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After a year full of record-high interest rates and home prices, experts say there are signs of improvement for the housing market in 2024.
In December, the average mortgage rates dropped below 7% for the first time since August and after an 8% peak in October, which pushed housing costs to the highest level since 2000.
“The decline poses good news for buyers,” said Jessica Lautz, deputy chief and vice president of research at the National Association of Realtors.

Noel Hendrickson/Getty Images

After a year full of record-high interest rates and home prices, experts say there are signs of improvement for the housing market in 2024.
In December, the average mortgage rates dropped below 7% for the first time since August and after an 8% peak in October, which pushed housing costs to the highest level since 2000.

The average rate on a 30-year fixed rate mortgage dropped to 6.95% from 7.03% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.31%. Meanwhile, the 15-year fixed rate mortgage jumped to 6.38% from 6.29%.
“The decline poses good news for buyers,” said Jessica Lautz, deputy chief and vice president of research at the National Association of Realtors. 

Interest and mortgage rates will slowly decline, giving people a “little bit more room in their budgets” when it comes to mortgage payments, experts say. Additionally, inventory is growing as new listings creep back up, said Nicole Bachaud, a senior economist at housing site Zillow.
Lower interest rates should come as encouraging news for homebuilders.
“It should be easier for builders as rates go down, as they need to borrow to build,” said Lautz. Homebuyers should see a greater supply as more homes will be built, she said.

However, consumers may still feel discouraged, added Lautz, as affordability may still be a challenge.
“We’re expecting home price appreciation to stay flat for the next year nationally, so prices aren’t really going to move much from where they’re at now,” Bachaud said.
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High costs kept would-be buyers as renters

Homes were 52% more expensive than rentals this year, the highest gap on record, according to the Zumper Annual Rent Report for 2023.
High costs in the buying market have delayed homeownership for many buyers and kept inflation-strapped consumers in the rental market, some explained.
The national rent price for a one-bedroom apartment is $1,496, down 10% from a year ago. The last time there was a decline was during the pandemic, from July to October 2020, Zumper found.
“Over the course of the last few years, there were actually a lot of buildings in the rental sector, so that may have helped to alleviate rental prices. But they’re still at a high price point,” Lautz said.
Lautz expects more movement in the rental market next year as many young adults look for a place to live.
While most young adults either stayed with parents or paired up with roommates during the pandemic to relieve costs, they might seek independence next year, whether because “a CEO [is] saying you have to come back into the office or they’re ready to move out,” said Lautz.
New York City is seeing a surging demand for rental housing in commutable areas with easy access to downtown and midtown Manhattan in 2024, according to data from StreetEasy, Zillow Group’s New York City real estate marketplace. 
“That’s an indication that people are looking to move back closer to the workplace or closer to more amenities,” Bachaud said. “We’re expecting the rest of the country to follow that trend throughout the next year.”

The American Dream is still owning a home.

Nicole Bachaud
Zillow senior economist

Record-high interest rates deterred more than 69% of renters from buying a home in 2023, a Zumper report found. These high costs are pushing the typical ages of renters and first-time homeowners upward.
To that point, the typical head of household in a rental is 41 years old, up from age 40 in 2019 and age 37 in 2000, according to Zillow economist Bachaud.
“Renters are getting older,” said Bachaud. “As long as affordability remains a big challenge, we will likely see renters getting older.”
Meanwhile, the age of a typical first-time homebuyer is 35 years. In the 1980s, people bought their first homes at the age of 28, Lautz said.
Market conditions and external factors, such as student loan repayments and child care costs, are delaying homebuying activity for many shoppers, Lautz said.
Since many people cannot afford to buy a home, they are likely to consider renting a single-family home instead to achieve a similar experience.

Renting over buying their first home

Prices for single-family rentals are increasing faster than rent prices for multifamily apartment buildings, showing signs of high demand, said Bachaud.
“That has a lot to do with affordability as people are priced out of being able to purchase a home. They’re still looking for that starter home experience,” she said.
As long as people continue to be priced out of the market, would-be homebuyers will remain as renters, and Bachaud expects “to see more of that this year.”
Even though affordability is expected to marginally improve over the next 12 months as rates continue to decline, the market is still far from where it was before the pandemic, she added.
“Affordability is still a big challenge for a lot of households,” she said.

