Personal finance weekly news roundup June 21, 2025 ~ Credit Sesame

Credit Sesame’s personal finance news roundup June 21, 2025. Stories, news, politics and events impacting personal finance during the past week.

Retail sales took a hit in May 2025

U.S. retail sales suffered a bigger drop than was expected in May. Retail sales fell by 0.9% during the month, more than the expected decline of 0.6%. Year-over-year, retail sales were up by 3.3%, a substantial slowdown from the 5% gain through April. In part, the sharp drop in retail activity in May was a recoil from unusually strong activity the prior month. In April, consumers had rushed to buy big-ticket items such as vehicles to get ahead of new tariffs. Notably, auto sales declined by 3.5% in May. See article at MSN.com.

Fed dampens expectations for rate cuts again

The Fed entered 2025 expecting to make multiple rate cuts during the year. However, after its recently completed meeting, the Fed announced that it still isn’t ready to make its first rate cut of 2025. The Fed’s rate target remains 4.25% to 4.5%. Besides holding off on cutting rates, the Fed has also reduced its projections for future rate cuts. While the Fed still expects to cut rates by half a percent this year, its rate targets for 2026 and 2027 are not as low as previously. Last September, the Fed issued projections showing that it expected the Fed funds rate to drop to 3.4% in 2025, 2.9% the following year and remain at 2.9% in 2027. Those targets have since been elevated to 3.9% for this year, 3.6% for next year and 3.4% for 2027. See Federal Open Market Committee Statement at FederalReserve.gov.

Tariff fears eroded household wealth in Q1 2025

U.S. households and nonprofit organizations lost a combined $1.6 trillion in the first quarter of 2025. The loss of wealth was caused by the stock market’s decline due to concern over the impact of tariffs. Meanwhile, household debt rose by 1.9% during the quarter. See article at Reuters.com.

U.S. workforce faces labor shortage

The U.S. needs to add an average of at least 4.6 million workers a year between now and 2033 to maintain a workforce sufficient to meet the country’s needs. This is according to a new report by the Committee for Economic Development (CED), which is the public policy center of the Conference Board. The CED warns that policy changes to expand the labor force are needed to avoid a shortage of workers in the years to come. Policy changes it recommends include reforms to the Social Security earnings test, gearing immigration rules towards admitting qualified workers, encouraging flexible work arrangements and making childcare more readily available. See news release at Conference-Board.org.

First-time buyers now spend nearly 60% of income on mortgages

A new study from the JPMorgan Chase Institute shows that mortgage payments are now taking up 45 percent more of household budgets than they did in 2019. Home prices have increased by 50 percent over the same period, and mortgage rates have also risen. Both factors are pushing up monthly costs. For people aged 25 to 44, who make up most first-time homebuyers, a typical mortgage payment used to take up 40 percent of their disposable income. By 2024, that had increased to 57.5 percent. See article at Realtor.com.

Government agencies team up to fight fraud

Various federal banking agencies issued a joint announcement of intentions to coordinate efforts to fight fraud. The statement was issued by the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Federal Reserve. Besides the cooperation on the federal level, the statement signaled an intent to work with state regulatory agencies. A particular area of emphasis is check fraud, which has soared in recent years. See article at PaymentsDive.com.

Budget cuts affect collection of economic data

Citing a lack of resources, the U.S. Bureau of Labor Statistics (BLS) announced that it was cutting back on the data collection efforts that go into calculating the Consumer Price Index (CPI). The CPI is the most widely followed measure of U.S. price inflation. The data affects financial markets, cost-of-living adjustments and economic policy decisions. The BLS explained that it is reducing sample collection efforts, including suspending data collection in some cities. See announcement at BLS.gov.

Sales of new homes slowed sharply in May

Applications for mortgages to buy newly-built homes dropped 9% in May compared with the previous month. Completed sales of new, single-family homes suffered an even steeper drop, falling by a seasonally-adjusted 12.1% in May. The drop-off in May reverses a large jump in new home sales in April, and is more in line with the level of activity seen earlier in the year. Mortgage rates rose sharply in mid-April. This, along with a significant level of economic uncertainty and a growing inventory of existing homes for sale, is thought to have contributed to the sharp decline in new home sales in May. See commentary at MBA.org.