Credit Sesame’s weekly news roundup November 19, 2022. Stories, news, politics and events impacting the personal finance sector during the past week.
- Court ruling threatens student loan forgiveness
- Consumers are growing more pessimistic about the economy
- Home prices still trending upward
- Household debt up sharply in the third quarter
- Mastercard survey expects strong Black Friday sales
- SEC issues Investor Alert on cyber fraud
- New housing construction slows down
- Mortgage rates take a steep fall
- Import and export prices fell in October
1. Court ruling threatens student loan forgiveness
A U.S. District Court in Texas has ruled that President Biden’s sweeping forgiveness of some student loan balances was unconstitutional. This is a more direct threat to the program than a ruling a few weeks ago by a different court. That earlier ruling merely put the loan forgiveness on hold until the court could consider a different lawsuit challenging the program. In this newer ruling, a judge appointed by then-President Trump said that the Biden administration exceeded its authority to act by granting such sweeping loan forgiveness. The government will appeal the ruling, though the forgiveness program will remain in limbo for the time being. See article at Yahoo.com.
2. Consumers are growing more pessimistic about the economy
A monthly survey by the Federal Reserve Bank of New York found that consumers are becoming more pessimistic about inflation, employment and access to credit. Since the last survey, consumers have increased their expectation of what the inflation rate will be in the year ahead by 0.5%. The percentage of consumers who think unemployment will be higher a year from now rose by 3.8% in the past month, to 42.9%. That’s the highest level of pessimism about the job market since April of 2020, when pandemic lockdowns were in effect. The percentage of households reporting that it’s harder to obtain credit than it was a year ago rose to 56.7%. That marks a new high for that data series. See full survey results at NYFed.org.
3. Home prices still trending upward
Despite rising mortgage rates, home prices generally have continued to rise. According to the National Association of Realtors (NAR) home prices over the past year rose in 98% of metropolitan areas. Nationally, the median single-family home price rose by 8.6% over the past year to reach $398,500. According to the NAR’s Lawrence Yun, the median income needed to buy a home is now $88,000, almost $40,000 more than it was back in 2019. See news release at NAR.Realtor.
4. Household debt up sharply in the third quarter
New data from the Federal Reserve Bank of New York’s Quarterly Report on Household Debt & Credit showed that the total amount owed by consumers rose sharply in the third quarter of 2022. The total household debt balance rose by $351 billion, the largest non-inflation-adjusted increase since 2007. Mortgage debt led the way, increasing by $282 billion in the quarter. This is the largest component of household debt, representing 71%. Credit card debt rose by $38 billion. That debt rose by 15% year-over-year, which is the largest percentage increase in more than 20 years. See analysis at NewYorkFed.org.
5. Mastercard survey expects strong Black Friday sales
The latest Mastercard SpendingPulse report projects that retailers will see Black Friday sales increase by 15% over last year. Since that is nearly twice the rate of inflation over the past year, the increase in spending is driven by more than just higher prices. In fact, there are some indications that retailers may offer more aggressive discounts this year. Amazon plans to stretch its Black Friday discounts out over 48 hours. Walmart is offering special discounts every Monday during November. Target is advertising a full week of Black Friday deals. This year’s retail activity is expected to mark the continued recovery of in-store shopping. In-person Black Friday purchases are expected to be up by 18% over last year, more than the general 15% increase in all retail sales that Mastercard is projecting. See full article at PYMNTS.com.
6. SEC issues Investor Alert on cyber fraud
With identity theft and other breaches of investment account information on the rise, the SEC has issued an Investor Alert on the subject. This advisory bulletin includes nine steps investors should consider taking to guard against cyber fraud. These steps range from account monitoring in an effort to detect fraud to actions that can secure or close an account an investor thinks has been compromised. See full Investor Alert at SEC.gov.
7. New housing construction slows down
Census Bureau figures for October show that residential building activity has been slowing down. New permits for residential housing were down by 2.4% for the month and 10.1% over the past year. Residential building starts were down by 4.2% for the month and 8.8% for the year. The slowdown in new residential construction may reflect a combination of builder pessimism over the housing market and weakened demand due to sharply higher mortgage rates. See full release at Census.gov.
8. Mortgage rates take a steep fall
30-year mortgage rates fell by nearly half a percent last week. They declined by 0.47%, from 7.08% to 6.61%. That reverses a rising trend and puts rates at their lowest level since late September. The reversal in mortgage rates comes on the heels of last week’s Consumer Price Index report that showed inflation rose less drastically than expected in October. Despite the downturn, 30-year rates are still more than twice as high as they were when the year started. See latest rate data at FreddieMac.com.
9. Import and export prices fell in October
More evidence of slowing inflation could be seen in October’s data on U.S. import and export prices. The price of imports to the U.S. dropped by 0.2% in October. That was the fourth consecutive month of price declines for imports. Falling import prices can lower the cost of goods sold in the U.S. The prices of exports from the U.S. have also fallen for four straight months. That could indicate some easing of the global inflation problem. The only sour note is that falling export prices are not good for U.S. economic growth. See full release at BLS.gov.