‘The American Dream is still owning a home’

While homeownership is challenging for many would-be buyers, it doesn’t mean people no longer aspire to own a home, said Bachaud.
“The American Dream is still owning a home,” she said. “There’s a lot of pent-up demand for ownership; that isn’t going to go away. It might take longer for people to get and to be able to realize that dream.”
Indeed, “homeownership is the number one way to build wealth in America,” said Lautz.
Lautz explained that when you look at the typical homeowner, they have a net worth of just under $400,000 compared with the typical renter, who has just over $10,000, following the American dream of financial stability.

“Folks will have to look elsewhere if they’re not looking at homeownership to find that,” Lautz added.
Additionally, younger generations are still thinking about saving for down payments and planning for future housing, said Bachaud, meaning the demand for homeownership persists.
She predicts a change in what homeownership will look like in the coming decades: “We’re kind of on that journey now.”
For now, serious first-time homebuyers should consider jumping into the market as soon as February, while the market remains quiet, said Lautz. Lower rates may breed competitive bidding wars among strong buyers, so now may be the time.
The National Association of Realtors forecasts mortgage interest rates will average 6.3% and estimates 0.9% increase for home prices in 2024, added Lautz.
“First-time buyers stand a chance at this time period,” she said. “It’s a trade off: Do they want to run the risk of encountering higher competition when rates are lower or do they want to increase the probability of securing homeownership?”
“Refinancing is always an option,” she said. More

ETF Strategist

Since early 2021, there have been more than 70 mutual fund to exchange-traded fund conversions, including nearly three dozen in 2023, according to Morningstar Direct.
The primary benefit of the conversions is greater tax efficiency for investors since ETFs generally don’t have capital gains distributions, experts say.
But despite the uptick over the past couple of years, these conversions are still somewhat rare.

A growing number of mutual funds are converting to exchange-traded funds, which is a positive trend for investors, experts say.
Since early 2021, there have been more than 70 mutual fund to ETF conversions, including nearly three dozen in 2023, according to Morningstar Direct, and experts say more conversions are coming.

“It’s steadily increasing year-over-year,” said Daniel Sotiroff, senior manager research analyst for Morningstar Research Services.

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A 2019 change from the Securities and Exchange Commission provided fund managers with more flexibility, which has helped pave the way for mutual fund to ETF conversions, according to Sotiroff.
The conversion itself is tax-free to the investor and switches from actively managed mutual funds, which aim to outperform the market. The primary benefit of the new ETF is more tax efficiency.
“That’s a big selling point,” Sotiroff said.

Year-end mutual fund capital gains distributions can be a pain point for investors with actively managed mutual funds in brokerage accounts. Those payouts can trigger a sizable tax bill, even when the investor hasn’t sold shares.

In 2023, many fund managers realized gains to meet investor redemptions, resulting in double-digit projected payouts for some funds.

The most attractive feature of an ETF is that most don’t distribute capital gains at the end of the year.

Barry Glassman
Founder and president of Glassman Wealth Services

Conversions are still ‘kind of rare’

Despite the uptick in mutual fund to ETF conversions over the past couple of years, it’s still “kind of rare to see,” according to CFP Matt Knoll, senior financial planner at The Planning Center in Moline, Illinois.
Sotiroff said conversions have been “relatively smaller” actively managed mutual funds worth around $100 million or less that are more likely to be converted to ETFs.
“You’re not seeing a lot of big-name mutual funds turning into ETFs,” he said. The exceptions, of course, were Dimensional Funds and JPMorgan conversions.
Future conversions are likely to be smaller, actively managed mutual funds outside of 401(k) accounts, Sotiroff said. More

ETF Strategist

The S&P 500 has seen strong gains in 2023.
Here’s what experts say you should consider before doubling down on exposure to that index in 2024.

Thomas Barwick | Stone | Getty Images

The S&P 500 index has been a winner in 2023.
The index on Wednesday closed above 4,700 for the first time since January 2022.  Year to date, the index is up about 23%. Its average annual return is more than 10%.

That performance may now prompt some investors to question whether they should allocate more of their money to a fund that tracks the index.
Vanguard founder John Bogle famously argued long-term wealth may be built by owning a low-cost fund that tracks the stock market, such as the S&P 500.

