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Personal finance weekly news roundup July 29, 2023

Weekly Personal Finance News Recap - JULY 29, 2023

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Credit Sesame’s personal finance weekly news roundup July 29, 2023. Stories, news, politics and events impacting the personal finance sector during the last week.

  1. Fed raises interest rates
  2. IMF issues mixed forecast for global economy
  3. UPS close to averting strike
  4. Visa rides consumer strength to continued growth
  5. Mortgage applications continue to slow
  6. Consumer confidence rises to highest level in two years
  7. Median home prices rise despite falling sales
  8. GDP growth eases upward in 2nd quarter
  9. Key inflation measure eases down

1. Fed raises interest rates

The Federal Open Market Committee (FOMC) announced an interest rate rise of 0.25%. This puts the Fed funds rate target range at 5.25% to 5.50%. The rate increase was widely expected after the Fed held off on raising rates at its previous meeting. In June, the Fed released economic projections suggesting two 0.25% increases between then and the end of the year. Now that the Fed has made one such increase, the Fed seems likely to make one additional 0.25% over the three remaining FOMC meetings this year. The Fed is also winding down its inventory of government and mortgage-backed securities. That has the effect of boosting long-term interest rates. See statement at FederalReserve.gov.

2. IMF issues mixed forecast for global economy

The International Monetary Fund (IMF) has issued an updated World Economic Outlook report. This report represents a mixed bag of news for the global economy. On the plus side, the IMF raised its forecast for global economic growth. They now expect global growth of 3% for 2023, up by 0.2% from the previous forecast. However, that’s still below last year’s pace of 3.5% and the historical growth rate of 3.8%. The outlook for the US economy is even more sluggish, with the IMF forecasting growth of 1.8% this year and 1.0% next year. However, the inflation outlook for the US is better than for the rest of the world. The IMF is forecasting a global inflation rate of 6.8% this year. That’s a high inflation rate but an improvement over last year’s 8.7% global inflation. In the US, though, inflation has already fallen to 3.0%. See details at Yahoo.com.

3. UPS close to averting strike

UPS reached a tentative deal with the Teamsters that would allow the delivery service to avoid a threatened strike as of August 1. The agreement would prevent a massive economic disruption that could reignite inflationary forces. However, the pact involves sizeable pay increases for full-time and part-time workers. That could result in rate increases that would add some inflationary pressure. The deal needs to be finalized through ratification by rank-and-file workers. See article at Yahoo.com.

4. Visa rides consumer strength to continued growth

Visa enjoyed strong payments growth of 9% over the past year. Most of that volume came from overseas, as U.S. growth was just 4.9%. The company attributes the growth to both continued strength on the part of consumers plus the continued migration of payments from cash to credit cards. See article at Yahoo.com.

5. Mortgage applications continue to slow

Mortgage applications responded to a recent rise in mortgage rates by posting another decline last week. Applications were down by 1.8% for the week on a seasonally-adjusted basis. Over the past year, purchase applications have fallen by 23%. Refinance applications have been hit even harder, declining by 30% year-over-year. See news release at MBA.org.

6. Consumer confidence rises to highest level in two years

The Conference Board’s Consumer Confidence Index rose 6.3% in July to reach its highest level since July 2021. Consumer perceptions of current conditions rose by 3%, while expectations for the months ahead did even better. The Expectations Index rose by 10.4% to 88.3. This is clearly above 80, which has traditionally signaled a recession. See news release at Conference-Board.org.

7. Median home prices rise despite falling sales

The housing market has continued to show a strange dynamic in which prices rise while sales volume is decreasing. Existing home prices fell by 3.3% in June and are off by 18.9% from a year ago. However, the median home price rose last month to $410,200. While this is lower than prices were a year ago, it is the second-highest level ever. Prices have been recovering even as volume remains weak. The reason is tight inventory, with limited properties available for sale. See news release at NAR.realtor.

8. GDP growth eases upward in 2nd quarter

The economy grew at a slightly higher rate in the 2nd quarter of 2023. The Bureau of Economic Analysis reported that GDP increased at a 2.4% inflation-adjusted annual rate during the quarter. This is an improvement over the first quarter’s 2.0% growth rate. The economy has now grown for four quarters in a row. The 2nd quarter figure is just a preliminary estimate, with routine adjustments to come in the months ahead. See details at BEA.gov.

9. Key inflation measure eases down

The Personal Consumption Expenditures Price Index is the Federal Reserve’s inflation measure to monitor price changes in the economy. This index increased by 3.0% over the past year, down from 3.8% for the year ending in May. Core inflation (excluding food and energy) remains more stubborn, at 4.1% over the past year. However, this is down from 4.6% for the year ending in May 2023. In June, prices of goods decreased by 0.1%, while services were up by 0.2%. See details at BEA.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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