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News roundup January 6, 2024

Finance news roundup January 6

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Credit Sesame’s personal finance news roundup January 6, 2024. Stories, news, politics and events impacting personal finance during the past week.

  1. Employment grew every month in 2023
  2. Federal government debt reaches new record to start 2024
  3. 2024 new year brings new flexibility for 529 plans
  4. Job openings continue sustained decline
  5. Mortgage applications haven’t responded to rate drop
  6. Construction spending is on the rise
  7. Strong 2023 stock market made up for 2022 losses
  8. Survey highlights the impact of unexpected expenses
  9. Mortgage rates break streak of nine straight weekly declines

1. Employment grew every month in 2023

The US economy added a net total of 216,000 jobs in December. That was above expectation but slightly below the average of 225,000 jobs per month for the past year. December’s solid growth was offset somewhat by downgrades to previously released figures for October and November, totaling 71,000 jobs. December’s job growth completes the third year in which employment has grown each month. See employment report at BLS.gov.

2. Federal government debt reaches new record to start 2024

The Treasury Department announced that US government debt has reached the $34 trillion mark for the first time. The new record sets the stage for another round of deadlines for agreement on funding levels for the remainder of this fiscal year. That fiscal year began on October 1, but temporary agreements have pushed back funding deadlines. See article at Reuters.com.

3. 2024 new year brings new flexibility for 529 plans

As of January 1, money in 529 college savings plans can be rolled into a Roth IRA. Previously, savers were charged a tax penalty if they used the money for something other than educational expenses. This new change in tax law will allow savers to put money into a 529 plan without worrying about what will happen if they don’t end up needing it all to pay for a family member’s education. See article at Parents.com.

4. Job openings continue sustained decline

Total job openings in the United States fell by 62,000 in November 2023 to 8.79 million. This decline continues a slow but steady trend since the openings peaked at 12 million in March 2022. Job openings declined in both the private and government sectors. Usually, a drop in job openings would be seen as negative economic news, but in recent years, there have been more job openings than job seekers. This is the opposite of the usual relationship, leading to labor shortages and inflationary wage pressures in some sectors. A decline in the number of job openings relative to the number of job seekers could bring that relationship more into balance. See news release at BLS.gov.

5. Mortgage applications haven’t responded to rate drop

Despite a sustained decline that saw mortgage rates drop by more than a full percentage point over the last two months of 2023, mortgage application activity hasn’t picked up. Mortgage applications declined by 9.4% over the past two weeks. The figures are seasonally adjusted, accounting for the typical holiday slowdown. Refinance activity was down by 18%, and purchase activity was down by 5% over the two weeks. See news release from MBA.org.

6. Construction spending is on the rise

Construction spending rose by a seasonally adjusted 0.4% during November. Both residential and non-residential construction rose during the month, with residential construction rising at a faster pace. Overall, construction spending has risen by 11.3% over the past 12 months. An increase in new residential construction could help ease the short supply of homes for sale. See news release at ABA.com.

7. Strong 2023 stock market made up for 2022 losses

S&P Global announced that a substantial rise in the S&P 500 last year was enough to make up for a very bad 2022. The S&P 500 posted a 24.23% gain last year, which brought its rise over the past two years to 0.8%. The total return was 3.42% when dividends were included. The S&P 500 fared much better than the Dow Jones Industrials Index, which is more narrowly concentrated in large, traditional businesses. The Dow was up by 13.7% last year, though it outperformed the S&P 500 over two years. See analysis at SPGlobal.com.

8. Survey highlights the impact of unexpected expenses

A new survey found that 60% of respondents had a significant unexpected expense during 2023. The average amount involved was $5,500. Typical impacts of these unexpected expenses included reduced credit scores, missed bill payments, and overdraft fees. Unexpected medical expenses were particularly damaging. These averaged $6,200, nearly 13% more than the typical unexpected expense. See article at PYMNTS.com.

9. Mortgage rates break streak of nine straight weekly declines

30-year mortgage rates rose last week for the first time since late October 2023. However, the increase was by the slightest of margins – just 0.01%. This brings 30-year rates to 6. That’s still 1.17% lower than they were when the nine-week stretch of rate drops began. 15-year mortgage rates fell last week by 0.04% to 5.89%. See rate data 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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