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Per its name, the S&P 500 includes around 500 stocks (503, to be exact) that fall in the large-cap equity category. The index was established in 1957 and was the first market-cap weighted index. That means each company’s weighting in the index is according to its market capitalization, or the total value of all outstanding shares.
The companies included in the S&P 500 is subject to change. This month, ride-hailing company Uber is among several names joining the index, replacing packaging company Sealed Air Corp.

How an S&P 500 ETF can benefit investors

For investors, passive funds that track the index are widely accessible.

“The biggest ETFs in the world are S&P 500 ETFs,” said Bryan Armour, director of passive strategies research for North America at Morningstar, a provider of investment research.
Investors may also choose to add S&P 500-focused mutual funds to their portfolios.
Exchange-traded funds are priced and can be traded throughout the day. Mutual fund orders are typically executed once a day, with all investors receiving the same price.
Another key difference between ETFs and mutual funds is cost.
“Our research has shown over the years that cost is one of the best predictors of future success,” Armour said. “And ETFs are a lot cheaper than mutual funds.”
Passive funds that track an index have the advantage of providing much lower costs than active strategies that are professionally managed. Over time, passive strategies have shown better returns.
“Among the better decisions people can make is starting with an index-based fund tracking the S&P 500 because it works,” said Todd Rosenbluth, head of research at VettaFi.
To be sure, 2023’s strong performance may not be indicative what is to come in 2024.

Will the S&P 500 rally last?

As the calendar turns to the new year, experts are placing bets on where the markets, including the S&P 500, will land.
A recent CNBC Fed Survey found money managers, strategists and economists surveyed expect a modest gain for the S&P 500 in 2024 of less than 2% to reach 4,696. Those experts on average also see the S&P rising above 5,000 for the first time, but not until 2025.
HSBC is expecting the index to reach 5,000 in 2024, with a chance it may go higher if there is no recession.
Raymond James’ S&P 500 target for 2024 is 4,850, due to a more conservative outlook than other firms when it comes to earnings, according to Chief Investment Officer Larry Adam.
That news is based on this year’s good news being already priced into the index, he said.
“Everybody’s feeling better that the Fed is no longer raising rates, they’re going to eventually be cutting rates, inflation is coming down,” Adam said.

In 2024, however, the firm’s forecast includes a mild recession or slower growth.
Much of the S&P 500’s strong turnout this year is due to the so-called “Magnificent Seven,” that includes Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.
Raymond James expects those technology names (excluding Tesla, which it considers a consumer company) to continue to be a driver of the market in 2024, though not as strong as they were this year, Adam said.
“Technology, by far and away, is the one sector that consistently beats its earnings by a fairly substantial amount,” Adam said.

‘Set a strategy and stay invested’

Financial experts generally say investing in an S&P 500 index fund is a sound strategy — though it does leave room for diversification.
“It could prove an effective strategy if you hang on,” said Douglas Boneparth, a certified financial planner and president of Bone Fide Wealth in New York. Boneparth is also a member of the CNBC FA Council.

While the S&P 500 index offers exposure to the largest companies, it excludes small- or mid-size companies, as well as international companies, Boneparth noted.
While buying and holding exposure to the S&P 500 may prove wise over the long term, investors should resist reacting to market moves.
“The main thing would be to set a strategy and stay invested,” David Rea, president of Salem Investment Counselors, which is No. 27 on the 2023 CNBC Financial Advisor 100 list, said via email. “The market is up this year, but down last year. You cannot time the market, so pick funds or ETFs that suit or risk/return profile and stay invested!”
Ted Jenkin, a certified financial planner and CEO and founder of oXYGen Financial, a financial advisory and wealth management firm based in Atlanta, said sticking to low-cost investing and not timing the market may pay off. He is also a member of the CNBC FA Council.
“I don’t think individual investors or money managers can generally outperform the S&P 500,” Jenkin said. More

Over the last year, the S&P 500 is up by more than 19%, and the Dow Jones Industrial Average has risen 11%.
The last few days have seen some of the steepest rises, with the Dow closing on Wednesday above 37,000 for the first time ever.
What should you do amid the rally? Financial advisors weigh in.

Traders work on the floor of the New York Stock Exchange during morning trading on December 13, 2023 in New York City.
Michael M. Santiago | Getty Images

The stock market is having a holiday party. But financial advisors urge investors to use caution for before joining in.
“Don’t fall prey to irrational exuberance,” said Ted Jenkin, a certified financial planner and the founder and CEO of oXYGen Financial in Atlanta. He’s also a member of CNBC’s Advisor Council. “Things are never as bad nor as good as they seem.”

