Credit Sesame’s personal finance weekly news roundup November 18, 2023. Stories, news, politics and events impacting the personal finance sector during the last week.
- Average credit card balances at a 10-year high
- US credit outlook takes a hit
- Consumers get break from inflation in October 2023
- Producer prices show a significant decline
- Retailers take cautionary tone on holiday shopping
- Oil prices plunge following economic concerns
- 30-year mortgage rates fall again
- Americans continue to expect spending to grow faster than income
1. Average credit card balances at a 10-year high
Credit bureau TransUnion reported that the average credit card balance owed by consumers rose to its highest level in 10 years during the third quarter of 2023. The average credit card customer now owes $6,088, 11% higher than a year earlier. Along with higher balances, the delinquency rate on credit cards rose in the third quarter. Delinquency rates on auto loans and mortgages also increased in the third quarter, while the delinquency rate on unsecured personal loans declined. See details at TransUnion.com.
2. US credit outlook takes a hit
Credit rating agency Moody’s lowered its outlook for the nation’s financial status from “stable” to “negative.” While the United States still maintains a AAA credit rating, the change in outlook reflects the risk that this credit rating may deteriorate. The high level of debt, the rising cost of debt due to higher interest rates, and the possibility of a government shutdown were all cited as reasons for the gloomier outlook. As with any borrower, if the country’s credit rating falls, it is likely to make borrowing more expensive. See article at Yahoo.com.
3. Consumers get break from inflation in October 2023
The Bureau of Labor Statistics reported that the Consumer Price Index (CPI) was unchanged for October 2023. That makes it the first month with no inflation since June last year. Falling energy prices have helped ease inflation pressures. Energy sector prices were down 2.5% in October and 4.5% for the past 12 months. Overall, the CPI is up 3.2% for the past 12 months after rising by 3.7% for the 12 months ending in September. So-called “core” inflation, which excludes the volatile food and energy sectors, was up by 4.0% over the past 12 months, its lowest reading since September of 2021. See details at BLS.gov.
4. Producer prices show a significant decline
The Producer Price Index (PPI) declined by 0.5% in October. This index measures the prices paid by producers of goods and services. The PPI is often more erratic than the Consumer Price Index (CPI) from month to month because retailers typically try to smooth out the price changes experienced by consumers. However, major trends in the PPI tend to be reflected in consumer prices over time. October’s 0.5% decline is significant because it is the largest drop in producer prices since April 2020, when the economy was shutting down due to the pandemic. See article at BLS.gov.
5. Retailers take cautionary tone on holiday shopping
Executives at major retailers Walmart and Target took cautious, though not outright pessimistic, approaches to discussing their outlook for holiday sales. Heavy debt burdens, high-interest rates, and the resumptions of student loan payments are among the factors retailers expect to act as a drag on holiday shopping. See article at Yahoo.com.
6. Oil prices plunge following economic concerns
Oil prices dropped by 5% in early trading on November 16, extending a recent slump. The price of a barrel of oil is now down by more than 20% from the 2023 high set just a couple of months ago. Oil traders cite worries about a build-up in oil inventories and signs of a slowdown in the global economy as reasons for the downward price trend. Falling energy prices were a significant factor in October’s lack of inflation. See article at Yahoo.com.
7. 30-year mortgage rates fall again
30-year mortgage rates declined for a third straight week. Over the past week, they fell by 0.06% to 7.44%. Overall, mortgage rates have decreased by 0.35% during their 3-week slide. Even so, this represents a minor step back compared to the extended rise in mortgage rates. 30-year rates are still higher than at the end of September and just over a full percentage point above their level when 2023 began. See rate details at FreddieMac.com.
8. Americans continue to expect spending to grow faster than income
The Federal Reserve Bank of New York’s October 2023 Survey of Consumer Expectations found people’s economic outlook essentially unchanged from the prior month. The most disturbing trend reflected in the survey is that consumers generally anticipate spending growing faster than income. The median expectation for the year ahead is that household income will grow by 3.1% while spending will grow by 5.3%. See details at NewYorkFed.org.