Personal finance weekly news roundup December 28, 2024

Credit Sesame’s personal finance news roundup December 28, 2024. Stories, news, politics, and events impacting personal finance during the past week.

2024 Q3 GDP growth strong in final estimate

The Bureau of Economic Analysis issued its final estimate of US Gross Domestic Product for the third quarter with a positive surprise. The US economy grew at an inflation-adjusted annual pace of 3.1%, an improvement over the prior estimate of 2.8% and an uptick from the second quarter’s 3.0% growth rate. Upward revisions to exports and consumer spending figures were the leading reasons for the improved growth rate. See GDP report at BEA.gov.

Key inflation measure eased in November 2024

The Personal Consumption Expenditures (PCE) price index slowed in November. The PCE price index is the Federal Reserve’s preferred measure of inflation. The index rose by just 0.1% in November, after a 0.2% increase in the two previous months. The year-over-year increase was up slightly, from 2.3% to 2.4%. However, this increase was due to activity in prior months and not to the most recent trend. Core inflation, which excludes the energy and food sectors, also eased in November. The core PCE price index was up by 0.1% after rising by 0.3% in each of the prior two months. See personal income report at BEA.gov.

Mixed consumer debt performance in November 2024

Consumer debt mix showed signs of strain but with some improvement last month. Rates of serious delinquency declined slightly. The rate of serious delinquency on unsecured personal loans increased, while it remained unchanged for credit cards. However, serious delinquency rates for subprime customers increased for auto loans, personal loans, and credit cards. Consumers continued to show an appetite for additional debt. The average balance on credit cards and personal loans increased, as did the average amount of new auto loans. See details at TransUnion.com.

Government sues banks over failure to protect customers

Three of America’s biggest banks are being sued by the Consumer Financial Protection Bureau (CFPB) for failing to protect customers from fraud adequately. The three banks are JPMorgan Chase, Bank of America, and Wells Fargo. Those banks are co-owners of Zelle, a peer-to-peer payment network. The CFPB alleges that Zelle’s identity verification methods were so weak that scammers could easily open fraudulent accounts and divert payments meant for legitimate users. Despite receiving hundreds of thousands of complaints about fraudulent activity on Zelle, the banks did not use the information to prevent continued fraud. Because the banks did not share information about scammers, those criminals could move from one bank to another, repeating the same crimes. See news release at ConsumerFinance.gov.

Holiday credit spending off to a slow start

The November 2024 VantageScore CreditGuage showed modest credit activity for the month. This muted credit at the traditional start of the holiday shopping season could spell trouble for retail spending. Overall, consumer credit balances shrank in November 2024, and credit card balances increased only slightly. New credit card account originations rose somewhat in the month but are down year-over-year. See report at VantageScore.com.

CFPB sues Walmart over opening bank accounts for drivers

The CFPB is suing Walmart for forcing delivery drivers to pay more than $10 million in fees to access their pay. The suit alleges that Walmart used the drivers’ personal information to open accounts in their names at Branch Messenger, a fintech company. Walmart then deposited their pay into those accounts without the drivers’ consent. Drivers were threatened with termination if they didn’t want to use Branch accounts. This resulted in the drivers having to pay fees to transfer the money to accounts of their choice. See news release at ConsumerFinance.gov.

Mortgage rates continue to climb

30-year mortgage rates rose by 13 basis points last week to 6.85%. It was the second consecutive week in which mortgage rates rose, for a total increase of 25 basis points. The recent surge has wiped out the benefit of three straight weeks of falling mortgage rates that preceded it. 30-year rates are now the highest since mid-July 2024 and 24 basis points higher than when the year began. Fears that inflation may be more persistent than once thought have contributed to the climb in mortgage rates. These fears were bolstered when the Fed revised its inflation estimates for the next two years upward after last week’s meeting. See rate details at FreddieMac.com.