Over the last year, the S&P 500 is up by more than 19%, and the Dow Jones Industrial Average has risen 11%, as of the market’s close Wednesday. A $1 million investment in the S&P 500 on Dec. 12, 2022, would be worth nearly $1.2 million today, according to Morningstar Direct.

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‘Stick to your goals’

Investors shouldn’t make any big changes to their investment strategy based on one short period in the market, Jenkin said. Instead, “stick to your goals and your time frames,” he said.
Marguerita Cheng, a CFP and the CEO of Blue Ocean Global Wealth in Maryland, said it was exciting to see positive returns. But investors who pull out now in an effort to lock in gains or access cash will likely regret it.

“The most challenging aspect of investing can be staying invested,” Cheng said. “I advise clients to remember that the time they are in the market is more important than trying to time the market.”
Indeed, over the last 20 or so years, the S&P 500 produced an average annual return of around 6%. But if you missed the 20 best days in the market over that time span, your return would shrivel to 0.1%, according to an analysis by Charles Schwab.

“The market keeps going up so even though it’s at a high, it might be even higher in the future,” said CFP Sophia Bera Daigle, founder of Gen Y Planning in Austin, Texas.
Dramatic ups and downs aside, history reveals the market reliably gives more than it takes over long periods.
Between 1900 and 2017, the average annual return on stocks has been around 11%, according to calculations by Steve Hanke, a professor of applied economics at Johns Hopkins University in Baltimore. After adjusting for inflation, that average annual return is still 8%.

Market rally, market slump: Do the same thing

It might sound counterintuitive, but investors should probably not do anything different whether the market is green or red, said Ivory Johnson, a CFP and founder of Delancey Wealth Management in Washington, D.C.
“Review your risk tolerance, time horizon and ask if anything has changed,” Johnson said.

Big drops and rises in the market can also be a good time to rebalance your portfolio, said CFP Cathy Curtis, founder and CEO of Curtis Financial Planning in Oakland, California.
“It’s quite possible that the rally of the last few months has created an overweight to stocks versus bonds in a person’s portfolio,” Curtis said.
For example, if you want your money allocated 70% to stocks, and 30% to bonds, you may now or at least soon need to sell some stocks and add to your bonds, she added. More

Shohei Ohtani made history this week with a 10-year, $700 million contract to play for the Los Angeles Dodgers.
The Japanese superstar will only receive $2 million per year over the agreement and will defer $680 million.
Some of the risks of deferred compensation include higher federal taxes, inflation and company solvency, experts say.

Shohei Ohtani, formerly of the Los Angeles Angels, pitches during a game in Anaheim, California, on July 6, 2021.
Daniel Shirey | Major League Baseball | Getty Images

Shohei Ohtani made history this week with a 10-year, $700 million contract to play for Major League Baseball’s Los Angeles Dodgers. The deal’s unique payout structure, however, could carry some risks, financial experts say.
The Japanese superstar will receive $2 million per year over the 10-year agreement, which defers $68 million annually.

Ohtani isn’t the first MLB player to defer income. Players such as Bobby Bonilla and Ken Griffey Jr. also chose yearly payments. In Bonilla’s case, those came with a guaranteed 8% interest rate. But Ohtani will receive the bulk of his contract, $680 million in payments, between 2034 and 2043, without interest.
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The deal could provide tax benefits for Ohtani if he leaves California before receiving his deferred income, according to certified financial planner Eric Bronnenkant, head of tax at Betterment.  
For 2024, California’s top tax rate climbs to 14.4%, which includes a 1.1% payroll tax on all income. Bronnenkant said federal law protects nonresidents from taxes on “retirement income,” including payments structured for at least 10 years.
But California might disagree, he added.

Ohtani could face higher federal tax rates on the deferred payments, said CFP and enrolled agent Louis Barajas, who is also CEO of International Private Wealth Advisors in Irvine, California. He is a member of CNBC’s Financial Advisor Council.
Without changes from Congress, the highest federal income tax rate will revert to 39.6% in 2026 from the current top rate of 37%. By accepting payments later, “he’s taking a risk,” Barajas said.    

