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News roundup December 16, 2023

news roundup December 16 2023

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Credit Sesame’s personal finance news roundup December 16, 2023. Stories, news, politics and events impacting personal finance during the past week.

  1. Fed leaves interest rates unchanged
  2. Inflation report shows mixed results
  3. Producer prices show continued signs of easing
  4. New consumer debt slowed in October 2023
  5. More Americans are taking 401(k) loans
  6. Consumers experience fraud attempts via mobile devices
  7. Friendly fraud is becoming commonplace
  8. Mortgage rates fall below 7%

1. Fed leaves interest rates unchanged

The Federal Open Market Committee (FOMC) concluded its last meeting of 2023 by leaving interest rates unchanged. Previously, it had released economic projections showing that it expected to make one more rate hike this year. The FOMC also released updated economic projections indicating that it expects to reduce rates from 5.4% to 4.6% next year. Those updated projections also include a milder forecast for inflation than the previous set of projections released in September. In its news release after the meeting, the FOMC reiterated its goal of bringing inflation down to 2.0%, though the current projections don’t show inflation getting down to that level until 2026. See FOMC statement at FederalReserve.gov.

2. Inflation report shows mixed results

The latest release of the Consumer Price Index (CPI) showed that inflation continued to be moderate in November, though it hasn’t entirely abated. The CPI was up by 0.1%. That’s an increase after being unchanged in October, but it would still be well below the Federal Reserve’s 2% annual target. However, core inflation, which excludes the food and energy sectors, continues to run above target. Core CPI was up by 0.3% in November. That’s up from 0.2% in October and would be projected to a 3.7% annual rate. See news release at BLS.gov.

3. Producer prices show continued signs of easing

The Producer Price Index (PPI) was unchanged in November 2023 after falling by 0.4% in October. For the past 12 months, the PPI is up by just 0.9%. This slow rate of increase for the prices paid by retailers and other providers of goods and services should take some of the pressure off of retail prices. A continued slide in energy prices has helped ease producer prices. The energy component of the PPI fell by 1.2% in November. See details on producer prices at BLS.gov.

4. New consumer debt slowed in October 2023

The latest Federal Reserve figures on consumer debt showed that Americans borrowed at a slower rate in October 2023. Consumer credit increased at a seasonally adjusted annual rate of 1.2% during the month. Nonrevolving credit increased at 0.7%, while revolving credit increased at 2.7%. Revolving credit consists primarily of credit card debt. See details at FederalReserve.gov.

5. More Americans are taking 401(k) loans

According to 401(k) plan administrator Empower, the number of people borrowing from their 401(k) plans is rising. 2.6% of retirement plan participants took a loan from their plans in the third quarter of this year. That’s up from 2.3% a year previously and 1.7% three years earlier. Not only is the number of people borrowing from their plans rising, but participants are also typically taking larger loans. The average loan size last year was $15,000. This contrasts with an average of between $10,000 and $11,000 from 2018 to 2021. The increased dependence on these loans is seen as a sign that Americans are having difficulty making ends meet with the high inflation of recent years. However, borrowers may risk their retirement security to pay for things today. See article at MSN.com.

6. Consumers experience frequent fraud attempts via mobile devices

A TransUnion survey found that just over half of consumers say they’ve been the target of a fraud attempt via their mobile device within the past three months. About a third of consumers say they see multiple fraud attempts each week. Most of these attempts are some variation on “phishing,” which involves using false pretenses to trick someone into providing sensitive financial information. 40% of survey respondents had experienced this kind of approach through an email. 32% had experienced it through a phone call, while 30% had been approached by text. Over a third of consumers believe their mobile service providers should be responsible for providing more fraud protection, such as always being able to see the caller ID. See news release at TransUnion.com.

7. Friendly fraud is becoming commonplace

First-party fraud, or “friendly fraud,” has become increasingly commonplace, especially among young adults. Unlike fraud committed by an outside party (i.e., neither the customer nor the merchant), first-party fraud is when the customer knowingly files a false complaint about a product or service despite receiving and being satisfied with that product or service. 42% of Generation Z members admit to doing this, compared with 22% of millennials, 10% of Generation X and 5% of baby boomers. This fraud is a growing cost to merchants and service providers, forcing them to implement less generous refund policies or raise prices to cover expenses. See report at Sift.com.

8. Mortgage rates fall below 7%

30-year mortgage rates dropped by 0.08% last week to 6.95%. That’s the lowest 30-year rate since the first week of August. Last week’s decline was the latest in seven consecutive weekly declines. The steady descent of mortgage rates reflects recent evidence of slowing inflation. However, mortgage lenders are taking a cautious approach. Rates are still 0.53% higher than they were when the year began. See rate details at FreddieMac.com.

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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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