Video
February 16, 2024
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February 16, 2024
Consumer Credit Card Debt Is at a Record High. What Does This Mean for Rates?
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Interest rates were on a roller coaster this week, as both the Consumer Price Index (CPI) and the Producer Price Index (PPI) came out higher than expected this week. That's not a good thing for Wall Street!
Inflation has been on a straight-line downward trend since it peaked at 9.1% in June 2022. It now sits at about 3.1%. The more important core inflation, which the Fed looks at very seriously, sits at 3.9%.
The Fed target is 2%. As we get down closer to that 2% level. It gets tougher and tougher to continue that straight line downward from where we were.
Thus, we're going to have some hiccups along the way, and Wall Street really doesn't like those hiccups. They want that straight line downward. So, whenever there are variations from Wall Street expectations, the markets react negatively.
That's what happened twice this week with the release of the CPI on Tuesday 2/14 and the PPI on Friday 2/16.
Conversely, another big market mover came out this week: retail sales. Retail sales were down much greater than expected, o that actually improved the market earlier in the week.
But combine that with consumers living on credit cards with record debt of over $1.3 trillion in credit cards right now... Is it time for individuals to start pulling everything back?
If so, this will clearly help reduce inflation, and mortgage rates will follow. Potentially even a recession. The issue is it's going to take more time to see if this trend continues. There is likely still uncertainty on Wall Street, so we're going to go sideways for a while. And might not see rates drop until closer to the summer months.
Lastly, a huge shout out to all the single ladies! According to homeownership statistics from the Census Bureau, compiled by LendingTree, single ladies own more real estate than single men in 48 out of 50 states. Keep it going, ladies!
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