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Tag: U.S. Economy

  • Don’t expect ‘immediate relief’ from the Federal Reserve’s first rate cut in years, economist says. Here’s why

    Don’t expect ‘immediate relief’ from the Federal Reserve’s first rate cut in years, economist says. Here’s why

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    Recent signs of cooling inflation are paving the way for the Federal Reserve to cut rates when it meets next week, which is welcome news for Americans struggling to keep up with the elevated cost of living and sky-high interest charges.

    “Consumers should feel good about [an interest rate reduction] but it’s not going to deliver sizable immediate relief,” said Brett House, economics professor at Columbia Business School.

    Inflation has been a persistent problem since the Covid-19 pandemic, when price increases soared to their highest levels in more than 40 years. The central bank responded with a series of interest rate hikes that took its benchmark rate to the highest level in decades.

    The spike in interest rates caused most consumer borrowing costs to skyrocket, putting many households under pressure.

    More from Personal Finance:
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    ‘Recession pop’ is in: How music hits on economic trends
    More Americans are struggling even as inflation cools

    “The cumulative progress on inflation — evidenced by the CPI now at 2.5% after having peaked at 9% in mid-2022 — has given the Federal Reserve the green light to begin cutting interest rates at next week’s meeting,” said Greg McBride, chief financial analyst at Bankrate.com, referring to the consumer price index, a broad measure of goods and services costs across the U.S. economy.

    However, the impact from the first rate cut, expected to be a quarter percentage point, “is very minimal,” McBride said.

    “What borrowers can be optimistic about is that we will see a series of rate cuts that cumulatively will have a meaningful impact on borrowing costs, but it will take time,” he said. “One rate cut is not going to be a panacea.”

    Markets are pricing in a 100% probability that the Fed will start lowering rates when it meets Sept. 17-18, with the potential for more aggressive moves later in the year, according to the CME Group’s FedWatch measure.

    That could bring the Fed’s benchmark federal funds rate from its current range, 5.25% to 5.50%, to below 4% by the end of 2025, according to some experts.

    The federal funds rate, which the U.S. central bank sets, is the rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.

    Rates for everything from credit cards to car loans to mortgages will be affected once the Fed starts trimming its benchmark. Here’s a breakdown of what to expect:

    Credit cards

    Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. In the wake of the rate hike cycle, the average credit card rate rose from 16.34% in March 2022 to more than 20% today — near an all-time high.

    For those paying 20% interest — or more — on a revolving balance, annual percentage rates will start to come down when the Fed cuts rates. But even then they will only ease off extremely high levels, according to McBride.

    “The Fed has to do a lot of rate cutting just to get to 19%, and that’s still significantly higher than where we were just three years ago,” McBride said.

    The best move for those with credit card debt is to switch to a 0% balance transfer credit card and aggressively pay down the balance, he said. “Rates won’t fall fast enough to bail you out.”

    Mortgage rates

    While 15- and 30-year mortgage rates are fixed and mostly tied to Treasury yields and the economy, they are partly influenced by the Fed’s policy. Home loan rates have already started to fall, largely due to the prospect of a Fed-induced economic slowdown.

    As of Sept. 11, the average rate for a 30-year, fixed-rate mortgage was around 6.3%, nearly a full percentage point drop from where rates stood in May, according to the Mortgage Bankers Association.

    But even though mortgage rates are falling, home prices remain at or near record highs in many areas, according to Jacob Channel, senior economist at LendingTree.

    “This cut isn’t going to totally reshape the economy, and it’s not going to make doing things like buying a house or paying off debt orders of magnitude easier,” he said.

    Auto loans

    “Auto loan rates will head lower, too, but you shouldn’t expect the blocking and tackling around car shopping to change anytime soon,” said Matt Schulz, chief credit analyst at LendingTree. 

    The average rate on a five-year new car loan is now around 7.7%, according to Bankrate.

    While anyone planning to finance a new car could benefit from lower rates to come, the Fed’s next move will not have any material effect on what you get, said Bankrate’s McBride. “Nobody is upgrading from a compact to an SUV on a quarter-point rate cut.” The quarter percentage point difference on a $35,000 loan is about $4 a month, he said.

    Consumers would benefit more from improving their credit scores, which could pave the way to even better loan terms, McBride said.

    Student loans

    Federal student loan rates are also fixed, so most borrowers won’t be immediately affected by a rate cut. However, if you have a private loan, those loans may be fixed or have a variable rate tied to the T-bill or other rates, which means once the Fed starts cutting interest rates, the rates on those private student loans will come down as well.

    Eventually, borrowers with existing variable-rate private student loans may also be able to refinance into a less expensive fixed-rate loan, according to higher education expert Mark Kantrowitz. 

    However, refinancing a federal loan into a private student loan will forgo the safety nets that come with federal loans, he said, “such as deferments, forbearances, income-driven repayment and loan forgiveness and discharge options.” Additionally, extending the term of the loan means you ultimately will pay more interest on the balance.

    Savings rates

    While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.

    As a result of the Fed’s string of rate hikes in recent years, top-yielding online savings account rates have made significant moves and are now paying well over 5%, with no minimum deposit, according to Bankrate’s McBride.

    With rate cuts on the horizon, those “deposit rates will come down,” he said. “But the important thing is, what is your return relative to inflation — and that is the good news. You are still earning a return that’s ahead of inflation, as long as you have your money in the right place.”

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  • UBS CEO says it’s too early to talk about a U.S. recession, but a slowdown is possible

    UBS CEO says it’s too early to talk about a U.S. recession, but a slowdown is possible

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    Sergio Ermotti, chief executive officer of UBS Group

    Stefan Wermuth | Bloomberg | Getty Images

    ZURICH, Switzerland ꟷ UBS CEO Sergio Ermotti said Wednesday that market volatility could intensify in the second half of the year, but he does not believe the U.S. is heading into a recession.

    Global equities saw sharp sell-offs last week as investors digested weak economic data out of the U.S. which raised fears about an economic downturn in the world’s largest economy. It also raised questions about whether the Federal Reserve needed to be less hawkish with its monetary policy stance. The central bank kept rates on hold in late July at a 23-year high.

    When asked about the outlook for the U.S. economy, Ermotti said: “Not necessarily a recession, but definitely a slowdown is possible.”

    “The macroeconomic indicators are not clear enough to talk about recessions, and actually, it’s probably premature. What we know is that the Fed has enough capacity to step in and support that, although it’s going to take time, whatever they do to be then transmitted into the economy,” the CEO told CNBC on Wednesday after the bank reported its second-quarter results.

    UBS expects that the Federal Reserve will cut rates by at least 50 basis points this year. At the moment, traders are split between a 50 and a 25 basis point cut at the Fed’s next meeting in September, according to LSEG data.

    Speaking to CNBC, Ermotti said that we are likely to see higher market volatility in the second half of the year, partially because of the U.S. election in November.

    “That’s one factor, but also, if I look at the overall geopolitical picture, if I look at the macroeconomic picture, what we saw in the last couple of weeks in terms of volatility, which, in my point of view, is a clear sign of the fragility of some elements of the system, … one should expect definitely a higher degree of volatility,” he said.

    Another uncertainty going forward is monetary policy and whether central banks will have to cut rates more aggressively to combat a slowdown in the economy. In Switzerland, where UBS is headquartered, the central bank has cut rates twice this year. The European Central Bank and the Bank of England have both announced one cut so far.

    “Knowing the events which are the unknowns on the horizon like the U.S. presidential election, we became complacent with a very low volatility, now we are shifting to a more normal regime,” Bruno Verstraete, founder of Lakefield Wealth Management told CNBC Wednesday.

    “In the context of UBS, [more volatility is] not necessarily a bad thing, because more volatility means more trading income,” he added.

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  • 59% of Americans wrongly think the U.S. is in a recession, report finds

    59% of Americans wrongly think the U.S. is in a recession, report finds

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    We are not in a recession

    “Right now we have a ‘Goldilocks’ economy,” said Gene Goldman, chief investment officer at Cetera Financial Group in El Segundo, California.

    The country’s economy has continued to expand since the Covid-19 pandemic, sidestepping earlier recessionary forecasts.

    Officially, the National Bureau of Economic Research defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” The last time that happened was early in 2020, when the economy came to an abrupt halt.

    In the last century, there have been more than a dozen recessions, some lasting as long as a year and a half.

    Still, regardless of the country’s economic standing, many Americans are struggling in the face of sky-high prices for everyday items, and most have exhausted their savings and are now leaning on credit cards to make ends meet.

    “Money is top of mind,” said Vishal Kapoor, senior vice president of product at Affirm. “Consumers are resilient but they’re feeling the pinch of higher prices.”

    Economists have wrestled with the growing disconnect between how the economy is doing and how people feel about their financial standing.

    We’re in a ‘vibecession’

    We’re in a “vibecession,” Joyce Chang, JPMorgan’s chair of global research, said at the CNBC Financial Advisor Summit in May.

    Over the last few years “the wealth creation was concentrated amongst homeowners and upper-income brackets,” Chang said, “but you probably have about one-third of the population that’s been left out of that — that’s why there’s such a disconnect.”

