During this week I read two articles and when I did I wondered how the subject of each might affect funeral homes and the funeral business going forward.  The articles included this one from Reuters titled “U.S. banks report weaker loan demand, Fed survey says” and this article from Morningstar titled “U.S. consumers pull back sharply on credit-card use in March”.

 

Here’s a little bit of what each article points out:

Reuters reports:

• “. . renewed weakening in demand for industrial loans and a decline in household demand for credit in the first quarter of the year. . “

• “Many consumers and businesses are feeling the pinch from reduced credit availability even as the Fed looks set to keep interest rates higher into 2025.“

• “This could set the stage for weaker activity ahead . . .”

• “The net share of large and medium-sized banks reporting tightening standards for commercial and industrial loans. . .”

•  “A rising share of banks reported weaker demand for C&I (Commercial and Industrial) loans.”

• “Household loan demand deteriorated across all categories.”

• “Demand for auto loans is at its weakest point in a year.”

 

And, the Morningstar article maintained that “Credit-card borrowing rose a slight 0.1% in March after a 9.7% gain in the prior month. That’s the slowest pace since April 2021.”

 

Funeral Director Daily take:   When I read these types of articles I always like to read them with the perspective of “How will these facts affect my funeral business?”  The first thing that hit me here was that if there is a lessening of demand for loans, then there soon should be some competition by the banks to get loan business. . . . simply because it is by getting and servicing loans that banks make their profits — that’s the business that they are in.

 

If there is less demand for loans and banks have to compete for the prospective loans that are out there, then the competition should bring down rates. . . . even if the Fed does not lower the Federal Reserve rate.  Banks may have to reduce rates and take lower margins simply to win business.

 

That’s good for funeral businesses with good credit to know.  Shop your loan needs.  Because you have been with one bank for a long time doesn’t necessarily mean that you are getting the best rate in town.  Relationships matter, but don’t let your bank take advantage of the relationship that they have with you.  Make sure they are competitive — if your money doesn’t go out in interest it will probably sift down to the profit line. . . and that’s good for you.

 

Now, the other side of the coin.  Consumer credit slowing so much in one month is troublesome.  After all, you are paid for your services by consumers and if they cannot get credit via their credit cards you have to figure out a way to get paid by them.

 

Also, if consumers are getting maxxed out on their credit cards and have an untimely death in the family the odds are good that they will choose limited services because they don’t have the available funding to purchase more at the time.

 

Know every place where your consumer client may have funds available including insurance assignment funding that could be procured from the likes of C&J Financial.

 

It also points out the value of pre-arrangements on the books.  The earlier that a death care business can get someone to pre-arrange and have the money for services set aside the less chance there is of that consumer family being short of funds at the time of need.

 

Finally, weaker demand for loans and consumers getting tight on available credit may have a slow down effect on the rates of inflation moving forward.  I recently took a look at the Cost of Living Adjustments (COLA) for Social Security recipients between 2018 thru 2023.    What I found out is that the cumulative COLA for those five years was 20.3% or an average of about 4.06% per year. . . . That’s a little over double what has been comfortable for the economy.  So, if inflation cools a little bit it should give funeral businesses some breathing room as we try to catch up to that 2% rate again.. . . . and that would also be a good thing for businesses in my book.

 

At the end of the day, knowing where you stand on certain items helps in ascertaining how you move your business forward.

 

More news from the world of Death Care:

• Human composting gains traction across the U.S.  Newsweek
• Five veterans buried at Lebanon Cemetery honored with new military headstones.  Video story and print article.  Fox 43 – Harrisburg (PA)
• Interest grows in natural burials in St. Lawrence County.  North Country Now (NY)
• Golden Charter prioritizes innovation agenda with appointment of new CTO.  Scottish Financial News (Scotland)
• A “Really Special” place:  Arlington leaders begin preparing historic cemetery to sell new plots.  Texas Standard  (TX)
• Celebrating a Century:  Van Orsdel Funeral and Cremation Service marks 100 years of serving South Florida.  Yahoo Finance

 

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