Credit Sesame’s personal finance weekly news roundup October 21, 2023. Stories, news, politics and events impacting the personal finance sector during the last week.
- Consumer delinquencies rise
- Net worth grew faster than income in updated Federal Reserve study
- Wage study shows growth for all despite inequality
- Retail sales beat expectations
- 9% of American adults victimized by identity theft
- Leading economic indicators point to a slowing economy
- Existing home sales continue to slow
- Consumers to increase holiday spending for a third year
- Mortgage rates continue to rise
1. Consumer delinquencies rise
More consumers were late with their debt payments in September 2023. Payment delinquency rates rose across all forms of consumer debt measured by the TransUnion Credit Industry Snapshot: auto loans, mortgages, credit cards and unsecured personal loans. Besides more late payments, consumers increased their average balances owed in the credit card, mortgage loan and unsecured personal loan categories. Delinquency rates are sharply higher for subprime customers. For example, while the delinquency rate for credit card payments among prime customers is just 0.20%, it’s 19.82% among subprime customers. See report at TransUnion.com.
2. Net worth grew faster than income in updated Federal Reserve study
The Federal Reserve has released the latest Survey of Consumer Finances, a comprehensive study of household financial conditions conducted every three years. The latest study released in October 2023 found that inflation-adjusted income rose by a modest 3% from 2019 to 2022. Net worth grew more quickly, rising by 37% during the period. This was primarily driven by gains in real estate values. Home owners’ average value of home equity increased from $139,100 to $201,000. The downside of those gains is that home affordability became worse than ever, with the median home price rising to 4.6 times the median family income. See details at FederalReserve.gov.
3. Wage study shows growth for all despite inequality
A new wage study by the Federal Reserve Bank of Minneapolis shows that while the rich have gotten richer over the past 50 years, all segments of earners have achieved inflation-adjusted income growth. The top 10% of U.S. wage earners achieved a 163% inflation-adjusted income increase from 1971 to 2021. For the median wage earner, inflation-adjusted income growth during that period was 80%, while for the bottom 20% it was just 22%. Education and hours worked are significant factors driving wage differences. See study at MinneapolisFed.org.
4. Retail sales beat expectations
Consumer spending continues to prove surprisingly resilient. Retail sales rose by 0.7% in September 2023, more than twice the Wall Street consensus estimate of 0.3%. The news was not entirely positive for the financial markets. Bond prices dropped as yields rose on the retail sales news. 10-year Treasury yields rose by 13 basis points to 4.85%, their highest level since July 27. Yields rose because strong retail sales add more fuel to inflationary momentum. See article at Yahoo.com.
5. 9% of American adults victimized by identity theft
Newly released statistics from the U.S. Department of Justice found that 23.9 million U.S. residents were victims of identity theft in 2021. That represents 9% of the population aged 16 and older. Losses from these frauds totaled $16.4 billion. In 76% of the cases, the losses stemmed from fraudulent use of a specific account, such as a credit card or bank account. See details at BJS.OJP.gov.
6. Leading economic indicators point to a slowing economy
The Conference Board’s Leading Economic Index (LEI) declined by 0.7% in September 2023. Nine of the ten components of the LEI were flat or down, indicating that weakening conditions are widespread. The LEI has now declined every month for a year and a half. Despite such a sustained decline, the index is not yet at a level that indicates a recession, but it does suggest slower growth ahead. See news release at Conference-Board.org.
7. Existing home sales continue to slow
Sales of existing homes fell by 2.0% in September 2023 and are down 15.4% from a year ago. Despite the drop in home sales, the median sales price has risen by 2.8% over the past year to $394,300. The rise in homes is attributed to a relatively low supply of homes on the market. However, these conditions have started to reverse recently, as the supply of homes increased and the median sales price decreased in September. See news release at NAR.Realtor.
8. Consumers to increase holiday spending for a third year
A TransUnion report found that 51% of consumers plan to spend more than $500 this holiday shopping season. That’s up from the 36% who planned to spend that much last year. Just 4% of survey respondents plan to spend less than $100 this year, compared to 17% who planned to keep spending below that level last year. Clothing is the leading gift category among people who plan to spend more this year, followed by gift cards and electronics. See report summary at TransUnion.com.
9. Mortgage rates continue to rise
30-year mortgage rates rose for the sixth consecutive week to reach 7.63%. This marked an increase of 0.06%. 30-year rates are now 1.21% higher than when the year began. The latest increase brought 30-year rates to their highest level since the week of December 1, 2000. 15-year rates rose for a fifth consecutive week to reach 6.92%. See rate data at FreddieMac.com.