News roundup May 4, 2024

Finance new May 4 2024

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Credit Sesame’s personal finance news roundup May 4, 2024. Stories, news, politics and events impacting personal finance during the past week.

Strong growth in compensation costs could prolong inflation

Total compensation costs for US employees, including wages and benefits, grew by 1.2% during the first quarter of 2024 after seasonal adjustment. That’s faster than the 0.9% rise in compensation growth during the final quarter of 2023. Over the past 12 months, compensation costs have grown by 4.2%. Fast-rising compensation costs are a sign of the strong job market. Employers have to offer more generous compensation to compete for scarce workers. This is good in the sense that it puts more money into the pockets of consumers. However, high compensation costs are likely to translate to higher prices. See report at BLS.gov.

Fed leaves rates untouched in the face of uncertainty about inflation

The Federal Reserve announced it would leave its interest rate target unchanged. Late last year, the Fed had signaled that it had expected to make three 0.25% rate cuts in 2024. However, persistent inflation seems to have pushed back the timing of those rate cuts. After its most recent meeting, the Fed noted that they would need more confidence that inflation is moving towards the 2% target before cutting rates. The delay in beginning rate cuts has raised questions about whether the Fed will reduce rates by as much as previously expected this year. The Fed will update its economic projections after the next meeting, scheduled for June 11-12. That will show what the Fed now expects to do for the remainder of this year and beyond. See policy statement at FederalReserve.gov.

Employment growth moderated in April 2024

Total employment in the US grew by 175,000 jobs in April. That’s slower growth than the 315,000 jobs gained in March 2024 and below the average monthly trend of 242,000 over the past 12 months. Even with the slower growth, employment has now grown for 40 straight months, and the unemployment rate remains very low at 3.9%. See employment situation report at BLS.gov.

Upward trend continues for home prices

After seasonal adjustment, the S&P CoreLogic Case-Shiller National Home Price Index rose by 0.4% to start 2024. Despite sharply higher mortgage rates, the latest monthly rise puts the index up 6.0% over the past year. All 20 major metropolitan areas tracked as part of the index were up over the past year. San Diego led the way, with an 11.2% increase in home prices over the past 12 months. See details at SPGlobal.com.

Consumers use tax refunds to try to catch up on debt payments

The VantageScore CreditGauge found that late payments on debt accounts declined across all four major categories in March. These include mortgages, credit cards, auto loans, and personal loans. The decline in delinquency rates is consistent with a normal seasonal pattern of consumers using tax refunds toward their tax payments. The report also found a slight improvement in the average credit score. The average VantageScore rose by 1 point in March to 702. Despite the recent decline in late payments, delinquency rates are still higher than a year ago. See news release at PRNewswire.com.

New guidelines remove some, but not all, medical debt from credit records

The Consumer Financial Protection Bureau has released a report showing the impact of new guidelines on eliminating some medical debts from credit reports. The new guidelines included lengthening the time before medical collections accounts would be included on credit reports, eliminating medical collections accounts that had been resolved, and not reporting amounts under $500. These measures have not eliminated the impact of medical debt on credit reports, but they have substantially reduced it. The percentage of Americans with medical debt on their credit records has dropped from 14% to 5%. The total amount of medical debt on credit reports has dropped from $88 billion to $49 billion. See research summary at ConsumerFinance.gov.

2024 suffers its first bank failure

The first bank failure of the year has claimed Republic First Bank of Philadelphia. Republic First was a relatively small bank, with approximately $4 billion in deposits. The bank’s operations will be taken over by Fulton Bank of Lancaster, Pa. The FDIC estimates it will provide about $667 million out of its insurance fund to cover Republic First’s deposits. See announcement at FDIC.gov.

Mortgage rates increase again

30-year mortgage rates increased by 0.05% to 7.22%. While that may seem mild, it marks the fifth consecutive week of increases in 30-year rates. 15-year mortgage rates have risen for four straight weeks. The increases have come in the thick of the spring home-buying season. See rate details at FreddieMac.com.

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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