News roundup January 27, 2024

Personal finance weekly news January 27, 2024

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Credit Sesame’s personal finance news roundup January 27, 2024. Stories, news, politics and events impacting personal finance during the past week.

  1. GDP shows solid growth in 4th quarter of 2023
  2. 2023’s existing home sales were the worst in 30 years
  3. Leading Economic Index points downward
  4. Consumers are beginning 2024 on a wave of optimism
  5. Unemployment differs widely from state to state
  6. Mortgage rates continue to seesaw
  7. Key inflation reading gives moderate signal

GDP shows solid growth in 4th quarter of 2023

The US economy grew at an inflation-adjusted annual rate of 3.3% in the final quarter of 2023. While this is a slowdown from the growth rate in the 3rd quarter, it shows that the economy continued to grow faster in the second half of 2023 than in the first half or at any point during 2022. GDP grew by an inflation-adjusted 3.1% for the entire year during 2023. That is a significant improvement over 2022’s growth of 0.7%. The 4th quarter GDP figure is a preliminary estimate subject to two scheduled revisions over the next two months. See details at BEA.gov.

2023’s existing home sales were the worst in 30 years

US sales of existing homes fell by 19% last year to 4.09 million. That was the lowest total in 30 years. Even that comparison doesn’t fully capture how weak home sales were last year because the population has grown by over 25% over those 30 years. Despite the weak demand, the price of an existing home reached a record high of $389,800. Prices have continued to rise despite the slow market because of a relatively low supply of properties. High prices have been hard on first-time home buyers in particular, preventing many of them from being able to afford a home. Whereas first-time buyers historically have represented 42% of the market, that share was under 30% last year. See article at Yahoo.com.

Leading Economic Index points downward

Despite a strong second half for GDP growth in 2023, the Conference Board’s Leading Economic Index declined by 2.9% over the final six months of the year. This followed a 4.3% decline over the first half of the year. While the rate of decline slowed as the year went on, the negative growth rate indicates the risk of a recession ahead. Specifically, the Conference Board expects GDP growth to turn negative in the 2nd and 3rd quarters of 2024 before beginning to recover by the end of the year. See details at Conference-Board.org.

Consumers are beginning 2024 on a wave of optimism

The University of Michigan’s consumer sentiment survey found consumer spirits rose sharply to start the new year. The consumer sentiment index rose by 13% in January and has increased 29% over the past two months. January’s improvement was well above economists’ consensus expectation, and the two-month rise is the strongest since 1991. The upbeat mood was attributed to a growing belief that the worst inflation flare-up was in the past. The sunnier perception of the economy is a marked difference from most of 2023 when consumer pessimism prevailed despite generally strong economic data. See article at Yahoo.com.

Unemployment differs widely from state to state

The latest report on state-by-state unemployment rates shows that job markets continue to show significant differences across the 50 states and the District of Columbia. Maryland has the strongest job market, with an unemployment rate of just 1.9%. Nevada has the highest unemployment rate of 5.4% at the other end of the spectrum. Over the past year, Maryland and Oregon showed the most significant improvement in employment conditions. The unemployment rate in both states declined by 1.1% in 2023. That brought Maryland’s unemployment rate down to 1.9%, while Oregon’s is now 3.7% (equal to the national average). New Jersey’s job market worsened more than any other state in 2023. The unemployment rate there rose by 1.5% to reach 4.8%. See details at BLS.gov.

Mortgage rates continue to seesaw

Mortgage rates have recently fallen into a seesaw pattern, rising one week and falling the next. Last week, it was their turn to rise, with 30-year mortgage rates climbing by 0.09% to 6.69%. For would-be home buyers, this is a big improvement over the recent peak of 7.79% that 30-year rates reached in late October of last year. Still, current rates remain 0.56% higher than they were a year ago. 15-year mortgage rates climbed fairly sharply last week. Those rates were up by 0.20%, to 5.96%. See rate trends at FreddieMac.com.

Key inflation reading gives moderate signal

The Personal Consumption Expenditures (PCE) price index rose 0.2% in December 2023. The PCE price index is the Federal Reserve’s preferred measure of inflation. While December’s rise was the largest since September, continuing over an entire year would amount to an inflation rate of just 2.4%. That’s lower than the actual rise in the PCE price index over the past year of 2.6% and just slightly above the Fed’s target of 2.0%. Significantly, the core PCE price index, which excludes the volatile food and energy sectors, was in line with the overall index, with a 0.2% rise in December. See media release at BEA.gov.

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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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