The opportunity costs of deferred income

Another downside of deferring income is Ohtani cannot spend or invest $68 million per year over the next decade.
“A dollar today is worth more than a dollar tomorrow,” Barajas said.
By deferring payments without interest, Ohtani also faces reduced purchasing power. While inflation has dropped significantly since June 2022, it’s difficult to predict rates over the next decade.
But if higher inflation returns, “the net value of his contract isn’t worth as much as he thought,” Barajas said.

The top risk of deferred compensation

While higher taxes and inflation could be issues for deferred income, the No. 1 concern is the company’s ability to pay, experts say.
That’s important for Ohtani’s potential tax benefits. To delay taxes on $680 million of deferred compensation, his future income must be “at risk,” per IRS guidelines, Bronnenkant said.
However, since he’s working for the Los Angeles Dodgers, “the odds of that happening are slim to none,” Barajas said.Don’t miss these stories from CNBC PRO: More

The Federal Reserve held rates steady at the end of its two-day meeting Wednesday.
Many economists believe this concludes the central bank’s rate-hiking cycle, which aimed to bring down inflation without tipping the economy into a recession.
Still, the combination of higher rates and inflation has hit household budgets particularly hard.

The Federal Reserve announced it will leave interest rates unchanged Wednesday, in a move that many believe will conclude the central bank’s rate hike cycle and set the stage for rate cuts in the year ahead.
The Fed has raised interest rates 11 times since March 2022 — the fastest pace of tightening since the early 1980s. The spike in interest rates caused consumer borrowing costs to skyrocket while inflation remained elevated, putting many households under pressure.

Although the central bank indicated it will continue to pursue its 2% inflation target, “the real question at this stage is when they’ll begin cutting,” said Columbia Business School economics professor Brett House.
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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.
Here’s a look back at how the central bank’s rate hike cycle affected everything from mortgage rates and credit cards to auto loans and student debt, and what may happen to borrowing costs next.
Credit card rates jumped to nearly 21% from 16%
Most credit cards come with a variable rate, which has a direct connection to the Fed’s benchmark rate.

After the previous rate hikes, the average credit card rate rose from 16.34% in March 2022 to nearly 21% today — an all-time high.
Between high inflation and record interest rates, consumers will end the year with $100 billion more in credit card debt, according to data from WalletHub. Not only are balances higher, but more cardholders are carrying debt from month to month.
Going forward, APRs aren’t likely to improve much. Credit card rates won’t come down until the Fed starts cutting and even then, they will only ease off extremely high levels, according to Greg McBride, chief financial analyst at Bankrate.
“Credit card debt is high-cost debt in any environment but that’s particularly true now and that’s not going to change,” he said.
Mortgage rates hit 8%, up from 3.2%
Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home lost considerable purchasing power, partly because of inflation and the Fed’s period of policy tightening.
In fact, 2023 was the least affordable homebuying year in at least 11 years, according to a report from real estate company Redfin.
“Mortgage rates rocketed higher from record lows to more than 20-year highs,” McBride said.
After hitting 8% in October, the average rate for a 30-year, fixed-rate mortgage is currently 7.23%, up from 4.4% when the Fed started raising rates in March of 2022 and 3.27% at the end of 2021, according to Bankrate.

A “For Sale” sign outside a house in Edmonton, Alberta, in Canada on Oct. 22, 2023.
Nurphoto | Nurphoto | Getty Images

Already, though, housing affordability is showing signs of improvement heading into the new year.
“Market sentiment has significantly shifted over the last month, leading to a continued decline in mortgage rates,” said Sam Khater, Freddie Mac’s chief economist. “The current trajectory of rates is an encouraging development for potential homebuyers,” he added, kickstarting a “modest uptick in demand.”
McBride also expects mortgage rates to ease in 2024 but not return to their pandemic-era lows. “You are still looking at rates in the 6s, not rates in the 3s or 4s,” he said.
Auto loan rates surpassed 7%, up from 4%
Even though auto loans are fixed, car prices had been rising along with the interest rates on new loans, leaving more consumers facing monthly payments that they could barely afford.
The average rate on a five-year new car loan is now 7.72%, up from 4% when the Fed started raising rates, according to Bankrate.
“The largest segment of consumers financing a new car today has a 7.9% APR,” said Ivan Drury, Edmunds’ director of insights. “That’s a far cry from those spring 2020 pandemic deals of 0% financing for 84 months that drove significant sales of large trucks and SUVs.”
But despite high interest rates, vehicle affordability is improving, with new car prices decreasing year over year and sales incentives increasing.
“The new-vehicle market is shifting to a buyer’s market, not a seller’s market,” according to Cox Automotive research.
Federal student loans are at 5.5%, up from 3.73%
Federal student loan rates are also fixed, so most borrowers weren’t immediately affected by the Fed’s moves. But undergraduate students who took out new direct federal student loans this year are paying 5.50%, up from 4.99% in the 2022-23 academic year and 3.73% in the 2021-22 academic year.
Private student loans tend to have a variable rate tied to the prime, Treasury bill or another rate index, which means those borrowers are paying even more in interest. How much more, however, varies with the benchmark.