    Rising rents coupled with high borrowing costs and low wage growth have hit some especially hard. “Lower income households are not keeping up,” Goldman said. “Everything looks great but when you look beneath the surface, the disparity between the wealthy and nonwealthy is widening dramatically.”

    It’s not only a “vibe,” however.

    As more consumers stretch to cover increased prices and higher interest rates, there are new indications of financial strain.

    A growing number of borrowers are falling behind on their monthly credit card payments. Over the last year, roughly 9.1% of credit card balances transitioned into delinquency, the New York Fed reported for the second quarter of 2024. And more middle-income households anticipate struggling with debt payments in the coming months.  

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  • Home valuations are rising faster than incomes. Here’s why that could hurt homeowners’ wallets

    Home valuations are rising faster than incomes. Here’s why that could hurt homeowners’ wallets

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    Record inflation may have people questioning whether homeownership is still a good investment.

    Home prices have been rising faster than incomes, which can be a problem for homeowners because as the value of a home rises, so does the cost to maintain it.

    More than 1 in 4 homeowners with mortgages are considered “cost-burdened,” meaning they spend more than 30% of their income on housing costs, according to a 2023 analysis of U.S. Census data by the Chamber of Commerce.

    “Unfortunately, a lot of people go into buying a home and they don’t understand that their monthly payment could change,” said Devon Viehman, regional vice president for the National Association of Realtors.

    Changes in two expenses in particular tend to surprise people, experts say.

    “What many [homeowners] have failed to anticipate is the rise in both property taxes — and that’s correlated to the rise in the value of their home, something that at some level helps them — as well as the increased cost of paying for that insurance,” said Mark Hamrick, senior economic analyst at Bankrate.

    ‘Paper’ wealth and rising expenses

    Single-family homeowners accumulate an average of $225,000 in wealth from their homes during a 10-year period, according to a 2022 report from the National Association of Realtors.

    “That wealth sort of boils down to being primarily only on paper, and the time that you cash in that asset is when you sell the home,” said Hamrick.

    Property taxes are one of the costs that can increase with the value of the home. Homeowners whose properties were reassessed between 2019 and 2023 amid skyrocketing valuations saw a median tax increase of 25%, according to a February 2024 study by CoreLogic. The annual median taxes for properties in the U.S. that were reassessed increased more than $600 over that period.

    More from Personal Finance:
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    Home insurance is the other major expense that can fluctuate after a home purchase. 

    There has also been a 20% increase in average home insurance premiums between 2021 and 2023, according to insurance comparison company Insurify. Insurify estimates rates will rise another 6% by the end of 2024.

    Florida, Louisiana, Texas and Colorado have seen the biggest spike in insurance rates over that period, influenced by extreme weather events.

    Florida is leading the pack. The average annual rate for home insurance in Florida was nearly $11,000 in 2023, which is more than $8,600 than the U.S. average. The state’s cities make up six of the top 10 most expensive cities to insure in the country, Insurify found.

    What’s more, the cost of repairing a home has risen, which also affects insurance premiums.

    “This is going to be a space to watch for the foreseeable future, simply because it is such a dynamic and volatile and potentially costly environment,” Hamrick said.

    Tips for homebuyers

    Viehman of the NAR recommends people shopping for a home “lean on their realtor first.” She recommends homebuyers ask their real estate agent for a history of costs associated with owning the home such as property taxes, insurance, trash removal, water, gas and electrical bills.

    Homebuyers should also see if the state they’re looking to buy in has any laws restricting property tax increases per year.

    Just because you qualify for $3,000 a month in a mortgage payment doesn’t mean you should max it out right now … Go a little lower than that so that you give yourself that room.

    Devon Viehman

    regional vice president for the National Association of Realtors

    A good agent ought to be able to answer all those questions for you, Viehman said.

    Viehman also recommends leaving room in your monthly budget to address the possibility of surprise expenses.

    “Just because you qualify for $3,000 a month in a mortgage payment doesn’t mean you should max it out right now,” she said. “Look for something where you can get in around $2,500 if $3,000 is your comfortable budget. Go a little lower than that so that you give yourself that room.”

    Tips for current homeowners

    Homeowners can also consider switching insurance companies if their rates get too high.

    “You should be interviewing insurance companies,” Viehman said. “Interview everyone. Interview a few lenders. Interview a few realtors. Interview a few insurance agents because they all have different things that they offer, and you need to find what works best for you.”

    Watch the video above to learn more about why home payments are skyrocketing and what homebuyers can do to help navigate in this challenging market.

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  • The Federal Reserve sets the stage for a rate cut — here’s what that means for your money

    The Federal Reserve sets the stage for a rate cut — here’s what that means for your money

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    Customer shopping for school supplies with employee restocking shelves, Target store, Queens, New York.

    Lindsey Nicholson | UCG | Universal Images Group | Getty Images

    Now, as the central bank sets the stage to lower interest rates for the first time in years when it meets again in September, consumers may see their borrowing costs start come down as well — some are already.

    The federal funds rate, which the U.S. central bank sets, is the rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.

    “The first cut will not make a meaningful difference to people’s pocketbooks but it will be the beginning of a series of rate cuts at the end the of this year and into next year that will,” House said.

    That could bring the the Fed’s benchmark fed funds rate from the current range of 5.25% to 5.50% to below 4% by the end of next year, according to some experts.

    From credit cards and mortgage rates to auto loans and student debt, here’s a look at where those monthly interest expenses stand as we move closer to that initial interest rate cut.

    Credit cards

    Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. In the wake of the rate hike cycle, the average credit card rate rose from 16.34% in March 2022 to more than 20% today — nearing an all-time high.

    At the same time, with households struggling to keep up with the high cost of living, credit card balances are also higher and more cardholders are carrying debt from month to month or falling behind on payments.

    A recent report from the Philadelphia Federal Reserve showed credit card delinquencies at an all-time high, according to data going back to 2012. Revolving debt balances also reached a new high even as banks reported tightening credit standards and declining new card originations.

    For those paying 20% interest — or more — on a revolving balance, annual percentage rates will start to come down when the Fed cuts rates. But even then they will only ease off extremely high levels, offering little in the way of relief, according to Greg McBride, chief financial analyst at Bankrate.com.

    “Rates are not going to fall fast enough to bail you out of a bad situation,” McBride said.

    The best move for those with credit card debt is to take matters into their own hands, advised Matt Schulz, chief credit analyst at LendingTree.

    “They can do that by getting a 0% balance transfer credit card or a low-interest personal loan or by calling their card issuer and requesting a lower interest rate on a card,” he said. “That works more often that you might think.”

    Mortgage rates

    While 15- and 30-year mortgage rates are fixed and mostly tied to Treasury yields and the economy, they are partly influenced by the Fed’s policy. Home loan rates have already started to fall, largely due to the prospect of a Fed-induced economic slowdown.

    The average rate for a 30-year, fixed-rate mortgage is now just below 7%, according to Bankrate.

    “If we continue to get good news on things like inflation, [mortgage rates] could continue trending downward,” said Jacob Channel, senior economist at LendingTree. “We shouldn’t expect any gargantuan drops in the immediate future, but we might see rates trending back to their 2024 lows over the coming weeks and months,” he said.

    “If all goes really well, we could even end the year with the average rate on a 30-year, fixed mortgage closer to 6% than 6.5% or 7%.”

    At first glance, that might not seem significant, Channel added, but “in mortgage land,” a nearly 50 basis-point drop “is nothing to scoff at.”

    Auto loans

    Auto loans are fixed. However, payments have been getting bigger because the interest rates on new loans are higher, along with rising car prices, resulting in less affordable monthly payments.

    The average rate on a five-year new car loan is now just shy of 8%, according to Bankrate.

    However, here, “the financing is one variable, and it’s frankly one of the smaller variables,” McBride said. For example, a quarter percentage point reduction in rates on a $35,000, five-year loan is $4 a month, he calculated.

    Consumers would benefit more from improving their credit scores, which could pave the way to even better loan terms, McBride said.

    Student loans

    Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by the Fed’s moves. But undergraduate students who took out direct federal student loans for the 2023-24 academic year are paying 5.50%, up from 4.99% in 2022-23 — and the interest rate on federal direct undergraduate loans for the 2024-2025 academic year is 6.53%, the highest rate in at least a decade.

    Private student loans tend to have a variable rate tied to the prime, Treasury bill or another rate index, which means those borrowers are already paying more in interest. How much more, however, varies with the benchmark.

    Savings rates

    While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.

    As a result, top-yielding online savings account rates have made significant moves and are now paying as much as 5.5% — well above the rate of inflation, which is a rare win for anyone building up a cash cushion, according to Bankrate’s McBride.

    But those rates will fall once the Fed lowers its benchmark, he added. “If you’ve been considering a certificate of deposit, now is the time to lock it in,” McBride said. “Those yields will not get better, so there is no advantage to waiting.”

    Currently, a top-yielding one-year CD pays more than 5.3%, as good as a high-yield savings account.

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  • World leaders condemn assassination attempt on Trump: ‘Tragedy for democracy’

    World leaders condemn assassination attempt on Trump: ‘Tragedy for democracy’

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    Republican candidate Donald Trump is seen with blood on his face surrounded by secret service agents as he is taken off the stage at a campaign event at Butler Farm Show Inc. in Butler, Pennsylvania, July 13, 2024. 

