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Hey friend - Make sure to catch up with our Weekly Scoop, and don’t miss our Explained: 2024 Outlook. Upgrade to Premium or refer one friend to read them.
Here’s what you need to know today…
Big Picture
People are worrying much less about rising living costs.
Credit card debt is piling up nationwide.
Unemployment is historically low, and employers are still hiring.
The Market: ⬆️ +1.4%
S&P 500: 4,763.54
1Mo: +3% | 1Yr: +22% | 5Yr: +83%
The market jumped higher after last week's slump. Holiday retail spending updates have been okay, and policymakers are discussing easing economic restrictions.
People are starting to get over the trauma of rapidly rising living costs. The New York Federal Reserve’s monthly consumer survey revealed the lowest short-term inflation expectations in nearly three years. Consumers expect living costs to rise by only 3% over the next year and just 2.5% annually over the next three years. That’s much closer to the 2% annual inflation policymakers want to see. Expectations matter because they can be self-fulfilling, as consumers spend more and businesses raise prices in anticipation of higher costs.
Americans are racking up credit card debt fast. The Federal Reserve Bank’s monthly consumer credit report showed revolving credit balances jumped by $18B in November after rising just $3B in October. With average credit card interest rates at record highs, more Americans are falling behind on payments. Bankrate reported nearly half of surveyed credit card users are carrying debt month-to-month, and 56 million cardholders have held debt for over 12 months.
💵 Debt is like investing in reverse, eating away at our wealth. It’s extremely difficult to find investments that counteract credit cards’ high interest rates of 20% or more. Knock out those unpaid balances first.
Unemployment is still historically low. The Labor Department reported the US economy added 216,000 new jobs in December, far more than expected, and the unemployment rate remained at 3.7%. Hiring was strong for government positions and across health care, social assistance, and construction.
How are you feeling about the economy? |
Company Scoops 🗣️🌎💰
💡Act like a boardmember and judge how companies behave. Engaging helps build your financial confidence and hold corporations accountable.
 Boeing | Unsafe Planes Regulators grounded nearly 200 Boeing 737 Max-9 planes across different airlines after a door panel blew open during an Alaska Airlines flight. Boeing's Max fleet has suffered two deadly crashes and other safety issues in recent years. |
 Nvidia | Personal AI Nvidia announced three new chips to expand its dominance in artificial intelligence processors for cloud and enterprise servers to personal computers. Individuals will be able to execute AI directly on their PCs for gaming, design, and more. |
 Snap | Dealing Accountability Snapchat faces blame for a series of fentanyl drug overdoses by victims' families who say the platform's disappearing messages facilitated illegal drug dealing. A judge denied Snap's pleas to limit liability from user activity. |
 BP | Wind Worries BP terminated one of the biggest US offshore wind projects planned for the coast of New York after finding it too financially challenging due to higher interest rates and supply chain issues. BP still aims to find more viable clean energy projects. |
 Apple | Price of Power Apple just paid a settlement to millions of customers for software that intentionally slowed older iPhone models and incentivized earlier upgrades. The tech giant also faces a new investigation into how it locks customers into its ecosystem. |
(These links only work for 24 hours while the story is live.)
Inside Scoop 🤓
Are we supposed to avoid debt?
Debt can be a tool or a burden, depending on how it is used.
Debt is designed to expand our purchasing power in amount and immediacy. Using it properly can help us invest today in things that will help us build wealth over time. Student loans help us invest in our education and amplify our potential earning power in the future. Mortgages allow us to invest in a home that will grow in value. Business loans help us cover costs today so our company can grow and make more money later. When used correctly, debt helps us invest.
Debt can be a burden when we use it for things that don’t help us recover the cost of borrowing. We get caught in a negative spiral when we borrow to buy everyday items or things that lose value.
The rate of interest is also an essential factor. Consider debt like investing in reverse. It decreases our wealth at that rate of interest. So, if we have a 5% mortgage, but our home value appreciates by 8% per year, our wealth still grows. It’s tough to find anything that will increase our wealth faster than a 20% credit card debt eats away at it.
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