Inflation and rising prices are chief reasons why Americans are struggling to reach their financial goals, and people in these five cities have been impacted the most, according to a recent WalletHub survey.
U.S. inflation rose 3.4% in December, up from 3.1% growth the previous month, but has moderated since hitting a record 40-year high after the pandemic. Cooling inflation could push the Federal Reserve to dial back interest rates as early as March. Still, there is no certainty that the central bank won't continue raising interest rates to reach a 2% inflation target rate, according to WalletHub.
"The year-over-year inflation rate has moderated to 3.4% in December 2023, which is welcome news to the Federal Reserve as it considers the monetary policy outlook," WalletHub said. "The government may continue its interest rate hikes in the hope of reining in inflation further. Various factors, such as the war in Ukraine and labor shortages, drive this relatively high inflation."
Major metropolitan statistical areas (MSAs) typically experience higher inflation rates than rural areas because they are popular destinations for those looking to relocate or visit. These are the five cities with the greatest inflation problem:
- Dallas-Fort-Worth-Arlington, Texas
- Miami-Fort Lauderdale-West Palm Beach, Florida
- Urban Honolulu, Hawaii
- San Diego-Carlsbad, California
- Detroit-Warren-Dearborn, Michigan
If you are struggling with high inflation, you could consider taking out a personal loan to pay down debt at a lower interest rate, reducing your monthly payments. You can visit Credible to find your personalized interest rate without affecting your credit score.
Americans feel better about their finances
Americans are feeling more confident about their finances, according to WalletHub's Economic Index. The index, which measures consumers' confidence about their financial outlook, increased 15% annually in December, and another 4% annually in January. However, the share of consumers who expect to have less debt after the next six months decreased 1.5% year-over-year in January, the survey said.
"The 4% increase in consumer sentiment over the past year is an encouraging sign that our economy is recovering from the damage it suffered as a result of the pandemic and inflation," WalletHub Analyst Cassandra Happe said in a release. "People who have high financial confidence are likely to spend more money and reduce their debts, both of which are good for the economy as a whole."
If you're interested in paying off high-interest debt with a personal loan, you could visit the Credible marketplace to learn more about your options and speak with an expert to get your questions answered.
Home prices remain elevated
U.S. home prices climbed 0.4% month-over-month in December, the smallest increase since June, according to the Redfin Home Price Index (RHPI). In January, the typical home in the U.S. cost $344,000 with a monthly mortgage payment, assuming 20% down, of $1,790, according to Zillow.
The Zillow report showed nearly all of the 50 largest metro areas in the U.S. saw annual home price gains in December, led by Hartford, Connecticut (11.7%), San Diego (7.9%) and Milwaukee, Wisconsin (7.9%).
It is unlikely that home prices will drop meaningfully this year since many existing homeowners are locked into below 4% mortgage rates. That means the market is likely to remain competitive for the homes that do come to market, and home prices will continue to strengthen, even as mortgage rates decline.
If you're looking to become a homeowner, you can find the best mortgage rates by shopping around. Visit Credible to compare your options from multiple lenders at once.
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