The Magnolia Standard in 5 Minutes
Realistic Money, September 19: The week the Fed raised rates

This is Realistic Money from The Magnolia Standard, the Saturday column, read aloud. It's Saturday, September nineteenth.

The Federal Reserve raised rates this week, for the first time in more than three years. Oil stayed above a hundred dollars. Diesel in Texas set a record. And a new state law covers the person who knocks on your door about solar panels.

We'll start with the Fed.

On Wednesday the Fed raised its rate by a quarter point, to a range of three and three quarters to four percent. The vote was twelve to nothing. The statement gave one reason: inflation is still running high.

Chair Kevin Warsh said the Fed's job is to keep an oil shock from spreading into everything else. A dozen officials expect one more quarter point this year.

The hike arrived fast. By the next morning the big banks had moved their prime rate from six and three quarters to seven percent. Prime is what most variable-rate consumer debt is priced against.

What moves, and how fast. Credit cards move within one or two billing cycles. The average card rate is just under twenty-one percent. Home equity lines move on the same schedule. Savings accounts and new CDs move up too, historically more slowly. A fixed mortgage that's already signed doesn't change at all. And a new mortgage follows the bond market. Freddie Mac's thirty-year average was six point nine five percent on Thursday, up from six and a quarter a year ago.

Now the math, with this week's numbers. A five thousand dollar card balance at twenty-one percent: a quarter point is about twelve dollars and fifty cents a year. A fifty thousand dollar home equity line: about a hundred and twenty-five dollars a year. Ten thousand dollars in savings at four percent: if the bank passes the whole increase through, about twenty-five dollars a year more.

And if nobody in the house does anything, card and home equity rates drift up on their own within a cycle or two, savings drift up more slowly, and the fixed mortgage stays put.

Now, energy.

West Texas crude settled Friday at a hundred dollars and thirty cents a barrel, its third straight weekly gain. The reason is supply: traffic through the Strait of Hormuz is running near a quarter of its prewar level.

At the pump, AAA Texas had regular at three ninety-three a gallon on Thursday. That's a dollar fourteen more than a year ago. Houston was the cheapest metro in the state at three eighty-three.

Diesel is the record: five ninety-six a gallon, the highest Texas average ever. It reaches grocery prices a few weeks later.

The commute math. Thirty miles round trip to The Woodlands, five days a week, in a car that gets twenty-five miles a gallon. At a dollar fourteen more per gallon than last year, that's about thirty dollars a month more.

Stocks went three directions for the week. The ten-year Treasury yield is back at five percent, which matters more to a mortgage than the Fed's rate does.

Gold closed at four thousand three hundred eighty dollars an ounce, up for the week. Silver was up about three percent, at sixty-six thirty-five. Both rose anyway. Bitcoin was near seventy-eight thousand dollars Friday morning, about a third below where it was a year ago.

Now the solar law.

Since September first, companies that sell or lease home solar systems in Texas, and the people who do the selling, have to register with the state licensing department. Both can be looked up by registration number.

The contract has to come with a two-page state disclosure form. It answers nineteen questions, including the total you'd pay over the whole loan, and a plain yes or no to this one: can a lien be placed on my home for failure to pay?

And the law gives the buyer five business days to cancel, in writing, with no further obligation. Weekends and holidays don't count, so a Thursday signature runs to the next Thursday. The state has paused enforcement of some of its own rules until November first. The five-day right is in the statute, and that pause doesn't touch it.

Last, two more laws that started September first. One makes electronics makers sell parts, tools and repair manuals to owners and independent shops. Phones, laptops and TVs are covered. Cars, tractors, game consoles and kitchen appliances are not.

The other recognizes gold and silver as legal tender in Texas. Nobody is required to accept it. The state has until May first, twenty twenty-seven, to build a way to pay with metal held in its bullion depository.

That's Realistic Money. It's not financial, tax or legal advice, and the paper holds no position in anything mentioned. Every number, with its source, is at the magnolia standard dot news.

Written by our newsroom, voiced by computer.