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News roundup December 23, 2023

news roundup December 23, 2023

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Credit Sesame’s personal finance news roundup December 23, 2023. Stories, news, politics and events impacting personal finance during the past week.

  1. Key inflation measure shows prices fell in November 2023
  2. Mortgage rate decline accelerates
  3. Americans find it takes more money to feel wealthy these days
  4. Four out of five Americans encountered fraud this year
  5. BP halting oil shipments through the Red Sea
  6. Government study finds overdraft fees are often avoidable
  7. Credit conditions reflect growing financial strain
  8. Mortgage applications continue to decline
  9. Economic indicators signal recession

1. Key inflation measure shows prices fell in November 2023

The Personal Consumption Expenditures (PCE) price index declined by 0.1% in November. The PCE price index is the measure of inflation primarily used by the Fed to track the progress of its monetary policy decisions. For the past 12 months, the PCE price index is up by just 2.6%. That suggests the numbers are a little ahead of the Fed’s inflation reduction schedule. Strong evidence of easing inflation validates the Fed’s recent decision to forego making another rate hike in 2023 and could fuel speculation about rate cuts in 2024. See news release at BEA.gov.

2. Mortgage rate decline accelerates

30-year mortgage rates fell for an eighth consecutive week. Last week’s 0.28% decline was the steepest yet during that streak. Mortgage rates have now fallen by 1.12% since the end of October 2023. However, 30-year rates remain 0.25% above where they were when the year began. See rate details at FreddieMac.com.

3. Americans find it takes more money to feel wealthy these days

A recent survey found that despite rising incomes and net worth, only 14% of Americans consider themselves wealthy. The standard for a high level of financial success has been raised considerably over time. More than half of Americans earning over $100,000 a year live paycheck-to-paycheck. This year, 67% say they would need at least $1 million to feel rich, up from 57% in 2022. About 20% say it would take at least $5 million to consider themselves wealthy. See article at CNBC.com.

4. Four out of five Americans encountered fraud this year

An AARP study found that 80% of consumers have seen some form of fraud attempt this year. That’s up from 76% last year. Much of the attempted fraudulent activity takes place online. This includes fake ads, impersonation scams, bogus delivery or security alerts and peer-to-peer payment fraud. The AARP recommends education as a weapon in fighting fraud. Only 28% of those surveyed could correctly answer at least 7 out of 10 questions on financial fraud. See article at SpectrumLocalNews.com.

5. BP halting oil shipments through the Red Sea

BP has announced that it will temporarily cease sending its tankers through the Red Sea due to increased attacks on shipping in the region. A Norwegian company followed shortly after with a similar announcement. A spate of recent attacks has escalated from targeting countries linked to Israel to apparently indiscriminate attacks on shipping. A disruption of shipments through this crucial waterway could drive up the price of oil. This could revive global inflation, which has been eased in recent months by a decline in oil prices. See article at Yahoo.com.

6. Government study finds overdraft fees are often avoidable

A new study by the Consumer Financial Protection Bureau demonstrates that consumers could have avoided overdraft fees in most cases. Although lower-income bank customers most frequently incur overdraft fees, even these customers generally had an alternative to overdrawing their accounts. While overdrafts tend to surprise people who rarely overdraft their accounts, consumers who do so frequently are usually aware of what they’ve done. Just 15% of people with infrequent overdrafts (1 to 3 a year) saw it coming, but 56% of people with frequent overdrafts (10 or more a year) expected their actions to result in an overdraft. Most people who incur an overdraft have the option of using credit instead. 68% of people with 1 to 3 overdrafts per year had credit available on a credit card. So did 62% of those with 3 to 10 overdrafts and 51% with 10 or more. See news release at ConsumerFinance.gov.

7. Credit conditions reflect growing financial strain

TransUnion’s November 2023 Credit Industry Snapshot shows consumers are relying more on credit to make ends meet and are having trouble keeping up with the debt they’ve taken on. The report covers conditions for auto loans, bank-issued credit cards, mortgages, and unsecured personal loans. Average balances were up across all products, indicating consumers borrowed more. Delinquency rates were also up, showing that larger percentages of consumers are missing payments. See report at TransUnion.com.

8. Mortgage applications continue to decline

Despite a recent drop in mortgage rates, the number of people seeking new home loans continues to decline. New purchase applications declined by 1% last week after seasonal adjustment and are down by 18% from a year ago. Refinancing, however, seems to be making a mild comeback in popularity. Refinancing applications are up by 18% from a year ago. The share of overall application volume represented by refinance applications rose from 39.2% to 39.7% last week. See new release at MBA.org.

9. Economic indicators signal recession

The Conference Board’s Leading Economic Index (LEI) declined by 0.5% in November. The LEI is now down by 3.5% over the past six months, following a 4.3% decline over the previous six months. The LEI is at a level traditionally associated with recessions. However, it has remained in that danger zone for several months without a recession. See news release at Conference-Board.org.

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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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