Banks are paying savers again after many years of low rates
Banks are paying up for savers' deposits in a much bigger way than they have in more than a decade, based on recent earnings reports from the nation's biggestbanks.
After a decade of low interest rates, the Federal Reservehasunleashedarapidseriesofratehikesto combat inflation, pushing up its benchmark rate to arangeof 4.75%to5%.Thathaspromptedbanksto pay higher interest on traditional savings products likemoneymarketfunds,certificatesofdepositand regularsavingsaccounts.
A 24-month CD, a common savings product for medium-term savers, is now carrying an average yield of 4.81%, according to the Federal Reserve Bank of St. Louis. That’s up from a 1.18% yield only a year ago. Further, non-bank names such as Apple are getting into the deposit game, giving savers even moreoptions.
Bankswereinitiallyslowtoraisetheirpayoutsasthe Fed raised rates because they were awash in deposits. But those deposits have shrunk over the past year because inflation forced consumers and businessestodip intotheirsavings.
Souce: https://www.foxbusiness.com/money/banks-paying-savers-again-after-years-low-
Americans are getting worried about the job market
The Conference Board’s Consumer Confidence Index, which measures attitudes toward the economy and the job market, fell to 101.3 in April, down from 104 in March and marking the lowest level since July 2022. The business group’s measureofeconomicexpectationsfellinApriland has remained below a threshold “associated with a recession within the next year” for every month since February 2022, with the exception of an uptickinDecember.
Consumer attitudes have held steady since the turbulence in the banking industry last month, but high inflationand economic uncertainty have continuedtoweighonconsumers.
“Consumers became more pessimistic about the outlook for both business conditions and labor markets,” said Ataman Ozyildirim, senior director of economics at The Conference Board, in a statement accompanyingthedata.“Compared to last month, fewer households expect business conditions to improve and more expect worsening of conditions in the next six months. They also expect fewer jobs to be available over theshortterm.”
US economy grew at weak 1.1% rate in Q1 in sign of slowdown
The U.S. economy slowed sharply from January through March, decelerating to just a 1.1% annual pace as higher interest rates hammered the housing market and businesses reduced their inventories.
Thursday’s estimate from the Commerce Department showed that the nation’s gross domestic product — the broadest gauge of economic output — weakened after growing 3.2% from July through September and 2.6% from OctoberthroughDecember.
But consumer spending, which accounts for about 70% of U.S. economic activity, remained resilient, growingata3.7%annualpace, thefastestsuchrate innearlytwoyears.Spendingongoods,inparticular, was solid: It rose at itsfastest pace since the second quarterof2021.
Economists had been expecting overall GDP to grow at a 1.9% pace in the January-March quarter. Behindmuchofthequarter'sweaknesswasasharp reduction in businessinventories,whichsubtracted roughly 2.3 percentage points from overall growth. Companies typically slash their inventories when theyanticipateacomingdownturn.
Souce:
https://www.usnews.com/news/us/articles/2023-04-27/us-economic-growth-likely-
Americans are saving far less than normal in 2023
The U.S. personal savings rate remains below its historicalaverage, according to the U.S. Bureau of EconomicAnalysis.
The seasonally adjusted annual rate of personal savingwas4.6%inFebruary.That’swellbelowthe averageannualrateofmorethan8%,accordingto the data, which traces back to 1959. In June 2022, theratehaddippedto2.7%,a15-yearlow.
This was a large fallfrom periods of the pandemic when households across the country were saving asmuchas30%oftheir monthlyincome.
“Something like $2 [trillion] to $2.5 trillion above what we would have otherwise expected were saved by American households,” said Curt Long, chief economist at the National Association of Federally-InsuredCredit Unions.
Butthelowerhalfbuiltupsavingsinthistime,too, accordingtothecentralbank’sOctobernote.They noted at the time that the lower half of earners had roughly $5,500 in excess savings per household. Experts believe these stockpiles of cashwillbeginto dwindlein2023.
U.S. dollar advances as inflation data affirms Fed rate hike next week
The U.S. dollar rose on Friday after data showed inflation grew in March, though at a slower pace, keeping theFederalReservestillfirmlyontracktoraiseinterestratesatnextweek'smonetarypolicymeeting.
The dollar index, a measure of the greenback's value against six major currencies, rose 0.7% to 102.10 . Againsttheyen, theU.S. currencyrose1.5%to136.07yen. Theeuro, meanwhile,fell0.4%againstthedollar to$1.0984.
Friday'sdatashowedthepersonalconsumptionexpenditures(PCE)priceindexedged0.1%higherinMarch after rising 0.3% in February. In the 12 months through March, the PCE price index increased 4.2% after climbing5.1%inFebruary.
Excludingthevolatilefoodandenergycomponents,thePCEpriceindexinchedup0.3%afterincreasingat thesamerateinFebruary.Theso-calledcorePCEpriceindexgained4.6%onayear-on-yearbasisinMarch afterrising4.7%inFebruary.TheFedtracksthe PCEpriceindexesforits 2%inflationtarget.
"It'sanothermixed bag ofdata, butwhatstands outisthe frustratinglyslow descent incore inflation,"said JoeManimbo,seniormarketanalystatConverainWashington.
Souce:
https://www.reuters.com/markets/currencies/dollar-headed-monthly-loss-yen-steady-ahead-boj-decision-2023-04-28/