Credit Sesame’s personal finance news roundup February 15, 2025. Stories, news, politics, and events impacting personal finance during the past week.
Consumer debt passes $18 trillion
Total consumer debt now exceeds $18 trillion for the first time, according to the Federal Reserve Bank of New York’s latest Household Debt and Credit Report. Household debt increased by $93 billion in the fourth quarter of 2024. Credit card debt showed the biggest increase during the quarter, at $45 billion. Mortgage debt, home equity lines of credit, student debt, and auto loan debt also grew. This is especially disturbing since delinquency rates increased in all those categories of debt except for student loans. See report at NewYorkFed.org.
January 2025 inflation highest in over a year
Last month’s rise in the Consumer Price Index (CPI) was the highest in over a year. The CPI rose by 0.5% in January. The last time a monthly inflation reading was that high was in August 2023. January’s increase brought the inflation rate for the past 12 months to 3.0%. The core inflation rate, which excludes food and energy costs, was 0.4% in January and 3.3% for the last 12 months. See details at BLS.gov.
Producer prices evidence of inflation
The Producer Price Index rose by 0.4% during January. If continued for a full year, this would amount to a 4.9% annual inflation rate in costs to producers of goods and services. Another concerning point is that producer prices for goods rose by 0.6% in January, while prices for services rose by 0.3%. The higher increase for goods means that less of the overall increase is likely to go into the pockets of workers. See details at BLS.gov.
Consumer borrowing accelerated in December 2024
The Federal Reserve reported that consumers added more than $40.8 billion in consumer debt in December. This figure is adjusted for the usual seasonal surge in borrowing due to holiday spending and is the largest monthly figure on record. Over $22.8 billion is revolving debt, also an all-time high. Most revolving debt is credit card balances. See details at FederalReserve.gov.
CFPB shut down by acting head
Russell Vought, who the Trump administration has made acting head of the Consumer Financial Protection Bureau (CFPB), has suspended the Bureau’s operations and ordered employees to work remotely for the time being. Vought’s instructions are for CFPB employees to cease all supervision and examination of financial institutions unless required by law or ordered by him. The CFPB issues rules that protect consumers from financial companies and pursues those companies that have broken the law. See article at CNN.com.
New 25% tariff on aluminum and steel
President Trump has announced new tariffs of 25% on imported aluminum and steel. This adds to the escalating trade war against several major sources of imports. Since aluminum and steel are integral to building and engineering construction and manufacturing automobiles and appliances, there is a risk that the new tariffs could create delays and shortages. They may also add to inflation pressures as higher costs are passed to consumers. See article at Reuters.com.
Consumer sentiment plunged in February 2025
Consumer sentiment has fallen by 5% in February. This is the second straight monthly drop, bringing the University of Michigan’s Consumer Sentiment indicator to its lowest since last summer. The Current Economic Conditions Index fell by 7.2%, and the Consumer Expectations Index fell by 2.9%. A big reason for souring consumer sentiment is a surge in inflation fears. The expectation for inflation over the year ahead jumped from 3.3% to 4.3%. The 1% jump is one of the largest monthly increases on record. See article at ABA.com.
Consumers still expect spending to exceed income growth
The Federal Reserve Bank of New York’s Survey of Consumer Expectations found that consumers generally expect their incomes to grow by 3% over the next year. They expect spending to grow more quickly than income, at 4.4%. Those spending growth expectations have been persistently above pre-pandemic levels. Spending growth has also consistently exceeded the inflation rate. See report at NewYorkFed.org.
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