    Rebecca Droke | Afp | Getty Images

    World leaders have joined together to condemn the assassination attempt on former U.S. President Donald Trump over the weekend.

    Trump was hit in the ear at a campaign rally in Butler, Pennsylvania, on Saturday. The suspected shooter, identified by the FBI as 20-year Thomas Matthew Crooks, was swiftly killed by Secret Service agents at the scene.

    A bystander was also killed, while two other spectators were critically injured.

    Canadian Prime Minister Justin Trudeau said he was “sickened by the shooting” and sent his thoughts to Trump and his fellow Americans.

    European leaders from G-20 countries such as Germany, France, Italy, extended their concern and best wishes to Trump. The UK’s newly elected Prime Minister Keir Starmer said he was “appalled by the shocking scenes” at the rally, adding that “political violence in any form has no place in our societies.”

    French President Emmanuel Macron said on X that the assassination attempt was “a tragedy for our democracies” and his country “shares the indignation of the American people.”

    In Asia, China’s foreign ministry said in a statement that President Xi Jinping had expressed sympathies to Trump, while Japan’s Prime Minister Fumio Kishida emphasized on the importance of standing firm against violence that challenges democracy.

    India’s Prime Minister Narendra Modi — who referred to Trump as “my friend” — said he “strongly” condemned the incident and that “violence has no place in politics and democracies.”

    Australian Prime Minister Anthony Albanese reiterated the same, and said the campaign event in Pennsylvania was “concerning and confronting.”

    The Kremlin’s spokesman Dmitry Peskov said “Russia has always condemned all manifestations of violence,” according to Reuters, reportedly blaming the U.S. administration for creating an environment provoked the attack.

    In the U.S., both Republicans and Democrats alike came together to criticize the attack and expressed their well wishes to the former president.

    In an Oval Office address on Sunday evening, President Joe Biden emphasized the importance of lowering the temperature in U.S. politics and urged Americans to remember: “We are not enemies. We’re neighbors, we’re friends, co-workers, citizens and most importantly, we’re fellow Americans.”

    “The political record in this country has gotten very heated. It’s time to cool it down. We all have responsibility to do that,” Biden said in his address.

    “Disagreement is inevitable in American democracy. It’s part of human nature. Politics must never be a battlefield and God forbid, a killing field,” he said, adding that he had a call with Trump who is recovering well.

    Vice President Kamala Harris posted on X on Sunday, to say that violence such as this “has no place in our nation” and this “abhorrent act” must be condemned to ensure it does not continue to happen.

    Her words echoed those of former President Barack Obama who voiced that there is “absolutely no place for political violence in our democracy” as he wished Trump a speedy recovery.

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  • A key to Biden’s lagging wind energy goal will set sail after the election

    A key to Biden’s lagging wind energy goal will set sail after the election

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    Wind turbines, solar panels and a coal-fired power station in China.

    Owngarden | Moment | Getty Images

    The United States is producing less than 1% of the wind power it wants to generate by 2030. But an enormous boat promising to change that is about 89% built, and when it’s done next year, the real race to catch up begins.

    The ship, named the Charybdis after a mythological Greek sea monster, won’t set sail until next year, potentially after one of the most pro-green energy administrations in history has left the White House. And as Eric Hines, the director of Tufts University’s offshore wind energy graduate program, puts it, “We’re going to need somewhere on the order of five of these installation vessels in just a few years.”

    The Biden administration wants the U.S. to generate 30,000 megawatts from wind power within the next five and a half years. As of last year, that figure stood at just 42 megawatts, putting the nation far behind Europe — which added 18,300 megawatts of new wind energy capacity in 2023 alone, according to WindEurope.

    In recent years, constructing massive offshore windmills has come with headwinds from supply chain snags to higher interest rates. But the U.S. faces an added logistical puzzle from a 100-year-old maritime law that, along with those other factors, has contributed to project delays and even cancellations.

    The outcome of November’s election isn’t likely to affect the Charybdis, whose operator plans to take advantage of green energy tax credits in the Inflation Reduction Act. But the prospect of a new administration much less keen on renewables could hamper additional projects.

    Republican presidential candidate Donald Trump claimed at a New Jersey rally in May that offshore wind installations harm whales, saying, “We are going to make sure that ends on day one. I am going to write it out in an executive order.” (“There are no known links between large whale deaths and ongoing offshore wind activities,” the National Oceanic and Atmospheric Administration has said.)

    The first major parts of the boat were laid down in 2020, kicking off a $625 million project between Dominion Energy and Seatrium AmFELS, which is building the massive vessel in its Brownsville, Texas, shipyard. At over 30,000 tons and with 58,000 square feet of deck space, the Charybdis will be able to transport 12 blades at a time, each measuring 357 feet and weighing 60 tons.

    We’re going to need somewhere on the order of five of these installation vessels in just a few years.

    Eric Hines

    Tufts University Professor

    Just as important as its technical specs, the boat will also be able to meet the requirements of the Jones Act, a 1920 merchant marine law that says cargo shipped from one point to another within the U.S. must be carried by an American vessel. And so far, there’s no American vessel capable of carrying wind turbine parts directly from shore to installation sites miles off the coast.

    The Charybdis’ first project will be Dominion’s offshore wind farm under development 24 miles east of Virginia Beach. Once completed, its 176 turbines are expected to deliver 2,600 megawatts of energy, enough to power over 900,000 homes. But to install its first two pilot turbines, it had to stage the parts in Canada to comply with the Jones Act, adding long travel times and related costs.

    “Obviously, you don’t want to install a large project like that,” said Mark Mitchell, the Dominion Energy senior vice president overseeing the Coastal Virginia Offshore Wind project — which, at $9.8 billion, is currently the largest and priciest in the country.

    Instead, the Charybdis will be able to pick up components on the coast, sail out to the wind farm site, and plant itself into the ocean floor using four 30-story legs that will transform the ship into a construction platform. Then, using a crane with a boom longer than 20 full-sized vehicles lined up bumper to bumper, it will begin assembling the turbines.

    After completing the Virginia project, the ship will be available for contract to other offshore wind projects along the nation’s coastline. Mitchell hopes the Charybdis can do more than complete wind farms already in the works, but inspire developers and planners to propose new ones too.

    “It’s a little bit of the chicken or the egg. As we start committing the projects, others can commit to infrastructure like this,” Mitchell said, adding that state and federal incentives will “pass right down to our customers.”

    But in other cases, federal subsidies have not been enough to overcome rising costs. One major reason: the Federal Reserve, which raised interest rates 11 times between March 2022 and July 2023, the fastest pace it has raised rates since the early 1980s.

    It’s a little bit of the chicken or the egg. As we start committing the projects, others can commit to infrastructure like this.

    Mark Mitchell

    Dominion Energy

    Higher interest rates make it more expensive to finance large construction projects like wind farms.

    “The cost of construction is very high,” Hines said. “If you imagine the time while one is constructing a project, you’re not making any money off the project. And so money that you borrow that time to construct the project, there’s a premium on that money, and the lower the interest rates, the better.”

    Last year, Danish company Orsted canceled two projects off the coast of New Jersey, citing “challenging” conditions.

    “Macroeconomic factors have changed dramatically over a short period of time, with high inflation, rising interest rates, and supply chain bottlenecks impacting our long-term capital investments,” Orsted said in October. The company paid the state $125 million to cease development.

    The Biden administration acknowledges the pressure from higher interest rates and points to tax credits in the IRA as a way to offset them.

    “We know that there are a number of different tools that will help us overcome some of those macroeconomic challenges,” said Jeff Marootian, principal deputy assistant secretary for the Office of Energy Efficiency and Renewable Energy.

    He acknowledged that the Biden administration’s goal of 30,000 megawatts of wind energy is “ambitious” but pointed to projects in the pipeline as a sign of things to come. The Energy Department has tallied nearly $6 billion of investments to develop offshore wind over the last few years, including in 17 manufacturing sites and at 15 ports.

    “Those are the kinds of investments that we need to continue to see in order to reach the president’s goals,” Marootian said.

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  • $2 billion Baltimore bridge rebuild is test case for new national debate over infrastructure spending

    $2 billion Baltimore bridge rebuild is test case for new national debate over infrastructure spending

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    In an aerial view, the remains of the Francis Scott Key Bridge are seen as salvage crews continue to work to clean up the wreckage after the bridge collapsed in the Patapsco River on June 11, 2024 in Baltimore, Maryland. 

    Kevin Dietsch | Getty Images

    Three months after Baltimore’s Francis Scott Key Bridge collapsed – killing six people, shutting a major port and disrupting vehicle traffic along the Eastern Seaboard — local, state and federal officials began a massive effort to make the best out of an unimaginable situation.

    “We’re working with construction companies and designers, and working with the people of our state, to think about what is it that we hope for this almost two-mile long bridge,” Maryland Governor Wes Moore told CNBC.

    The process passed a major milestone last week when crews managed to reopen the main navigation channel to the Port of Baltimore, the nation’s largest port for vehicles. That process alone was initially forecasted to take up to a year.

    “It didn’t take 11 months. We got it done in 11 weeks, because we work together,” Moore said.

