Credit Sesame’s personal finance news roundup December 14, 2024. Stories, news, politics and events impacting personal finance during the past week.
Inflation increases in November 2024
The Consumer Price Index (CPI) rose by 0.3% in November. That was an upturn from October’s 0.2% and the highest monthly increase since April. The core inflation rate was also 0.3% in November. The year-over-year inflation rate was 2.7%, up from 2.6% the prior month. This leaves the CPI close to the Federal Reserve’s 2% target but moving away from rather than towards that target. However, the CPI is often higher than the Personal Consumption Expenditures price index, the Fed’s primary indicator to track inflation. See CPI report at BLS.gov.
Producer prices rise in November 2024
The Producer Price Index (PPI) rose by 0.4% in November. This was the largest monthly increase since June. The PPI tends to be quite variable from month to month, but if continued, this rate of increases in producer prices would start to put more upward pressure on consumer prices. This is likely to add to inflation concerns after the previous day’s news that the Consumer Price Index had also gained momentum in November. Year-over-year, the PPI is up by 3.0% over the past 12 months, the highest 12-month rate in over a year. See details at BLS.gov.
Consumer borrowing surged in October 2024
The latest Federal Reserve report on consumer credit usage showed a significant increase in the amount owed in October 2024, led by revolving credit. The amount of revolving credit, most of which is credit card debt, showed the greatest monthly increase since May. October’s rise in revolving credit was more than three times the amount added in October of last year. Overall, consumer credit rose at a seasonally adjusted annual rate of 4.5% in October. Non-revolving credit rose at a seasonally adjusted annual rate of just 1.1%, but revolving credit rose at 13.9%. This leaves consumers with over $5.1 trillion in non-mortgage debt. That’s a record high, leading into the start of the holiday shopping season. November and December are usually the biggest months for revolving credit increases. See data at FederalReserve.gov.
Credit card late fee cap proposal remains blocked
A federal judge rejected a request to lift his earlier court order that has blocked a limit on credit card late fees from going into effect. The rule, proposed by the Consumer Financial Protection Bureau (CFPB), would have capped fees for late credit card bill payments at $8. The CFPB claims that higher late fees are an excessive penalty for people who are habitually late with their payments. Critics of the fee cap say it might raise other costs for credit card customers and restrict credit availability. See article at MSN.com.
Spending expectations still exceed income growth
Consumers expect spending to rise by 4.7% over the next year. That’s according to the latest Survey of Consumer Expectations from the Federal Reserve Bank of New York. The 4.7% expected increase in spending is down by 0.2% from the prior month and is the lowest expected increase since April of 2021. Still, it remains above pre-pandemic levels. Perhaps more significantly, it exceeds consumers’ expectations for growth in income and inflation. Consumers expect household income to rise by 3.1% and a 3% inflation rate over the next year. See details at NewYorkFed.org.
Mortgage rates decline for third week
30-year mortgage rates declined for a third consecutive week. They fell by nine basis points to reach 6.6%. 15-year rates fell by 12 basis points to 5.84%. Despite the recent easing, 30-year rates are still 0.52% higher than at the end of September. 15-year rates experienced a similar surge in October and November 2024 and remain 0.68% above where they were at the end of September. See details at FreddieMac.com.
Mortgage applications increased last week
After adjusting for seasonal differences, total mortgage applications rose 5.4% last week. The rise was driven by an increase in refinancing applications, which increased to 46.8% of total applications, up from 38.7% in just one week. Meanwhile, purchase applications declined on a seasonally adjusted basis last week, falling by 4%. See details at MBA.org.
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