Last Week’s Economic News in Review
September 14th, 2016
Consumer borrowing exceeded expectations, while wholesale inventories essentially hovered and lay offs fell.
Consumer borrowing grew 5.8 percent in July to hit a total of $3.66 trillion, according to last week’s release from the Federal Reserve. The $17.7 billion gain was well above the $16 billion increase that the market had been expecting, and was a good showing after June noted weak growth in consumer credit.
The main driver for July’s gains was non-revolving debt, such as car and student loans, which grew 6.7 percent to hit a total of $2.69 trillion. Meanwhile, revolving debt, such as credit cards, came of a series of strong monthly gains to only increase 3.4 percent, reaching a total of $969 billion.
Coming off the previous week’s gains in consumer spending, the increase in consumer credit was encouraging, because it indicates continued consumer activity. Given that consumer spending drives 70 percent of the U.S. economy, consumer credit is a key indicator to monitor.
Initial Jobless Claims
First-time claims for unemployment benefits filed by the newly unemployed during the week ending September 3 dropped to 259,000 claims, a decline of 4,000 from the prior week’s total of 263,000, the Employment and Training Administration.
The total marked a two-month low, which surprised many economists as the market had actually expected claims to notch up to 265,000. The week’s total marked the 79th consecutive week of first-time claims below 300,000 — which economists consider indicative of a growing job market — since 1970.
The four-week moving average — considered a more stable measure jobless claims — declined to 261,250, a drop of 1,750 claims from the prior week’s average of 263,000.
Wholesale inventories — a key indicator because they show manufacturers’ and distributors’ anticipated retailer demand — grew a slight 0.1 percent in July to $591.3 billion, which was virtually unchanged from June. Compared annually, total inventories were up 0.5 percent in comparison to July 2015 totals.
Meanwhile, sales for wholesalers during July dropped 0.4 percent to $441.9 billion. Compared annually, July’s sales were down 1 percent from July 2015’s total. July’s inventories-to-sales ratio for wholesalers was 1.34. Compared against last year, the July 2015 ratio was 1.32.
This week we can expect:
- Tuesday — August budget from the Treasury Department.
- Wednesday — Import and export prices for August from the Census Bureau and the Bureau of Economic Analysis.
- Thursday — Initial jobless claims for last week from the Employment and Training Administration; producer price index for August from the Bureau of Labor Statistics; industrial production and capacity utilization for August from the Federal Reserve; July business inventories from the Census Bureau.
- Friday — Consumer price index for August from the Bureau of Labor Statistics.