    But now, in many ways, comes the hard part. Officials hope to use the disaster as a chance to reconsider all the infrastructure in the region.

    “This is going to be an important opportunity for our state to look at all of our infrastructure, our roads, our bridges, our tunnels. You know, our critical infrastructure is imperative for our economic growth and development,” Moore said.

    Reimagining how to rebuild a bridge

    Some of that planning is already underway. Last month, the Maryland Transportation Authority issued its first request for proposals to rebuild the bridge. The plan is to use what officials call a “Progressive Design-Build Approach,” in which the design and construction firms are hired at the same time and work together throughout the process. This efficiency could allow a new bridge to be built in just four years — breakneck speed for a project expected to cost upward of $2 billion. The Maryland Transportation Authority is expected to choose the firms this summer.

    U.S. Transportation Secretary Pete Buttigieg told CNBC the new bridge will be far better than the old one that opened in 1977.

    “We know things that we didn’t know in the 1970s, about how to put up a bridge,” Buttigieg said. “Nobody wanted to be here through this tragic catastrophe that happened. But it does bring an opportunity, and I would say, responsibility, to get things right for the future.”

    Transportation planners have also begun a series of community meetings to gain public input. At a virtual meeting on June 11, questions included whether the new bridge — like the old one — will be a toll bridge (that is the plan) and whether the new bridge will be wider than the old, four-lane structure (no).

    As the process continues, officials have promised an “engagement tour” to get public input.

    The city of Baltimore, meanwhile, hopes to speed up funding for the already-planned reconstruction of the Hanover Street Bridge over the Patapsco River, which has emerged as a key alternate route for travelers who formerly used the Key Bridge.

    A microcosm of the national infrastructure push

    The situation in Baltimore is a vastly sped-up version of processes underway in states and cities across the country, said Buttigieg, who is overseeing some 54,000 projects nationwide funded by the Bipartisan Infrastructure Law passed in 2021.

    “We have funding that goes to projects that come from every state, city, airport authority or transit agency, you can think of,” he said.

    While Buttigieg acknowledged that some of the demand is a result of the huge amount of money being made available — $550 billion in transportation and infrastructure funding over five years — it is also a reflection of the need.

    “To me, it indicates just how much work there is to do in this country,” he said. “We were reminded as a country the hard way how important our infrastructure is, because of the pressures we experienced at the beginning of this decade with Covid. We saw what happens if our supply chains come under strain.”

    New economic development battleground

    Companies seeking to capitalize on the drive — and incentives — to rebuild damaged domestic supply chains are looking for states and localities that have proper infrastructure in place, said site selection consultant John Boyd, Jr., of The Boyd Company. This may help explain why infrastructure has become such a hot topic in the world of United States economic development.

    “Site readiness is a key component when we think about what distinguishes one market versus another, and it very often is such a critical factor, it could tip the scales for a project towards an overall less business-friendly state, if they have a certified site that’s ready to go,” he said.

    A CNBC analysis of all 50 states’ economic development marketing materials shows that infrastructure is the most mentioned attribute by states marketing to attract companies. As a result, Infrastructure is the top-weighted category in CNBC’s annual state competitiveness rankings, America’s Top States for Business.

    Experts say the emphasis on infrastructure will likely stick around for a while.

    “It’s not easy to build out electrical or water or gas or wastewater infrastructure. Those things take time and money,” said Seth Martindale, chairman of the Site Selectors Guild, which supplied some of the data for the CNBC study. “I think it’s going to be five-plus, 10-plus years before we really get it to a point where we feel good about it.”

    Buttigieg noted that the Bipartisan Infrastructure Law is already halfway through its five-year lifespan, with plenty of needs remaining.

    “I think it’s not too soon to start thinking and talking about what the next five-year package ought to look like,” Buttigieg said, referencing the future of U.S. infrastructure.

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  • The Federal Reserve holds interest rates steady — here’s what that means for your money

    The Federal Reserve holds interest rates steady — here’s what that means for your money

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    The Federal Reserve announced Wednesday that it will leave interest rates unchanged. Fresh inflation data issued earlier in the day showed that consumer prices are gradually moderating though remain above the central bank’s target.

    The Fed’s benchmark fed funds rate has now stood within the range of 5.25% to 5.50% since last July.

    The central bank projected it would cut interest rates once in 2024, down from an estimate of three in March.

    For consumers already strained by the high cost of living, there is an added toll from persistently high borrowing costs.

    “It’s not enough that the rate of inflation has come down,” said Greg McBride, chief financial analyst at Bankrate.com. “Prices haven’t, and that is what is really stressing household balances.”

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    Inflation has been a persistent problem since the Covid-19 pandemic when price increases soared to their highest levels since the early 1980s. The Fed responded with a series of interest rate hikes that took its benchmark rate to the highest level in decades.

    The federal funds rate, which is set by the U.S. central bank, is the rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.

    The spike in interest rates caused most consumer borrowing costs to skyrocket, and now, more Americans are falling behind on their payments.

    From credit cards and mortgage rates to auto loans and student debt, here’s a look at where those monthly interest expenses stand.

    Credit cards

    Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. In the wake of the rate hike cycle, the average credit card rate rose from 16.34% in March 2022 to nearly 21% today — nearing an all-time high.

    “Consumers need to understand that the cavalry isn’t coming anytime soon, so the best thing you can do is take things into your own hands when it comes to lowering credit card interest rates,” said Matt Schulz, chief credit analyst at LendingTree.

    Try calling your card issuer to ask for a lower rate, consolidating and paying off high-interest credit cards with a lower-interest personal loan or switching to an interest-free balance transfer credit card, Schulz advised.

    Mortgage rates

    Although 15- and 30-year mortgage rates are fixed and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.

    The average rate for a 30-year, fixed-rate mortgage is just above 7%, up from 4.4% when the Fed started raising rates in March 2022 and 3.27% at the end of 2021, according to Bankrate.

    “Going forward, mortgage rates will likely continue to fluctuate and it’s impossible to say for certain where they’ll end up,” noted Jacob Channel, senior economist at LendingTree. “That said, there’s a good chance that we’re going to need to get used to rates above 7% again, at least until we start getting better economic news.”

    Auto loans

    Even though auto loans are fixed, payments are getting bigger because car prices have been rising along with the interest rates on new loans, resulting in less affordable monthly payments. 

    The average rate on a five-year new car loan is now more than 7%, up from 4% in March 2022, and that’s not likely to change, according to Ivan Drury, Edmunds’ director of insights.

    “Until we hit summer selldown months in the latter half of the third quarter, we should expect rates to remain relatively static during the foreseeable future,” Drury said.

    However, competition between lenders and more incentives in the market lately have started to take some of the edge off the cost of buying a car, he added.

    Student loans

    Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by the Fed’s moves. But undergraduate students who took out direct federal student loans for the 2023-24 academic year are paying 5.50%, up from 4.99% in 2022-23 — and the interest rate on federal direct undergraduate loans for the 2024-2025 academic year will be 6.53%, the highest rate in at least a decade.

    Private student loans tend to have a variable rate tied to the prime, Treasury bill or another rate index, which means those borrowers are already paying more in interest. How much more, however, varies with the benchmark.

    Savings rates

    While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.

    As a result, top-yielding online savings account rates have made significant moves and are now paying more than 5% — above the rate of inflation, which is a rare win for anyone building up a cash cushion, according to Bankrate’s McBride.

    “Savers are sitting back and enjoying the best environment they’ve seen in more than 15 years,” McBride said.

    Currently, top-yielding one-year certificates of deposit pay over 5.3%, as good as a high-yield savings account.

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  • The next airport terminal lounge or club you pass may also be a bank branch

    The next airport terminal lounge or club you pass may also be a bank branch

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    Nicolette Nelson was running late for her return flight to Fairbanks as she sprinted towards her gate at Cincinnati/Northern Kentucky International Airport (CVG). Overcome by a medical issue, she didn’t make it to her gate and wound up spending the night in a Cincinnati hospital. By the next day, she had recovered and awaited her flight home, but it was repeatedly delayed.

    So Nelson spent hours of her delay in a quiet cubicle in an unlikely place — a bank — waiting for her flight and wiling away the time on electronic devices.

    “It’s been really, it’s quiet and that is what I need,” Nelson said.

    Fifth Third Bank was trying to appeal to this type of traveler when it rechristened its 40-year-old CVG branch last month as a combination lounge and lending center. Weary travelers and constantly working entrepreneurs stake out prime spots in the bank away from the airport hubbub, while corporate travelers use the center to squeeze out more business.

    “One woman wanted to rent my office to work,” remembers Lisa Slocum, the airport Fifth Third Bank branch manager. Slocum directed the woman to other options in the branch.

    Other customers use the bank on a purely transactional basis. On a recent day, Hannah Thelen and her mother, Ashley Thelen, were passing through on their way to Spain and stopped in to convert currency.

    “I love the central location,” Ashley Thelen said as she converted dollars to euros. 

    It’s a central location for a flyer, but a maze of trams, moving sidewalks, and concourses need to be navigated to get to it in Terminal B, and it is past the TSA checkpoint, so the branch doesn’t get customers off the street.

