Used car prices are rising. Here's why.
Happy Tuesday! I'm Elisabeth Buchwald here with your Daily Money.
It's currently the calm before the storm, aka Fed Day Eve. But unlike Fed meetings for the past year, where it essentially boiled down to how much would the central bank hike rates, tomorrow's decision is a question of if the Fed will hike rates at all.
That's because Silicon Valley Bank and Signature Bank's collapses have rocked the banking sector. Many economists worry that hiking interest rates will only cause the surviving banks more stress.
But there are good reasons why the Fed may continue to hike rates anyway. For starters, inflation is still very high and the most powerful tool the Fed has to lower inflation is raising interest rates. Secondly, the optics of a pause could signal that the Fed is worried about a bigger banking crisis.
Thinking about using your refund on a used car? You may want to think again
Consumers who want to spend their tax refunds on a car may be disappointed: Prices are rising.
Manheim, which auctions used cars to dealers, reported a 4.3% increase in vehicle prices in February, the largest increase for that month since 2009. Another tracker of wholesale used-car prices, Black Book, said prices rose 0.46% for the week ended March 11, the largest single-week increase since November 2021.
What gives?
January and February, typically slow sales months, showed unusual strength this year. In December, used-vehicle retail sales rose 5% from a year earlier, and 16% between December to January, Manheim said.
For more details on what's going on in the used car market be sure to check out Medora Lee's latest story.
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About The Daily Money
Each weekday, The Daily Money delivers the best consumer news from Paste BN. We break down financial news and provide the TLDR version: how decisions by the Federal Reserve, government and companies impact you.
Elisabeth Buchwald is a personal finance and markets correspondent for Paste BN. You can follow her on Twitter @BuchElisabeth and sign up for our Daily Money newsletter here