Credit Sesame’s personal finance weekly news roundup May 27, 2023. Stories, news, politics and events impacting the personal finance sector during the last week.
- Fed survey shows households losing ground financially
- Today’s economy has young adults hungry for financial guidance
- New report highlights wealth inequality
- Employment conditions vary greatly by state
- A new bump in rates slows mortgage activity
- State AGs team up to fight robocalls
- 1st quarter growth a little better than previously thought
- Mortgage rates post biggest rise since February
- Inflation remains stubborn
1. Fed survey shows households losing ground financially
The Federal Reserve’s annual Economic Well-Being of U.S. Households survey found that Americans generally took a step back financially last year. The percentage of households that reported they were “doing okay” or “living comfortably” financially dropped by 5% last year. Fewer adults reported having any money to spare after paying essential bills, and just over half of those surveyed reported being affected “a lot” by higher prices. The percentage of adults who said they had enough money available to meet a $400 emergency expense declined by 5% last year, to 63%. See survey details at FederalReserve.gov.
2. Today’s economy has young adults hungry for financial guidance
A new survey by Experian found that millennials and members of Generation Z are actively seeking financial answers to today’s economic challenges. More than two-thirds of each group say today’s economy is hurting their ability to be financially independent. About three-quarters of each group say they would feel better about their financial situation if they better understood personal finance. However, more than half of Generation Z and nearly half of millennials say they don’t know how to start building credit. The survey results also suggest most of these survey respondents recognize these shortcomings and are working to correct them. 77% say they are striving to become more financially literate. 69% say they are actively looking for a trusted source of personal finance information. See survey results at Experian.com.
3. New report highlights wealth inequality
A study by the Federal Reserve Bank of St. Louis found a substantial wealth gap between American haves and have-nots. The top 10% of U.S. households have an average of $6.8 million in wealth, while the bottom 50% have an average of $59,000. There are wealth gaps according to generational, racial and educational characteristics. The widest wealth gap is by educational attainment. Adults who lack a high school education have only 10 cents of wealth for every dollar owned by people with a four-year college degree. See report at StLouisFed.org.
4. Employment conditions vary greatly by state
Unemployment remains very low nationally, but conditions vary greatly by state. The latest state-by-state figures on unemployment from the Bureau of Labor Statistics show that South Dakota had the nation’s lowest unemployment rate. Unemployment was just 1.9% in South Dakota for April. South Dakota was one of 17 states with an unemployment rate lower than the national rate of 3.4%. 8 states plus the District of Columbia had unemployment rates higher than the national average. Employment conditions continue to be strong, as 14 states had unemployment rate decreases in April. Unemployment rates were essentially unchanged for the month in the remaining states plus the District of Columbia. See full employment report by state at BLS.gov
5. A new bump in rates slows mortgage activity
Mortgage applications for home purchases dropped by 5% last week, according to the Mortgage Bankers Association (MBA). The decline in mortgage applications came as the average mortgage rate tracked by the MBA rose to its highest level since March. Purchase mortgage applications are now 30% below where they were a year ago. Refinancing applications are even more sensitive to rising interest rates. Refinancing volume fell to its lowest level in two months, which is 40% below where it was at this time last year. See details at MBA.org.
6. State AGs team up to fight robocalls
51 attorneys general have joined forces to file a lawsuit concerning the placement of billions of illegal phone calls. The lawsuit charges Avid Telecom with enabling 7.5 billion automated calls to people on the national “do-not-call” registry. The suit also accuses Avid Telecom of spoofing phone numbers to make calls appear to be coming from government agencies or a variety of prominent corporations. These calls are alleged to have involved a variety of scams based on pretending to represent Social Security, Medicare, auto warranty companies, Direct TV and Amazon, among others. See story at KPAX.com.
7. 1st quarter growth a little better than previously thought
The Bureau of Economic Analysis (BEA) revised its estimate of U.S. GDP growth in the 1st quarter of 2023 upward by 0.2%. The BEA now estimates that real GDP grew at an inflation-adjusted annual pace of 1.3%. While still a slow level of growth, the revised number at least puts the economy a little further away from a recessionary track. See news release from BEA.gov.
8. Mortgage rates post biggest rise since February
30-year mortgage rates rose for the second consecutive week. The 0.18% increase was the biggest one-week increase since February. 30-year rates are now at 6.57%, which is higher than their level at the start of this year. See more details at FreddieMac.com.
9. Inflation remains stubborn
The Personal Consumption Expenditures (PCE) price index rose by 0.4% in April. The PCE price index is a measure of inflation the Fed relies on more than the Consumer Price Index. The 0.4% rise in April represents a resurgence of inflation after a 0.1% rise in March and two consecutive months of slowing inflation. See data at BEA.gov.