    Fifth-Third Bank isn’t the first financial institution to create an airport lounge vibe. Capital One closed its branch at Washington, D.C.’s Dulles International Airport in 2020, instead creating “airport lounges” for cardholders in Dulles, along with similar spots at airports in Denver and Dallas. The lounges offer amenities on par with an airline rewards club but are only for Capital One card holders, and banking services are not a part of the experience like they are at Fifth-Third’s CVG branch.

    Capital One Lounge inside Dulles International Airport in Washington, D.C.

    Capital One

    If CVG were a city, it’d be the fourth or fifth largest in Kentucky on most days, with 16,000 workers employed on the airport campus daily, according to Mindy Kershner, CVG’s senior manager of communications, plus the nine million passengers going through the gates yearly. That’s a lot of potential banking customers. Yet full-service airport bank branches are a relative rarity, surprising in a retail landscape that often resembles an upscale mall more than a terminal.

    Wings Credit Union has a small full-service branch at the Minneapolis-St. Paul International Airport, and Wings Vice President of Marketing Brent Andersen said the branch is also more about serving the large number of airport employees who are members than the traveling public. He adds, however, that in terms of visibility and advertising, even with the higher airport rent, the branch is a no-brainer.

    “We’d have to spend a lot more in other advertising to get that kind of visibility,” Andersen said, crediting the branch with also landing new members.

    For Fifth Third Bank, and a handful of other retail banking players, the airport branches are more than just expensive advertising for the brand (though that’s certainly part of the appeal). They are also functional financial centers, and in a digital era when bank branches are under existential scrutiny, some financial companies are betting on airports as a viable and visible place to keep their shingle hung.

    Big banks are adding hundreds of branches

    The banks and credit unions adding airport branches are just another indicator that the long-predicted demise of in-person banking at the hands of digital isn’t happening exactly as expected. The long-term trend is still less retail footprint, but branches have been staging a bit of a comeback. In fact, FDIC data shows that 2023 saw the first annual gain in branch count nationwide, to nearly 70,000, in a decade. This rebound comes as banking giants JPMorgan Chase and PNC have announced plans to open more branches — Chase up to 500, plus 1,700 renovations, while PNC is adding 100 new branches and renovating another 1,000 at a cost of $1 billion over the next three to five years.

    When Fifth Third Bank, the nation’s tenth-largest bank by deposits, rechristened its 40-year-old CVG location last month, it did so with plenty of local media coverage, cementing its commitment to airport banking.

    “There are very few full-service branches in airports, and this is one of a kind,” said John Sieg, regional retail executive for Fifth Third Bank. The bank is trying to create something like Delta’s Sky Club, except with on-site banking — cashing checks, checking balances, and converting currency — and open to all. And you won’t get dinged with an overdraft fee for lounging on their sofas.

    “Our objective is for travelers to have a place to do their full-service banking and hang out with us. They could hang out with us all day if they have a delayed flight. We have had customers that have done it,” Sieg said.

    Wells Fargo operates a full-service branch in Las Vegas’s Harry Reid International Airport, and according to a bank spokeswomen, has a multi-year relationship with the airport that involves both the branch and multiple ATMs throughout terminals. Although Wells Fargo had little to say about the branch, it’s not difficult to imagine why it might be popular in Vegas, where slots are as much a part of the landscape as espresso machines.

    Truist Bank, formerly SunTrust, operates a full-service bank branch at Hartsfield-Jackson Atlanta International Airport, where serving customers remains a top priority, but Brian Davis, director of consumer and small business banking communications, also noted that being at the airport provides the bank with “a high level of brand visibility for the millions of passengers who pass through.”

    Still, not everyone in the industry is sold on mixing anxiety about getting through security and to the gate on time with personal finance.

    “I think it’s a bad idea,” says Paul McAdam, senior director of banking and payments intelligence at analytics firm J.D. Power. McAdam says ATMs and advanced-function kiosks are one thing, but a full-service branch, except maybe in the largest markets, is overkill. JFK Airport in New York City has three credit unions in its terminals.

    “I sense that bank branches in airports would handle a lot of transaction volume but very little value-added volume of customers looking to open accounts or receive advice. Who wants to open a new account in an airport?” McAdam said.

    Financial giants are testing the concept of bank-branded destinations more widely. Capital One has opened some cafes in New York that cater to the remote worker, offering a financial vibe without vaults of money and tellers watching your every move. 

    With most travelers focused on traveling, Fifth Third conceded that banking isn’t top of mind for many airport customers. Sieg says the CVG branch does about 1,700 transactions a month.

    “That is probably on the smaller side of what a transaction count would be at a traditional bank mart or office,” he said, but the visibility of the branch makes up for lower volume.

    The branch offers an array of spaces, including a service bar where travelers can tap away at their tablets while watching coffee-clutching, harried travelers racing for their gates. The bank also includes a fully private office with phones, a hydration station, sofas, and overstuffed chairs, an enticement for remote workers. 

    “Regardless of whether you are a customer or a non-customer, we wanted to put out the best welcome sign we could have. Everybody is invited and can use this space,” Sieg said.

    However, if someone feels a need to apply for a mortgage during their layover or open a savings account, the branch has that functionality.

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  • The Federal Reserve holds interest rates steady, offers no relief from high borrowing costs — what that means for your money

    The Federal Reserve holds interest rates steady, offers no relief from high borrowing costs — what that means for your money

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    The Federal Reserve announced Wednesday it will leave interest rates unchanged as inflation continues to prove stickier than expected.

    However, the move also dashes hopes that the Fed will be able to start cutting rates soon and relieve consumers from sky-high borrowing costs.

    The market is now pricing in one rate cut later in the year, according to the CME’s FedWatch measure of futures market pricing. It started 2024 expecting at least six reductions, which was “completely fantasy land,” said Greg McBride, chief financial analyst at Bankrate.com.

    That change in rate-cut expectations leaves many households in a bind, he said. “Certainly from a budgetary standpoint, not only is inflation still high but that is on top of the cumulative increase in prices over the last three years.”

    “Prioritizing debt repayment, especially of high-cost credit card debt, remains paramount as interest rates promise to remain high for some time,” McBride said.

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    Inflation has been a persistent problem since the Covid-19 pandemic, when price increases soared to their highest levels since the early 1980s. The Fed responded with a series of interest rate hikes that took its benchmark rate to its highest level in more than 22 years.

    The federal funds rate, which is set by the U.S. central bank, is the rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.

    The spike in interest rates caused most consumer borrowing costs to skyrocket, putting many households under pressure.

    Increasing inflation has also been bad news for wage growth, as real average hourly earnings rose just 0.6% over the past year, according to the Labor Department’s Bureau of Labor Statistics.

    Even with possible rate cuts on the horizon, consumers won’t see their borrowing costs come down significantly, according to Columbia Business School economics professor Brett House.

    “Once the Fed does cut rates, that could cascade through reductions in other rates but there is nothing that necessarily guarantees that,” he said.

    From credit cards and mortgage rates to auto loans and savings accounts, here’s a look at where those rates could go in the second half of 2024.

    Credit cards

    Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. In the wake of the rate hike cycle, the average credit card rate rose from 16.34% in March 2022 to nearly 21% today — an all-time high.

    Annual percentage rates will start to come down when the central bank reduces rates, but even then they will only ease off extremely high levels. With only a few potential quarter-point cuts on deck, APRs aren’t likely to fall much, according to Matt Schulz, chief credit analyst at LendingTree.

    “If Americans want lower interest rates, they’re going to have to do it themselves,” he said. Try calling your card issuer to ask for a lower rate, consolidating and paying off high-interest credit cards with a lower-interest personal loan or switching to an interest-free balance transfer credit card, Schulz advised.

    Mortgage rates

    Although 15- and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.

    The average rate for a 30-year, fixed-rate mortgage is just above 7.3%, up from 4.4% when the Fed started raising rates in March 2022 and 3.27% at the end of 2021, according to Bankrate.

    “Going forward, mortgage rates will likely continue to fluctuate and it’s impossible to say for certain where they’ll end up,” noted Jacob Channel, senior economist at LendingTree. “That said, there’s a good chance that we’re going to need to get used to rates above 7% again, at least until we start getting better economic news.”

    Auto loans

    Even though auto loans are fixed, payments are getting bigger because car prices have been rising along with the interest rates on new loans, resulting in less affordable monthly payments. 

    The average rate on a five-year new car loan is now more than 7%, up from 4% in March 2022, according to Edmunds. However, competition between lenders and more incentives in the market lately have started to take some of the edge off the cost of buying a car, said Ivan Drury, Edmunds’ director of insights.

    “Any reduction in rates will be especially welcome as there is an increasingly higher share of consumers with older trade-ins that have sat out the market madness waiting for an automotive landscape that looks more like the last time they bought a vehicle six or seven years ago,” Drury said.

    Student loans

    Federal student loan rates are also fixed, so most borrowers aren’t immediately affected. But undergraduate students who took out direct federal student loans for the 2023-24 academic year are now paying 5.50%, up from 4.99% in 2022-23 — and any loans disbursed after July 1 will likely be even higher. Interest rates for the upcoming school year will be based on an auction of 10-Year Treasury notes later this month.

