%1

U.S. companies are raising prices on everything from plane tickets to paint, passing on higher costs for fuel, metal and food to their customers after years of low inflation, the Wall Street Journal reported. Coca-Cola Co. and Arconic Inc. yesterday said that they raised prices in the third quarter. Top airlines, manufacturers and food makers have also announced price hikes over the past week. The higher prices have effectively ended a long period of low inflation that led the Federal Reserve to keep short-term interest rates near zero for years. Unemployment is at the lowest point in decades, and economic growth is strong. Now inflation is near the Fed’s 2 percent target. Prices could climb higher if pressure from labor shortages and tariffs intensify. Or other factors could offset these pressures, including the stronger U.S. dollar, which makes imports cheaper.

U.S. consumer spending rose for a seventh straight month in September, but income recorded its smallest gain in more than a year on moderate wage growth, suggesting the current pace of spending was unlikely to be sustained, Reuters reported. The report from the Commerce Department yesterday also showed the increase in income at the disposal of households was the smallest in 15 months and savings dropped to their lowest level since December last year. “It remains to be seen how long the spending spree can continue,” said Sung Won Sohn, chief economist at SS Economics in Los Angeles. “The stimulus from the tax cut has plateaued. Rising interest rates and volatile stock markets are having a psychological as well as a real effect.” Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.4 percent last month as households bought more motor vehicles and spent more on health care. Data for August was revised up to show spending advancing 0.5 percent instead of the previously reported 0.3 percent gain. Read more.

Be sure to check out yesterday’s ABI Chart of the Day. 

Two of the biggest credit-card issuers are tightening lending standards, an unusual move in a strong economy that may signal longer-term concerns about consumers’ financial health, the Wall Street Journal reported. Capital One Financial Corp. and Discover Financial Services said last week that they have become more cautious in how they’re handling credit limits. The two lenders said that they don’t currently see signs of deterioration in consumers’ ability to pay their debts but do question how much longer the economic recovery will last.

Credit scores for decades have been based mostly on borrowers’ payment histories. That is about to change, the Wall Street Journal reported. Fair Isaac Corp., creator of the widely used FICO credit score, plans to roll out a new scoring system in early 2019 that factors in how consumers manage the cash in their checking, savings and money-market accounts. It is among the biggest shifts for credit reporting and the FICO scoring system, the bedrock of most consumer-lending decisions in the U.S. since the 1990s. The UltraFICO Score, as it is called, isn’t meant to weed out applicants. Rather, it is designed to boost the number of approvals for credit cards, personal loans and other debt by taking into account a borrower’s history of cash transactions, which could indicate how likely they are to repay. The new score, in the works for years, is FICO’s latest answer to lenders who after years of mostly cautious lending are seeking ways to boost loan approvals.