Declining wages for new grads

Here are three of the week's top pieces of financial insight, gathered from around the web: 

Declining wages for new grads

New college grads today are earning much less than their parents did, said Jessica Dickler at CNBC. Forty years ago, “graduates earned $23,278, on average, or $68,342 in today’s dollars” in their first job out of college. That’s “roughly $7,254 more than 2023 graduates, according to a recent report by Self Financial.” The peak for new college grad salaries, adjusted for inflation, came way back in 1969, with average starting salaries equivalent to $79,870. They dropped dramatically after that, reaching a nadir in the mid-1990s and recovering only moderately since. The costs of college and student-loan balances, meanwhile, have gone up sharply.

JPMorgan bids to keep wealthy clients

JPMorgan Chase is finally sweetening its interest offers, but only for a select few, said Rachel Louise Ensign in The Wall Street Journal. JPMorgan has begun “offering clients of its private bank division a 6% rate on a six-month certificate of deposit.” However, the offer applies only to clients who put at least $5 million into the product. Most of Chase’s retail-banking clients have to settle for 4% interest on CDs. But it’s still a big improvement. “For years following the 2008-09 financial crisis, JPMorgan and other mega banks raked in deposits despite paying almost no interest.” Now the deposit “glut” has ended, and deposits in JPMorgan’s asset and wealth management unit have fallen 22% in the past 12 months, in part because customers have moved their cash into Treasurys and money-market funds for higher rates. Unfortunately, Chase’s basic “checking and savings accounts still pay just 0.01%.”

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Hawkish Fed pushes down stocks

Investors are starting to come to grips with the Federal Reserve’s “higher for longer” message on rates, said Kate Duguid in the Financial Times. The central bank “held its main interest rate steady” at its most recent policy meeting, and fears of recession have almost completely receded. However, policymakers signaled there could be yet another rate hike this year and projected fewer rate cuts next year than most investors had expected. The prospect that “interest rates are set to stay higher for longer than previously thought” has hurt the stock market, because investors shift to buying bonds with higher yields. Professional traders are betting that benchmark interest rates will still be at 4.8% at the end of 2024. 

This article was first published in the latest issue of The Week magazine. If you want to read more like it, you can try six risk-free issues of the magazine here.