    Private student loans tend to have a variable rate tied to the prime, Treasury bill or another rate index, which means those borrowers are already paying more in interest. How much more, however, varies with the benchmark.

    For those struggling with existing debt, there are ways federal borrowers can reduce their burden, including income-based plans with $0 monthly payments and economic hardship and unemployment deferments. 

    Private loan borrowers have fewer options for relief — although some could consider refinancing once rates start to come down, and those with better credit may already qualify for a lower rate.

    Savings rates

    While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.

    As a result, top-yielding online savings account rates have made significant moves and are now paying more than 5.5% — above the rate of inflation, which is a rare win for anyone building up a cash cushion, McBride said.

    “The mantra of higher-for-longer interest rates is music to the ears of savers who will continue to enjoy inflation-beating returns on safe-haven savings accounts, money markets and CDs for the foreseeable future,” he said.

    Currently, top-yielding certificates of deposit pay over 5.5%, as good as or better than a high-yield savings account.

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  • Why hundreds of U.S. banks may be at risk of failure

    Why hundreds of U.S. banks may be at risk of failure

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    Hundreds of small and regional banks across the U.S. are feeling stressed.

    “You could see some banks either fail or at least, you know, dip below their minimum capital requirements,” Christopher Wolfe, managing director and head of North American banks at Fitch Ratings, told CNBC.

    Consulting firm Klaros Group analyzed about 4,000 U.S. banks and found 282 banks face the dual threat of commercial real estate loans and potential losses tied to higher interest rates.

    The majority of those banks are smaller lenders with less than $10 billion in assets.

    “Most of these banks aren’t insolvent or even close to insolvent. They’re just stressed,” Brian Graham, co-founder and partner at Klaros Group, told CNBC. “That means there’ll be fewer bank failures. But it doesn’t mean that communities and customers don’t get hurt by that stress.”

    Graham noted that communities would likely be affected in ways that are more subtle than closures or failures, but by the banks choosing not to invest in such things as new branches, technological innovations or new staff.

    For individuals, the consequences of small bank failures are more indirect.

    “Directly, it’s no consequence if they’re below the insured deposit limits, which are quite high now [at] $250,000,” Sheila Bair, former chair of the U.S. Federal Deposit Insurance Corp., told CNBC.

    If a failing bank is insured by the FDIC, all depositors will be paid “up to at least $250,000 per depositor, per FDIC-insured bank, per ownership category.”

    Watch the video to learn more about the risk of commercial real estate, the role of interest rates on unrealized losses and what it may take to relieve stress on banks — from regulation to mergers and acquisitions.

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  • Economic Opportunity Tour brings VP Harris to College Park

    Economic Opportunity Tour brings VP Harris to College Park

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    Before Vice President Kamala Harris took the stage Monday afternoon, a panel led by Congressman Steven Horsford (seated, far left), Chairman of the Congressional Black Caucus, took place. Photo by Kerri Phox/The Atlanta Voice

    COLLEGE PARK, Ga.- United States Vice President Kamala Harris returned to the metro Atlanta area on Monday to kick off the Biden-Harris Administration’s Economic Opportunity Tour. The tour is scheduled to move on to Detroit, Michigan, and Milwaukee, Wisconsin next, according to Harris. 

    The first stop took place inside the Georgia International Convention Center in College Park. Harris used her time in College Park to highlight the Biden-Harris Administration’s investments in small business, and more specifically, in Black-owned businesses. Dressed in pink, Harris took the stage to rousing applause and said she chose Atlanta to be the kickoff because of a number of reasons, one of which was former United States Ambassador to the United Nations and former Atlanta Mayor Andrew Young, who was in attendance and received his own standing ovation.

    United States Vice President Kamala Harris (above). Photo by Kerri Phox/The Atlanta Voice

    Harris, who spent time at RICE earlier in the day, said Young was a civic leader that spoke to people’s ambitions.

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  • Trump wins voters on inflation as Biden zeroes in on tariffs, jobs: NBC News poll

    Trump wins voters on inflation as Biden zeroes in on tariffs, jobs: NBC News poll

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    Joe Biden and Donald Trump 2024.

    Brendan Smialowski | Jon Cherry | Getty Images

    More voters trust Donald Trump than President Joe Biden to deal with inflation and the cost of living, their top concerns for the U.S., according to the latest NBC News poll.

    The poll of 1,000 registered voters nationwide found that 52% of respondents said Trump would better handle inflation and the cost of living, while 30% said the same of Biden.

    The survey was taken from April 12 to 16, several days after the release of another hotter-than-expected inflation report, indicating consumer prices gradually ticking back up. Trump attacked Biden’s economic policies immediately following the release of the data.

    As consumer prices heat up again, the Biden administration has kept its message on inflation the same and turned more of its attention to other aspects of the economy: jobs, tariffs and taxes.

    Biden’s heavy focus on those issues was evident as he made the rounds in the key battleground state of Pennsylvania last week.

    During a Wednesday speech in Pittsburgh, Biden announced that he would support tripling tariffs on Chinese steel and aluminum imports, escalating his growing economic hawkishness toward China.

    And a day before in Scranton, Pennsylvania, Biden focused on the tax code and jobs: “There are only two presidents on record in all of American history that left office with fewer jobs than when they entered office: Herbert Hoover and, yes, Donald ‘Herbert Hoover’ Trump.”

    These speeches come after months of Biden hammering the argument that businesses are to blame for stubborn high prices and sticky inflation, accusing companies of price gouging and “shrinkflation,” the practice of selling less quantity of goods for the same price.

    However, as consumer prices wobble, Biden’s recent remarks indicate an effort to bring other economic issues and data to the forefront of voters’ minds.

    For example, while Trump lambasts Biden’s economy, the president has doubled down on the claim that the U.S. “has the best economy in the world.” In fact, the U.S. does lead developed economies on topline metrics like gross domestic product and unemployment.

    But voters are not so easily distracted from their feelings about inflation and the cost of living.

    Only 11% of respondents named “jobs and the economy” as the most critical issues facing the country heading into the November election. Meanwhile, 23% of respondents, the largest share, said inflation and the cost of living were their number one issues — both of which a majority said Trump would manage better.

    Overall, the NBC poll found that Biden appears to be catching up to Trump’s lead, echoing a similar result from a New York Times/Siena College poll earlier this month. The NBC survey found that Trump led Biden by two points in a head-to-head matchup, which was lower than his five-point lead in January. The poll has a margin of error of +/- 3.10%.

    But voters’ rosy memory of the Trump economy has been a consistent thread in early polling and continues to weigh on Biden’s momentum. Despite Biden’s efforts to refocus the conversation on other economic issues, inflation appears to remain an unavoidable barrier to winning over the public’s trust.

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  • Free trade flaws fueled Trump’s rise in 2016 — and the problems remain, top economist says

    Free trade flaws fueled Trump’s rise in 2016 — and the problems remain, top economist says

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    Former U.S. President Donald Trump speaks after attending a wake for New York City Police Department (NYPD) officer Jonathan Diller, who was shot and killed while making a routine traffic stop on March 25 in the Far Rockaway section of Queens, in Massapequa Park, New York, U.S., March 28, 2024. 

    Shannon Stapleton | Reuters

    Decades of trade deficits and a strong dollar created too many “losers” in the U.S. economy who turned to Donald Trump’s protectionist policies, according to Richard Koo, chief economist at the Nomura Research Institute — and those conditions remain.

    Trump’s “America First” economic policies led his administration to institute a slew of trade tariffs on China, Mexico, the European Union and others, including slapping 25% duties on imported steel and aluminum.

    As the Republican nominee for the 2024 presidential election, Trump has proposed a baseline 10% tariff on all U.S. imports and a minimum levy of 60% on imported Chinese products.

    These policies have drawn widespread criticism from economists, who argue that tariffs are counterproductive, as they make imported goods more expensive for the average American.

    Speaking to CNBC’s Steve Sedgwick on the sidelines of the Ambrosetti Forum on Friday, Koo said protectionism was a “horrible thing,” but that Trump’s approach “does have some economic logic.”

    “When we studied economics and free trade, in particular, we were taught…that free trade always creates both winners and losers in the same economy, but the gain that winners get is always greater than the loss of the losers, so the society as a whole always gains. So that’s why the free trade is good,” he noted.

    Koo nevertheless argued that this rests on the assumption that trade flows are balanced or in surplus, while the U.S. has been running huge deficits for the last forty years, which have expanded the number of “losers.”

    “By 2016, the number of people who consider themselves losers of free trade, were large enough to elect Trump president, and so we have to really go back and say to ourselves: what did we do wrong to allow this many people in United States to view themselves as losers of free trade?” he said.

    For Koo, the key problem was the exchange rate, as the strength of the U.S. dollar incentivized foreign imports and hurt U.S. companies exporting around the world.

    “We kind of let the exchange rate be decided by so-called market forces, speculators, my clients, Wall Street types, but the foreign exchange rate has to be set in a way that the number of losers does not grow to a point where the free trade itself is lost,” Koo said.

    He pointed to a similar pivotal moment in 1985, when President Ronald Reagan faced the same issue of a strong dollar and rising protectionism. At the time, Reagan responded by facilitating the Plaza Accord with France, West Germany, Japan and the United Kingdom to depreciate the U.S. dollar against the respective currencies of these countries through intervention in the foreign exchange market.

