4 Things You Need to Know About Your Money This Week

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Amid fluctuating jobless claims and surging job growth, alongside shifts in consumer credit and gas prices, the nation stands at a crossroads of economic resilience and looming challenges.

Just last week, consumer optimism was buoyed by a string of positive financial updates, including a jobs report that far exceeded expectations, mortgage rates sliding to levels that could potentially trigger a busy spring buying season, a report that showed the Federal Reserve winning in its fight to bring inflation back to its 2 percent target, and dovish commentary from Fed Chair Jerome Powell that indicated the central bank will cut rates three times this year.

But as economic news keep flowing, all of that can change.

Jobs, and a Strong Labor Market

As we look ahead, the U.S. labor market’s robust beginning in 2024, marked by the creation of 353,000 jobs in January, sets a tone of economic resilience.

This week, though, eyes will be on initial jobless claims that are set to be issued on Thursday. Forecast at 219,000, the report will provide further insights into the employment landscape.

The diverse growth across sectors seen last week challenges previous grim forecasts and positions the economy for a potential soft landing, according to experts. However, as Comerica Bank chief economist Bill Adams told Newsweek, that unexpected strength in job growth, particularly in the latter half of 2023, suggests a temporary impact from January’s weather on wage growth and work hours.

Adams said he does not expect an alarming figure for the initial jobless claims report, and anticipates further normalization in the coming months.

Consumer Credit Surges, Potential Troubles Ahead

U.S. consumer credit soared by $23.75 billion in December, far exceeding the $9 billion forecast, as Americans increasingly turn to borrowing. The upcoming report, set for release on Friday, anticipates a $14.9 billion rise.

TransUnion’s vice president of U.S. research and consulting, Michele Raneri, suggested to Newsweek that the Fed’s signals towards lowering interest rates could offer relief for debt holders, with the hope of refinancing opportunities.

Gas, Expect Price Fluctuations Ahead

Gasoline prices have seen a near five-cent uptick, reversing a declining trend as demand increases, GasBuddy’s head of petroleum analysis Patrick De Haan told Newsweek.

Despite the uptick in demand, prices remain significantly lower than the previous year. De Haan predicts further rises through mid-to-late spring, with potential volatility influenced by geopolitical tensions and seasonal adjustments.

De Haan’s forecast suggests a temporary dip below $3 per gallon before approaching $4 by summer, with the national average expected to peak during the Memorial Day holiday.

Homes, Mortgage Rates and Market Dynamics

Mortgage rates surged to 6.92 percent on Monday, a jump from the previous week’s low of 6.63 percent, according to figures from Mortgage News Daily. The robust January jobs report, alongside cautious Fed actions and Treasury statements, has left mortgage rates relatively unchanged, ending a week of volatility at a standstill, according to a report from Redfin’s economics lead Chen Zhao.

Despite statistical adjustments potentially inflating job numbers, the labor market’s strength signals both opportunities and challenges, according to Zhao, with the opportunity being increased purchasing power for buyers and the challenge being potentially higher mortgage rates.

The Fed’s hesitancy to cut rates in March further complicates predictions, Zhao said, and called for a cautious approach for those looking to navigate the housing market in the upcoming months.

Shoppers wait in line at a Publix in Nashville, Tennessee. A string of positive economic reports last week buoyed consumer optimism, but that can change as new reports emerge.

SETH HERALD/AFP via Getty Images