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Economic Advisor: August 15, 2018
August 15, 2018


The pace of consumer borrowing tapered, while wholesale inventory growth also slowed, and layoffs fell.

Consumer Credit

Consumer credit posted growth in June, growing 3.1 percent to reach a total of $3.907 trillion for the month, according to last week’s report from the Federal Reserve. This was well below the 7.5 percent growth consumer credit grew by in May.

Looking at the specific types of debt, non-revolving debt, such as car and student loans grew by 4.4 percent to hit a total of $2.868 trillion for June. However, that growth was undercut by a 0.2 percent decline in revolving debt, such as credit card spending.

After May’s 11.2 percent gain in revolving debt, the decline came as a surprise to many credit market watchers given the close relationships between credit cards and consumer spending. A reticence on the part of consumers to use their cards could hit consumer spending, which drives 70 percent of U.S. economic activity.

Wholesale Inventories

Bearing that in mind, wholesale inventories for June hit $632.4 billion, which was 0.1 percent higher than May, the Census Bureau reported last week. Wholesale inventories are important to track, because they indicate wholesalers’ anticipation for increased demand from retailers.

While June’s gains were welcome, the pace of wholesale inventory growth was off from May’s 0.3 percent gain Compared to the same period a year ago, June’s inventories were 5.1 percent over June 2017.

Initial Jobless Claims

First-time claims for unemployment benefits filed by laid-off Americans during the week ending August 4 dipped to 213,000, a decline of 6,000 claims from the preceding week’s total of 219,000, the Employment and Training Administration reported last week. This was welcome news given that the market had expected initial claims to reach 220,000.

Meanwhile, the four-week moving average — regarded as a more reliable measure of initial jobless claims — ticked down to 214,250, a dip of 500 claims from the prior week’s average of 214,750. Last week’s report also marked the 179th week in which initial claims were below the 300,000-claim level, which economists consider an indicator of a growing job market.

This week, we can expect:

  • Tuesday — Import prices for July from the Bureau of Labor Statistics.
  • Wednesday — Retail sales for July and business inventories for June from the Census Bureau; industrial production and capacity utilization for July from the Federal Reserve.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; housing starts and building permits for July from the Census Bureau and Department of Housing and Urban Development.
  • Friday — Consumer sentiment for August from the University of Michigan Surveys of Consumers; leading economic indicators for July from The Conference Board.

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