    This Fed is 'overly data-dependent,' says Allianz chief economic advisor

    “That’s the kind of thing we should have been more conscious of doing. Instead of allowing [the] dollar to go wherever the market takes [it], and then these people who are not as fortunate as we are in the financial markets, end up suffering and end up voting for Mr. Trump,” Koo added.

    He argued that economists need to move beyond the idea that the trade deficit is simply down to “too much investment” and “too few savings” in the U.S., as this means deficit can only be reduced by remaining in recession until domestic demand weakens so much that U.S. companies can export more goods, which would not be possible in a democracy.

    Koo again pointed to past dealings with Japan, suggesting that if the argument held that overseas companies are just filling in where U.S. companies cannot satisfy domestic demand, then the American companies fighting Japanese firms in the 1970s and 70s should have recorded huge profits due to excess demand.

    “But that did not actually happen. It’s the opposite that happened. So many of them went bankrupt, so many losers of free trade were left in the streets, because it was not savings and investment issue, it was the exchange rate issue,” he said.

    “The dollar should have been much weaker, and Reagan understood that that’s why he took that action.”

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  • The U.S. inflation prints for January and February were ‘anomalies’: Economist

    The U.S. inflation prints for January and February were ‘anomalies’: Economist

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    Olu Omodunbi of Huntington Private Bank expects to see “better inflation prints in the next couple of months” which would allow the Fed to start cutting interest rates in the middle of 2024

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    Thu, Apr 4 202410:39 PM EDT

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  • Immigration is boosting the U.S. economy and has been ‘really underestimated,’ says JPMorgan research head

    Immigration is boosting the U.S. economy and has been ‘really underestimated,’ says JPMorgan research head

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    U.S. commuters.

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    The recent surge in immigration into the U.S. is helping to bolster the economy despite a raft of global challenges, according to Joyce Chang, chair of global research at JPMorgan.

    The U.S. Federal Reserve on Wednesday raised its U.S. GDP growth projection to 2.1% for 2024, up from 1.4% in its December outlook, as the economy continues to display resilience despite high interest rates as the central bank seeks to manage inflation levels.

    Meanwhile, the labor market has stayed relatively hot despite tighter monetary conditions, with unemployment remaining below 4% in February and the economy adding 275,000 jobs.

    The Fed also raised its projections for its preferred measure of inflation: core personal consumption expenditure. It now expects the core PCE to come in at 2.6%, up from 2.4%, after January and February inflation prints dampened hopes that price increases were fully under control.

    The core consumer price index, which excludes volatile food and energy prices, rose 0.4% in February on the month and was up 3.8% on the year, slightly higher than forecast.

    “We are still seeing the phenomena around the globe that services inflation is still well above where it was before the pandemic, so we’re looking at 3% for core CPI, but I think one thing that was really underestimated in the U.S. was the immigration story,” Chang told CNBC’s “Squawk Box Europe” on Thursday.

    “The U.S. population is almost 6 million higher than it was two years ago or so, and so that has accounted for a lot of the increase in consumption, when you see the very low unemployment numbers as well.”

    She noted that upward pressure on wages and housing costs, along with a resurgence in energy prices so far this year, suggest that the Fed is “not out of the woods yet” when it comes to inflation.

    A recent Congressional Budget Office report estimated that net immigration to the U.S. was 3.3 million in 2023 and is projected to remain at that level in 2024, before dropping to 2.6 million in 2025 and 1.8 million in 2026.

    Immigration, and particularly border crossings, is among the hottest topics in the run-up to the November presidential election. Chang suggested that other events could exacerbate the issue, particularly the unfolding situation in Haiti.

    However, she argued that in terms of net impact on the economy, immigration is “a good thing.”

    “From everything that we have seen, the revenues that are generated exceed the expenses. Now it is a political issue, not just here in the U.S. but you look at Europe, it’s also probably the No. 1 issue right now, but we do think that when you look at the unemployment numbers, the strength of consumption, the immigration was a big part of that,” Chang said.

    Vanguard economist says Fed to keep interest rates on hold for the rest of the year

    Other factors that have enabled the U.S. economy to outperform its peers include its high fiscal deficit and its energy independence, Chang added. Europe has struggled in recent years to eradicate its reliance on Russia for energy supply.

    Meanwhile, the Congressional Budget Office projects that the U.S. federal budget deficit totaled $1.4 trillion in 2023, or 5.3% of GDP, which will swell to 6.1% of GDP in 2024 and 2025.

    “I think that also in an election year you’re going to see a lot of spending before Sept. 30 as well, so there aren’t really many signs that those numbers [will subside]. I think that’s one reason why I do think that higher for longer will be here to stay,” Chang added. Sept. 30 is the end of the U.S. government’s fiscal year.

    With this in mind, JPMorgan sees only a “shallow” loosening cycle from the Federal Reserve, with inflationary pressures set to persist against the backdrop of high government spending and immigration.

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  • The Fed hasn’t touched interest rates since July, but they’re still moving. What that looks like for credit cards, mortgages and savings accounts

    The Fed hasn’t touched interest rates since July, but they’re still moving. What that looks like for credit cards, mortgages and savings accounts

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    Savings accounts

    Higher rates mean that consumers have to pay more to service their debt, but it also means that banks pay higher rewards to savers. It’s one of the silver linings to the current rate environment, said Ted Rossman, chief credit card analyst at Bankrate.

    “There’s also been remarkable stability at the top of this market,” Rossman said. “The highest savings rate right now is 5.35%.”

    That top rate is considerably higher than the national average for savings rates overall, which has been just below 0.6% for the past two months. But even that overall average is more than double its level of 0.23% 12 months ago.

    Rossman added that plenty of high-yield savings accounts, mostly available online, are still paying close to or even above 5%. These kinds of accounts keep money easily accessible while earning solid returns and are great options for emergency savings.

    Certificates of deposit

    Interest rates on savings accounts are higher than they’ve been in decades, but there has been recent softening in returns on certificates of deposit, data from the U.S. Federal Deposit Insurance Corp. shows.

    The average yield on a 12-month certificate in March 2024 was 1.81%, down slightly from its high in December and January, according to the FDIC.

    Despite the dip, CDs are good savings vehicles that avoid risk but still provide a return if you’re willing to tie up your money for a set period of time, Rossman said. The current environment will likely remain good for savers until the Federal Reserve initiates its rate cuts.

    “There’s been remarkable stability at the top of this market, even though we expect cuts are coming,” he said. “These shorter-term rates don’t tend to move until the Fed moves.”

    Until then, savers should take full advantage.

    Credit cards

    The flip side to the positive environment for savers is the expensive credit card market: Consumers carrying balances on their cards face historically high rates. The average credit card rate has been well above 20% for the past 12 months and will continue to stay there for some time, Rossman said.

    “Sometimes rates bounce around a little bit if offers come on and off the market,” Rossman said, but “we’ve plateaued since that last rate hike as of late July.”

    The key for consumers to remember is that credit card debt is expensive, and that will still be true even after the rate cutting starts, he said.

    “The Fed is not going to come to your rescue on credit card rates,” Rossman said. “Even if rates fell a couple of points in a couple of years, they’d still be high.”

    His best advice for consumers is to prioritize paying off credit card debt, if possible with the help of a balance transfer card, which lets consumers carry balances from one credit card to another for a low fee and an extended period of no or low interest.

    The Fed is not going to come to your rescue on credit card rates.

    Ted Rossman

    Senior industry analyst, Bankrate

    Rossman added the offers from balance transfer cards continue to be very favorable with low fees and generous repayment windows.

    “The balance transfer market has been remarkably stable and strong,” he said. “It speaks to a strong job market and the strong economy. People are paying these bills back,” despite the fact that more consumers, on average, are carrying more expensive debt.

    Mortgage rates

    While savings and credit card rates are very sensitive to maneuvers from the Federal Reserve, the area that might see the most movement is housing.

    “Unlike some of these other products, mortgage rates tend to move in advance of the Fed because they tend to track 10-year Treasurys,” Rossman said. “It’s more about investor expectations for the Fed and for economic growth.”

    That’s reflected in the data. Mortgage rates peaked in October 2023 at about 8%, followed by a steady decline. And after a brief jump in February, they seem to be settling back to where they were at the beginning of 2024, when a 30-year fixed rate mortgage was about 6.6%.

    “We think there’s a good chance that the average 30-year fixed rate mortgage could be around 6% by the end of the year,” Rossman said, which would be a much needed reprieve for a highly competitive housing market that is still undersupplied.

    High mortgage rates have kept many sellers — who are locked into lower rates from years’ past — from putting their homes on the market. Lower rates could get them to list, Rossman said.

    “The closer we get to 6% and then eventually into 5% territory, that gets some people off the fence and they list their home and then inventory improves,” he said. “Then that gives some some relief on the price side for would-be buyers.”

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  • The Federal Reserve holds interest rates steady, with no immediate relief for consumers from sky-high borrowing costs

    The Federal Reserve holds interest rates steady, with no immediate relief for consumers from sky-high borrowing costs

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    The Federal Reserve announced Wednesday it will leave interest rates unchanged, delaying the possibility of rate cuts as well as any relief from sky-high borrowing costs.

