Economic News in Review Greenville SC
Here is last week’s Economic News in Review Greenville SC.
Consumer borrowing beat expectations to hit a new record, while layoffs declined, and producer prices were flat.
Consumer credit growth outpaced expectations, with total outstanding consumer borrowing growing 6.7 percent in July to hit a record $3.45 trillion, the Federal Reserve reported last week. This $19.1 billion increase over June outpaced analysts’ expectations of an $18 billion gain.
Both types of credit, revolving and non-revolving debt, drove July’s better-than-expected gains. Revolving debt, such as credit cards increased by 5.7 percent to hit $914.6 billion. Non-revolving debt, such as student or car loans, grew by 7 percent to hit $2.53 trillion.
July’s balanced gains would appear to indicate that U.S. consumers were willing to borrow in order to make larger, more expensive purchases, as well as to spend more at the cash registers. Given that consumer spending drives 70 percent of the U.S. economy, many economists pointed to that as a welcome development.
Initial Jobless Claims
After reporting an increase in lay-offs in its previous release, the Employment and Training Administration reported last week that lay-offs had yo-yoed back down. First-time claims for unemployment benefits filed by the newly jobless during the week ending September 5, dipped to 275,000, a decline of 6,000 claims from the prior week’s revised level of 281,000.
The four-week moving average — considered a more stable measure of lay-offs — ticked slightly up to 275,750 claims, an increase of just 500 claims from the preceding week’s revised average of 275,250 claims. In both cases, claims were well below the 300,000-claim mark that economists say denotes a growing job market.
“Consistently low readings for initial and continuing jobless claims suggest that the separations side of the labor market remains healthy, and we see little reason to expect a meaningful shift in labor market dynamics in the near term,” Barclays economist Jesse Hurwitz told the New York Times.
Producer Price Index
Producer prices, a key economic indicator because they show where consumer prices are likely headed, remained flat for August. Prices for final demand goods and services — offerings that are ready to be sold to consumer market retailers — was unchanged for the month, according to last week’s report from the Bureau of Labor Statistics. This beat expectations of a 0.2 percent decline in final demand prices.
Looking at more detail, the index for final demand goods fell 0.6 percent in August, which the Bureau said could mostly be chalked up to a 3.3-percent drop in prices for final demand energy. The index for final demand goods, less foods and energy, moved down 0.2 percent. Meanwhile, the index for final demand services grew 0.4 percent in August.
“As the dampening impact from the strong dollar and falling energy prices continues to make its way through the price pipeline, we expect both producer and consumer price inflation to remain subdued, complicating the Fed’s outlook for inflation,” TD Securities economist Millan Mulraine told the Wall Street Journal.
Economic News in Review Greenville SC
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