CD Rate Trends This Week: July 6

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Against a backdrop of a soft jobs report, a lousy consumer confidence number, and a growing disconnect between what Washington is telling the public about the economy – and how much if that the public actually believes – there was one piece of good news last week.

Last Friday wasn’t only a welcome gateway into a sun-splashed Fourth of July weekend for most Americans. It also marked a rare Friday where a U.S. bank didn’t fail.

The Federal Deposit Insurance Corp (FDIC) tracks these things, and points out the difference between the Friday prior to July 4, 2009 and the Friday prior to July 4, 2010, and the 2009 bank failure number wins in a rout:

Bank Failures on the Friday Before July 4: 2009 and 2010

Date              Bank Failures
July 3, 2009:      7
July 2, 2010:      0

You’ve got to take good news where you find it, although the July 4 year-to-year bank numbers won’t exactly send people into the streets singing “Happy Days Are Here Again”.

That’s because certificate of deposit rates remain in a downward spiral, as measured by the BankingMyWay Weekly CD Rate tracker. Rates are either down or level in all major categories (see table below) and there’s no legitimate sign that CD rates will pull out of their death spiral anytime soon.

At the top of the charts (with a bullet) for reasons why is the decision made late last month by the Federal Reserve to leave interest rates “exceptionally low” over an “extended period.” The Fed is apparently worried that the debt crisis currently percolating over in Europe will find its way across the Atlantic during the second half of 2010.

Some economists point out that some U.S. state governments, like Illinois, New York and California already cannot pay their bills, and more states may follow them into a potential economic abyss.

The other key economic measure keeping bank CD rates down right now is the U.S. employment number – and that could be a long-term issue. The economy isn’t creating many jobs right now (only 83,000 in the month of June) and has a long way to go before things are back on an even keel. According to the Brookings Institute, even if the economy produced an average 208,000 jobs per month going forward, it would still take 11 years for the unemployment situation to bounce back to pre-recession levels.

With rates down and the jobs picture bleak, there’s no momentum to drive bank CD rates upward right now – or even stop them from falling further.

For proof of that last point, take a look at last week’s bank CD numbers, as calculated by the BankingMyWay Weekly CD Rate tracker:

Description   This Week   Last Week

60-Month CD   2.058%       2.064%
48-Month CD   1.738%       1.755%
24-Month CD   1.171%       1.177%
12-Month CD   0.725%       0.734%
6-Month CD     0.473%       0.476%
3-Month CD     0.303%       0.306%

While by average, CD rates are certainly in the tank right now, there are some decent deals out there. To find them, check out BankingMyWay’s CD Rate Search. Week-to-week, it’s the most thorough review of bank CD rates in the market.

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