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Personal Finance Weekly News Roundup July 9, 2022

Weekly Personal Finance News Recap - JILY 9, 2022

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Credit Sesame’s personal finance weekly news roundup July 9, 2022. Stories, news, politics and events impacting the personal finance sector during the last week.

  1. Consumers should check for a recent credit score boost
  2. New credit card accounts surge
  3. European inflation hits record high
  4. Job openings declined in May
  5. The yield curve on Treasury securities signals possible inflation
  6. Mortgage rates show a big drop this week
  7. Stocks rally as Fed takes tougher stance on inflation
  8. Consumers return to stores as inflation drives spending higher
  9. Steady job growth continued in June

1. Consumers should check for a recent credit score boost

A new policy for calculating credit scores has taken effect, and should provide a boost for millions of consumers. The three major credit bureaus, Equifax, Experian and TransUnion have removed certain types of medical debt from credit reports. This change was announced in March but just took effect on July 1. So, consumers who haven’t checked their credit scores since then may want to take a fresh look. Further changes in how credit reports account for medical debt are expected in early 2023. These changes, which could impact millions of Americans, are expected to eventually remove 70% of all medical debts from credit records, totaling $60 billion.  See full story at Nasdaq.com.

2. New credit card accounts surge

A recent report by Equifax found that Americans are opening new credit card accounts at a pace that is 31.4% higher than in the previous year. Higher credit limits on these accounts mean that the total amount of new credit available jumped by an even greater amount. New credit available rose $55.5 billion, a 59.2% increase over the previous year. Credit limits now total $4.12 trillion, an increase of $224 billion over the pre-pandemic level. See full article at USAToday.com.

3. European inflation hits record high

Inflation in countries that participate in the euro currency reached a record high in June. Annual inflation in the euro zone rose from 8.1% to 8.6% last month. Price increases were led by essentials such as food and energy. Shortages of these commodities are having a global impact. Accelerating inflation is expected to prompt the European Central Bank to make more aggressive interest rate increases. See full article at Reuters.com.

4. Job openings declined in May

The monthly Job Opening and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics had a mixed message about the economy. On the one hand, the number of job openings decreased in May. That could be a sign of weakening labor demand due to a slowing economy. On the other hand, unusually high labor demand has been one of the factors fueling inflation. Fewer job openings could ease inflation pressures. However, if commodity price pressures remain strong while wage pressures ease it could tighten the squeeze on consumers. See release data at BLS.gov.

5. The yield curve on Treasury securities signals possible inflation

The yield curve on Treasury bonds and notes has become inverted. Basically this means that some shorter-term Treasuries are offering higher yields than longer term ones. This is considered “inverted” because longer-term securities normally offer higher yields because they represent greater risk. An inverted yield curve is considered a possible recession signal because while short-term yields are higher to reflect the current Fed policy of raising rates, the concern is that longer-term this will cause a recession that brings rates back down. See full article at Morningstar.com.

6. Mortgage rates show a big drop this week

30-year mortgage rates dropped by 0.40% for the week ending July 7. Together with a decline the week before, mortgage rates have now fallen by just over half a percent in just two weeks. To put this in perspective though, a year ago 30-year fixed mortgage rates were 2.90%. And, while home buyers might welcome any break from the massive rise in mortgage rates over the past year, the recent slide in rates comes with a cloud over it. Rates are falling because of deepening concern about a recession. See full release at FreddieMac.com.

7. Stocks rally as Fed takes tougher stance on inflation

The stock market rose following the release of minutes from last month’s Federal Open Market Committee meeting. Not only did that meeting feature a 0.75% rate hike, but the meeting minutes indicate that the Fed is planning a 0.50% or 0.75% rate hike in its next meeting. That meeting is scheduled for July 26 and 27. Large rate hikes signal that the Fed is making fighting inflation its top priority, even at the expense of risking a recession. The stock market’s positive reaction to the Fed’s tougher stance on inflation is a turnaround. After investors initially fretted about the Fed raising rates, they are increasingly recognizing that inflation is the real danger. See article at Investors.com.

8. Consumers return to stores as inflation drives spending higher

A new report on consumer spending found that easing health concerns have brought consumers back to in-person shopping. In-store spending was up 11.7% for the year ending June 30, compared with just 1.1% growth for e-commerce. Overall, consumer retail spending was up 9.5% over the past 12 months. That’s not much over the rate of inflation, so consumers aren’t actually buying more. They are just spending more because of higher prices. See full release at Mastercard.com.

9. Steady job growth continued in June

Despite growing concerns about a recession, the job market has logged it’s 18th consecutive month of growth. Employment increased by 372,000 in June, according to the Bureau of Labor Statistics. That’s roughly the same amount of job growth as in each of the previous three months. The unemployment rate remained unchanged, at 3.6%. See full report at BLS.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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