.19% last week to 7.03%. This was the sixth straight weekly decline for 30-year rates. This trend has brought mortgage rates to their lowest level since August 10, though they are still 0.61% higher than when the year began. See rate details at FreddieMac.com.

9. Job growth remains steady

The US economy added a net total of 199,000 jobs in November. This is less than the 240,000 average monthly gain for the past 12 months but an improvement over October’s 150,000 new jobs. The unemployment rate dipped to 3.7%, down from 3.9% in October. The report takes on special significance in light of next week’s last Fed meeting of the year. The increase in jobs confirmed that the economy continues to grow, while the drop in the unemployment rate could mildly revive inflation concerns. See Employment Situation report at BLS.gov.

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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