CD Rate Trends This Week: Nov. 30

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The economy got a big boost this morning with news from the Conference Board that the American consumer is starting to break open her pocketbook again.

According to the Board, U.S. consumer confidence was up for the fifth straight month, and is now at its highest level since July 2010. Officially, the index is up to 54.1, up from a revised 49.9 in October. Analysts expected the index to rise, but only to 52.0.

That news, coupled with the generally positive early holiday shopping numbers, could foreshadow a rise in interest rates. In general, bank rates follow the path of the economy – the stronger the economy, the higher bank rates go. So with consumers being a huge cog in the economic engine any news that Americans are spending again is considered a big step forward for the long-battered U.S. economy.

Lynn Franco, director of The Conference Board Consumer Research Center, agrees: “Consumer confidence is now at its highest level in five months,” she says, “a welcome sign as we enter the holiday season. Consumers’ assessment of the current state of the economy and job market, while only slightly better than last month, suggests the economy is still expanding, albeit slowly. Expectations, the main driver of this month’s increase in confidence, are now at the highest level since May. Hopefully, the improvement in consumers’ mood will continue in the months ahead.”

But let’s not break out the party favors just yet. Last week’s certificate of deposit numbers, as measured by the BankingMyWay Weekly CD Rate tracker, were down right across the line (see chart below). It looks like banks need more evidence that the economy is growing, and that inflation will creep up right alongside it before kicking bank interest rates into higher gear.

The good news for bank CD investors is that today’s Conference Board numbers may be the best evidence yet that the economy is finally rebounding (a good unemployment number on Friday from the U.S. Labor Department would be another big indicator). Most economists view consumer confidence trends with laser-like focus – they say it accounts for about two-thirds of the U.S. gross domestic product (GDP). But the Conference Board index still has a ways to go  - economists also say that the index must hit 90 before the economy is fully healthy.

Another good sign for the economy within the past 24 hours comes from Coremetrics, a division of IBM that measures the online economy. The company reports that Cyber Monday sales are up 20% from 2009. For example, the average order value from consumers shopping online yesterday was $194.89, up from $180.03 last year.

"Cyber Monday came in as the biggest shopping day of the year so far," said John Squire, chief strategy officer of Coremetrics.

Finally, with some good news in our back pockets, let’s take a reality check with this week’s CD rate numbers, as calculated by the BankingMyWay Weekly CD Rate tracker:

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Description                              This Week                   Last Week

60 Month CD                          1.571%                        1.590%
48 Month CD                          1.315%                        1.339%
24 Month CD                          0.805%                        0.827%
12 Month CD                          0.528%                        0.542%
6 Month CD                            0.349%                        0.360%
3 Month CD                            0.218%                        0.226%

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The best place to find good CD rates is at BankingMyWay’s CD Rate Search. Week to week, it’s the most thorough review of bank CD rates in the market.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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