Now that federal student loan payments have restarted after a three-year reprieve, interest is also accruing again, and the transition back to payments has proved painful for many borrowers.
However, if the Fed cuts rates in 2024, that may open the door to some refinancing opportunities, which could help.
High-yield savings rates topped 5%, up from 1%
While the Fed has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.
The savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid-19 pandemic, are currently up to 0.46%, on average, according to the Federal Deposit Insurance Corporation.
Top-yielding online savings account rates have made more significant moves and are now paying over 5% — the most savers have been able to earn in nearly two decades — up from around 1% in 2022, according to Bankrate.
Even though those rates are peaking, “from a savings standpoint, 2024 is still going to be a really good year for savers because inflation is likely to decline faster than the yields on savings accounts,” McBride said.
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CNBC’s senior personal finance correspondent Sharon Epperson shared advice with high school students at Junior Achievement of Middle Tennessee’s Finance Park program.
She also participated in the capstone program with a real-life career and budgeting simulation for the students.
“The experience lets them touch it, feel it and see it before they have to be it,” said Trent Klingensmith, president of Junior Achievement of Middle Tennessee.

NASHVILLE, Tenn. — As Tennessee leads many states in financial literacy in public high schools, Junior Achievement of Middle Tennessee aims to boost those lessons through career, entrepreneurship and personal finance programs.
Speaking to high school students in December at Junior Achievement’s Finance Park program in Nashville, CNBC’s senior personal finance correspondent Sharon Epperson shared her career journey and offered personal finance tips.

“You’re going to be something that you want to be — whatever that is — because you will have the tools to do it,” she said.

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Here are three personal finance tips Epperson shared with the high school students.

1. Open a high-yield savings account

2. Invest in a Roth individual retirement account

With a part-time job, “you’re already set up to be an investor,” Epperson told the students. “Not just a saver, but an investor.”

Here’s why: With so-called earned income, students can contribute to a Roth individual retirement account, which provides tax-free growth on investments. You contribute after-tax money but won’t owe taxes on Roth IRA withdrawals in retirement. Tax-free earnings are powerful for younger investors with decades until their golden years.

3. Avoid credit card debt

Epperson also warned students about the “risk of plastic” and amassing credit card debt, which can be difficult to pay back.
To avoid problems, she suggested, use a prepaid card for purchases and join a parent or guardian’s credit card as an authorized user before applying for a student credit card at age 18.

Opportunity to ‘make adult decisions’

After speaking, Epperson participated as a volunteer in Finance Park, Junior Achievement’s capstone financial literacy program, which gives students the chance to “make adult decisions before they’re adults,” according to Trent Klingensmith, president of Junior Achievement of Middle Tennessee, which serves 22 counties.
After 13 classroom-based lessons, Finance Park culminates with a real-life budgeting simulation at Junior Achievement’s facility — including savings, investing and debt payoff — based on the student’s career decisions.

The experience lets them touch it, feel it and see it before they have to be it.

Trent Klingensmith
President at Junior Achievement of Middle Tennessee

“The experience lets them touch it, feel it and see it before they have to be it,” said Klingensmith.
While the organization aims to have 32,000 Middle Tennessee students participate in various programs during the 2023-2024 school year, the “biggest need is volunteers,” Klingensmith said.