    Overall, expectations that the Fed is pulling off a soft landing have increased, but that offers little consolation for Americans with high-interest debt.

    And now there may be fewer interest rate cuts on the horizon after hotter-than-expected inflation reports sent the message that “we are moving in the right direction, but we’re not there yet,” said Greg McBride, chief financial analyst at Bankrate.com.

    For consumers, that means “a very slow downward drift in savings rates but no material change in borrowing costs for credit cards, auto loans or home equity lines of credit,” McBride said.

    More from Personal Finance:
    Here’s when the Fed is likely to start cutting interest rates
    Nearly half of young adults have ‘money dysmorphia’
    Deflation: Here’s where prices fell

    Inflation has been a persistent problem since the Covid-19 pandemic, when price increases soared to their highest levels since the early 1980s. The Fed responded with a series of interest rate hikes that took its benchmark rate to its highest level in more than 22 years.

    The federal funds rate, which is set by the U.S. central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.

    The spike in interest rates caused most consumer borrowing costs to skyrocket, putting many households under pressure.

    Even with some rate cuts on the horizon later this year, consumers won’t see their borrowing costs come down significantly, according to Columbia Business School economics professor Brett House.

    “The costs of borrowing will remain relatively tight in real terms as inflation pressures continue to ease gradually,” he said.

    From credit cards and mortgage rates to auto loans and savings accounts, here’s a look at where those rates could go in 2024.

    Credit cards

    Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. In the wake of the rate hike cycle, the average credit card rate rose from 16.34% in March 2022 to nearly 21% today — an all-time high.

    With most people feeling strained by higher prices, balances are higher and more cardholders are carrying debt from month to month compared with last year.

    Annual percentage rates will start to come down when the Fed cuts rates, but even then they will only ease off extremely high levels. With only a few potential quarter-point cuts on deck, APRs would still be around 20% by the end of 2024, according to Ted Rossman, Bankrate’s senior industry analyst.

    “If the average credit card rate falls a percentage point from its current record high of 20.75%, most cardholders would barely notice,” he said.

    Mortgage rates

    Although 15- and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.

    But rates are already lower since hitting 8% in October. Now, the average rate for a 30-year, fixed-rate mortgage is near 7%. That’s up from 4.4% when the Fed started raising rates in March 2022 and 3.27% at the end of 2021, according to Bankrate.

    Doug Duncan, chief economist at Fannie Mae, expects mortgage rates will end the year at 6.4%, but that won’t provide much of a boost for would-be homebuyers.

    “The housing market is likely to continue to face the dual affordability constraints of high home prices and elevated interest rates in 2024,” Duncan said. “The problem is still supply. If rates come down and it ramps up demand and there’s no supply, the only thing that happens is that home prices go up.”

    Auto loans

    Even though auto loans are fixed, payments are getting bigger because car prices have been rising along with the interest rates on new loans, resulting in less affordable monthly payments. 

    The average rate on a five-year new car loan is now more than 7%, up from 4% when the Fed started raising rates, according to Edmunds. However, competition between lenders and more incentives in the market have started to take some of the edge off the cost of buying a car lately, said Ivan Drury, Edmunds’ director of insights.

    Once the Fed cuts rates, “that gives people a little more breathing room,” Drury said. “Last year was ugly all around. At least there’s an upside this year.”

    Student loans

    Federal student loan rates are also fixed, so most borrowers aren’t immediately affected. But undergraduate students who take out new direct federal student loans are now paying 5.50% — up from 4.99% in the 2022-23 academic year and 3.73% in 2021-22.

    Private student loans tend to have a variable rate tied to the prime, Treasury bill or another rate index, which means those borrowers are already paying more in interest. How much more, however, varies with the benchmark.

    For those struggling with existing debt, there are ways federal borrowers can reduce their burden, including income-based plans with $0 monthly payments and economic hardship and unemployment deferments. 

    Private loan borrowers have fewer options for relief — although some could consider refinancing once rates start to come down, and those with better credit may already qualify for a lower rate.

    Savings rates

    While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.

    As a result, top-yielding online savings account rates have made significant moves and are now paying more than 5% — above the rate of inflation, which is a rare win for anyone building up an emergency savings account, McBride said.

    Since those rates have likely maxed out, this is the time to lock in certificates of deposit, especially maturities longer than one year, he said. “There’s no incentive to hold out for something better because that’s not the way the wind is blowing.”

    Currently, one-year CDs are averaging 1.73%, but top-yielding CD rates pay over 5%, as good as or better than a high-yield savings account.

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  • The Federal Reserve may not cut interest rates just yet, here’s what that means for your money

    The Federal Reserve may not cut interest rates just yet, here’s what that means for your money

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    Economists expect the Federal Reserve to leave interest rates unchanged at the end of its two-day meeting this week, even though many experts anticipate the central bank is preparing to start cutting rates in the months ahead.

    In prepared remarks earlier this month, Federal Reserve Chair Jerome Powell said policymakers don’t want to ease up too quickly.

    Powell noted that lowering rates rapidly risks losing the battle against inflation and likely having to raise rates further, while waiting too long poses danger to economic growth.

    But in the meantime, consumers won’t see much relief from sky-high borrowing costs.

    More from Personal Finance:
    Here’s when the Fed is likely to start cutting interest rates
    Nearly half of young adults have ‘money dysmorphia’
    Deflation: Here’s where prices fell

    In 2022 and the first half of 2023, the Fed raised rates 11 times, causing consumer borrowing rates to skyrocket while inflation remained elevated, and putting households under pressure.

    With the combination of sustained inflation and higher interest rates, “many consumers are experiencing higher levels of economic stress compared to one year ago,” said Silvio Tavares, CEO of credit scoring company VantageScore.

    The federal funds rate, which is set by the U.S. central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.

    Even once the central bank does cut rates — which some now expect could happen in June — the pace that they trim is going to be much slower than the pace at which they hiked, according to Greg McBride, chief financial analyst at Bankrate.

    “Interest rates took the elevator going up; they are going to take the stairs coming down,” he said.

    Here’s a breakdown of where consumer rates stand now and where they may be headed:

    Credit cards

    Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. Because of the central bank’s rate hike cycle, the average credit card rate rose from 16.34% in March 2022 to nearly 21% today — an all-time high.

    With most people feeling strained by higher prices, balances are higher and more cardholders are carrying debt from month to month compared to last year.

    Annual percentage rates will start to come down when the Fed cuts rates but even then, they will only ease off extremely high levels. With only a few potential quarter-point cuts on deck, APRs would still be around 20% by the end of 2024, McBride said.

    “If the Fed cuts rates twice by a quarter point, your credit card rate will fall by half a percent,” he said.

    Mortgage rates

    Fifteen- and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy. But anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.

    Rates are already significantly lower since hitting 8% in October. Now, the average rate for a 30-year, fixed-rate mortgage is around 7%, up from 4.4% when the Fed started raising rates in March 2022 and 3.27% at the end of 2021, according to Bankrate.

    “Despite the recent dip, mortgage rates remain high as the market contends with the pressure of sticky inflation,” said Sam Khater, Freddie Mac’s chief economist. “In this environment, there is a good possibility that rates will stay higher for a longer period of time.”

    Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate and those rates remain high.

    “The reality of it is, a lot of borrowers are paying double-digit interest rates on those right now,” McBride said. “That is not a low cost of borrowing and that’s not going to change.”

    Auto loans

    Even though auto loans are fixed, payments are getting bigger because car prices have been rising along with the interest rates on new loans, resulting in less affordable monthly payments. 

    The average rate on a five-year new car loan is now more than 7%, up from 4% when the Fed started raising rates, according to Edmunds. However, competition between lenders and more incentives in the market have started to take some of the edge off the cost of buying a car lately, said Ivan Drury, Edmunds’ director of insights.

    Once the Fed cuts rates, “that gives people a little more breathing room,” Drury said. “Last year was ugly all around. At least there’s an upside this year.”

    Federal student loans

    Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by the Fed’s moves. But undergraduate students who take out new direct federal student loans are now paying 5.50% — up from 4.99% in the 2022-23 academic year and 3.73% in 2021-22.

    Private student loans tend to have a variable rate tied to the prime, Treasury bill or another rate index, which means those borrowers are already paying more in interest. How much more, however, varies with the benchmark.

    For those struggling with existing debt, there are ways federal borrowers can reduce their burden, including income-based plans with $0 monthly payments and economic hardship and unemployment deferments. 

    Private loan borrowers have fewer options for relief — although some could consider refinancing once rates start to come down, and those with better credit may already qualify for a lower rate.

    Savings rates

    While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.

    As a result, top-yielding online savings account rates have made significant moves and are now paying more than 5% — above the rate of inflation, which is a rare win for anyone building up an emergency savings account, McBride said.

    Since those rates have likely maxed out, this is the time to lock in certificates of deposit, especially maturities longer than one year, he advised. “There’s no incentive to hold out for something better because that’s not the way the wind is blowing.”

    Currently, one-year CDs are averaging 1.73% but top-yielding CD rates pay over 5%, as good or better than a high-yield savings account.

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