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Hi there, welcome back to the Weekly Scoop from your trusted team at your favorite financial institution! We’ll keep you informed on everything that affects your work, home, and wallet.
Now, here’s what you need to know this week:
Photo: Getty Images
Layoff rates are still low, but finding a job is getting harder.
The Labor Department reported that initial jobless claims fell to 227,000 last week, fewer layoffs than economists expected. However, the number of people continuing to receive unemployment benefits for consecutive weeks rose to nearly 1.9 million—the highest since November 2021—indicating it's getting tougher for those who've lost jobs to find new ones. While hurricanes and worker strikes have muddied the labor market data, the Federal Reserve's recent Beige Book noted that employment increased slightly in early October. So, hiring seems relatively stable, but if you're looking, it might take a bit longer to land a new position.
US businesses are picking up steam while price hikes are slowing down.
According to S&P Global's latest report, their composite Purchasing Managers' Index (PMI)—which measures business activity in both manufacturing and services—rose to 54.3 in October from 54.0 in September, signaling solid growth. Any number above 50 indicates expansion. Even better, companies raised their prices at the slowest pace since May 2020, suggesting inflation is cooling back to a normal level. This means the economy started the fourth quarter on a strong footing, and you might soon feel a bit more relief at the checkout counter if wages keep catching up with the cost of living.
Inflation still seems to be under control, but that doesn’t mean things are getting cheaper.
The cost of living rose only slightly in September, with the Consumer Price Index (CPI) increasing by 0.2% for the month. While prices rose a little bit more than economists expected in September, it was still the same relatively low pace as July and August. Overall, the cost of living is 2.4% higher than a year ago, the slowest annual change since early 2021. Falling gas prices helped to offset the pain at the grocery store, where the cost of eggs, butter, and other cooking ingredients jumped last month. Core inflation, which excludes more volatile food and energy costs, increased by 0.3%, mainly driven by home and rent prices. Policymakers have expressed more comfort with where prices are right now.
🔍 The Consumer Price Index (CPI) is one of the main ways economists track inflation. Inflation is the rate at which things get more expensive. The CPI looks at a set basket of items your average consumer spends money on and tracks how much they cost each month.
Rising interest rates have pushed the US into more debt.
The Treasury Department reported that the US government paid $1.16 trillion in interest on its debt in fiscal 2024, as the average interest rate rose to 3.32% from 2.97% last year. This surge in borrowing costs contributed to a budget deficit of over $1.8 trillion—the third biggest overspending year on record—even though the government collected a record $4.9 trillion in taxes. The deficit now exceeds 6% of the country’s annual economic production, much higher than the 50-year average of 4%. For all of us, this trend might lead to higher taxes or cuts in government services as more of our annual tax payments go toward paying the interest on our debt.
Photo: Al Drago, New York Times
A drop in mortgage rates got buyers off the sideline last month.
New home sales in the US reached their highest level in nearly 18 months. According to the Commerce Department's Census Bureau, the number of new single-family home sales jumped 4.1% in September to an annual rate of 738,000 units, more than economists expected. This surge was likely driven by cheaper mortgage rates in September. Rates fell to their lowest point in over a year and a half as the Federal Reserve began easing some of its restrictive policies aimed at controlling inflation. However, rates have climbed back up recently, which might cool future sales. If you're considering buying a new home, this trend likely shows buyer competition will increase as mortgage rates come back down.
Photo: Getty Images
What we’re talking about this week:
đź’ˇ How much should I have in my savings account?
Building savings is a core aspect of budgeting, and it always starts with a thorough review of our expenses. Once we know how much we’re spending, we can figure out a target savings account balance.
We can’t have too much savings. The important thing to watch is how much we have in cash versus other investments. If we have enough to cover our short-term expenses with a buffer for emergencies, we will often consider investing extra long-term savings in assets like stocks that could grow more over time.
Finding the right amount for our emergency cash savings isn’t an exact science. We’re planning for an emergency, such as a health issue or getting laid off. The average length of unemployment is roughly 4-5 months, so 3-6 months offers a rough estimate of the cash we might need to cover our expenses if we lose our job. The more expenses or dependents we have, the more savings we should consider building.
That’s it for this week!
Give me a call with any questions you might have.
See you next week,
Your favorite financial resource
