News roundup March 16, 2024

Personal finance weekly news roundup March 16

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Credit Sesame’s personal finance news roundup March 16, 2024. Stories, news, politics and events impacting personal finance during the past week.

Inflation continues to rise

After a lull, inflation has risen for two consecutive months. The Bureau of Labor Statistics reported that the Consumer Price Index rose 0.4% in February 2024. While the inflation rate for the past 12 months is a moderate 3.2%, projected over a full year, February’s rate would translate to an annual inflation rate of 4.9%. The core inflation rate matched the overall increase of 0.4% last month. By any measure, the inflation rate remains firmly above the Fed’s target of 2.0%. See inflation report at BLS.gov.

Producer price increases accelerate

Not only did the pace of consumer inflation rise in February, but producer prices indicate there may be more inflation to come. The Producer Price Index rose by 0.6% last month. That’s the fastest rate of increase since last August. If continued for a year, February’s growth rate would translate to a 7.4% annual inflation rate. Inflation for goods exceeded inflation for services last month. That’s a switch from recent months when inflation in services led the way. Inflation in services at least has the benefit of translating more into workers’ wages, helping purchasing power keep up with inflation. Rising energy prices were a big reason why the price of goods rose faster in February. See report on producer prices at BLS.gov.

US household wealth at highest level ever

The Federal Reserve reported that US household wealth reached $156.2 trillion at the end of last year. That figure includes a 3.2% increase in the 4th quarter and is the highest level of household wealth ever reached. The rise in household wealth during the final quarter of 2023 was largely fueled by an 11.7% total return on US stocks. This was more than enough to offset a slight decline in real estate values. See article at Reuters.com.

New household debt record in January 2024

The total amount of non-mortgage debt owed by US consumers set another new record in the first month of 2024. Non-mortgage consumer debt rose at an annual pace of 4.7% during the month. That brought the total to $5,039.2 billion. Revolving debt continued to grow at a faster pace than non-revolving debt. Revolving debt, most of which is credit card balances, grew at an annual pace of 7.6% in January. Non-revolving debt rose at an annual pace of 3.6% during the month. Consumers continued to prefer revolving debt even though it is typically more expensive than non-revolving debt. See details on consumer credit at FederalReserve.gov.

Mortgage activity perked up last week

Mortgage applications increased last week by a seasonally adjusted 7.1%. This was primarily due to an upturn in refinancing activity, which climbed by 12% last week and was up 5% from the same week a year earlier. On the other hand, mortgage applications for home purchases rose by just 5% last week and were down 11% from the same week a year earlier. See mortgage application details at MBA.org.

Retail sales recovered somewhat in February 2024

After seasonal adjustment, retail sales were up 0.6% in February, which represents a turnaround from January’s unexpectedly severe decline of 1.1%. February’s retail sales were 1.5% higher than they were a year earlier. These figures are not adjusted for inflation, so actual sales volume would have been down over the past year. Food and drinking establishments did much better, with sales rising by 6.3% compared with February 2023. See details at Census.gov.

Mortgage rates ease for second consecutive week

30-year mortgage rates fell by 0.14% last week to 6.74%. That was on the heels of a 0.06% decline the week before. The combined 0.2% decline reverses most of the 0.31% increase 30-year rates had previously experienced since the beginning of February. 15-year mortgage rates declined by 0.06% last week and are now at 6.16%. 30-year rates are now 0.13% higher than they were when 2024 began. 15-year rates are 0.23% higher than at the start of the year. See rate details at FreddieMac.com.

Consumers expect spending growth to outpace earnings growth

The Federal Reserve Bank of New York’s Survey of Consumer Expectation found that households generally expect their spending to continue to grow faster than their incomes. The median expectation for spending growth over the next year is 5.2%, while the median expectation for household income is for an increase of just 3.1%. Consumers also became more pessimistic about their job prospects. The average probability consumers gave of losing their jobs in the next 12 months is 14.5%. That’s up by 2.7% from just last month. See details at NewYorkFed.org.

Weekly news headlines from Credit Sesame

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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