‘You leave a little seed in their brain’

Volunteers participate with students during every step of Finance Park. It’s a rewarding experience for board member Claudia Zuazua, who often works with the program’s Latino students.
Born and raised in Mexico City, Zuazua, who is bilingual, said she knows the cultural differences many Latino students face when learning about personal finance — especially when English is a second language.
“They know there’s someone who understands,” said Zuazua, who has also lived in Peru and Colombia. In Metro Nashville Public Schools, nearly one-third of enrolled students were Hispanic during the 2022-2023 academic year, compared with only 1.6% of teachers.
Finance Park offers the chance for students to explore career opportunities while practicing real-world money management skills. “You leave a little seed in their brain,” Zuazua said. “I think that’s what matters.” 
Correction: After 13 classroom-based lessons, Finance Park culminates with a real-life budgeting simulation at Junior Achievement’s facility. An earlier version misstated the time frame. More

Deflation is the opposite of inflation: it’s when prices fall instead of rise.
In the U.S., deflation is happening across categories like food, energy and household goods, according to consumer price index data.
A strong U.S. dollar, untangled supply chains and quirky measurement dynamics play a role.

Thomas Barwick | Stone | Getty Images

Inflation has been falling gradually across the U.S. economy.
This process, known as disinflation, means prices for consumer goods and services are rising but at a slower pace than they had been.

However, inflation has actually turned negative in some sectors, like energy. Deflation, as this dynamic is known, is the opposite of inflation: when prices are going down, not up.

Why some categories are deflating

Largely, deflation is happening on the “goods” side of the U.S. economy, or the tangible objects that Americans buy, economists said.
There are several reasons for this.  
For one, a strong U.S. dollar makes imported goods cheaper. Some of those savings get passed on to consumers, said Mark Zandi, chief economist at Moody’s Analytics.
A strong dollar is a likely contributor to deflation in certain categories like household furniture and appliances, Zandi said. Additionally, weaker demand may be a factor: Households that spent liberally on home goods in the early days of Covid-19 lockdowns are likely no longer doing so, he added.

Broadly, the pandemic snarled global supply chains, causing shortages that fueled big spikes in prices. Energy costs surged when Russia invaded Ukraine, pushing up transportation and other distribution costs.
Now, supply chain disruptions are largely in the rearview mirror, economists said. The Federal Reserve Bank of New York’s Global Supply Chain Pressure Index, for example, has fallen back to pre-pandemic levels from historic highs at the end of 2021.
“You’ll see inflation has followed basically the same pattern” as the index, with a few months’ lag, said Lael Brainard, director of the White House National Economic Council.

Energy costs have declined. In fact, energy prices, which include categories such as gasoline and electricity, fell 5.4% in the year through November, according to the consumer price index.
“The inflationary effects of the pandemic and the Russian war in Ukraine are increasingly in the rearview mirror,” Zandi said.
Falling energy costs also contribute to deflation among certain grocery items, since transportation is a key input cost for retail food prices, economists said.
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Some prices, like those for airline tickets and eggs, are also falling back to earth after hitting record-high levels. The latter, for example, soared largely due to a historically deadly bout of avian flu among egg-laying hens. Egg and airline ticket prices are down about 22% and 12% in the past year, according to CPI data.
Consumers also seem to be “more judicious” in their purchases as things have gotten more expensive, an important factor in influencing businesses to be more cautious about how they price, Zandi said.

Goods prices, after stripping out those for energy and food, have deflated for six consecutive months, according to CPI data.
“I think there’s further deflation in the pipeline as you see a stronger inventory picture and signs of consumer demand beginning to wane,” said Sarah House, senior economist at Wells Fargo Economics.

How measurement quirks affect prices

Some deflation is due partly to measurement quirks.
For example, the U.S. Bureau of Labor Statistics, which compiles the CPI report, controls for quality improvements over time. Electronics such as televisions, cellphones and computers continually get better. Consumers get more for roughly the same amount of money, which shows up as a price decline in the CPI data. 
Health insurance, which falls in the “services” side of the U.S. economy, is similar.

The BLS doesn’t assess health insurance inflation based on consumer premiums. It does so indirectly by measuring insurers’ profits. This is because insurance quality varies greatly from person to person. One person’s premiums may buy high-value insurance benefits, while another’s buys meager coverage.
Those differences in quality make it difficult to gauge changes in health insurance prices with accuracy.
These sorts of quality adjustments mean consumers don’t necessarily see prices drop at the store — only on paper.  
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