It’s Friday and that means it’s time to review the latest economic data and identify which pockets of the economy are heating up and which are slowing down. Don’t worry about catching every headline and every report throughout the week—I recap all of the most important news impacting your wealth right here every Friday. Let’s take a look at this week’s big headlines:
Trade Deficit Widens Less Than Expected
The U.S.trade deficit widened by 2.9% to $41.9 billion in the month of May. Economists had expected the deficit to widen to $42.7 billion, so the deficit wasn’t quite as high as expected. Exports fell $1.5 billion to $188.6 billion, while imports also fell $0.3 billion to $230.5 million. The April trade deficit was revised slightly lower from $40.9 billion to $40.7 billion. The good news is that the deficit widened less than expected following the largest monthly drop in the trade deficit in six years in April. However, it looks like the strong dollar will continue to impede exports. Exports in the first five months of 2015 have slipped 2.7% compared with the same period in 2014. As a result, economists are anticipated to trim their second quarter GDP estimates slightly.
Consumer Debt Rises
In the month of May, consumer credit increased $16.09 billion, rising to a seasonally adjusted 5.7% annual rate, according to the Federal Reserve. Economists had expected consumer credit to increase $18.2 billion. Breaking it down, revolving credit increased at 7% annualized rate, the first rise since December. Of that, credit card debt rose slightly to 2.1%, following an 11.5% jump in April. The amount of credit taken out by consumers has risen every month since August 2011. During this period, non-revolving credit that includes long-term debt like student loans surged at a 7% annual pace, while credit-card debt rose at a much smaller 2.1% annual pace. Overall, the rise in consumer credit bodes well for second quarter GDP growth.
Jobless Claims Jump By 15,000 in May
For the week ending July 3, initial claims for unemployment spiked by 15,000 to 297,000, the highest level since February. Economists were looking for claims to rise to 275,000, so this was somewhat unexpected. Meanwhile, the four-week moving average rose by 4,500 to 279,000 from the previous week. Despite the uptick in claims, this is the 18th consecutive week that jobless claims fell below 300,000, a sign that the economy is still recovering.
Wholesale Surpass Analysts’ Estimates
Wholesale inventories increased to its fastest pace in six months to 0.8% in May, above economists’ expectations for a 0.2% gain. Inventories of durable goods and machinery rose 0.6%, while non-durable goods increased 1.2%. Meanwhile wholesales increased 0.3% in May after a 1.7% growth in April. Inventories are an important driver of economic growth, so the recent rise in inventories should help bolster second-quarter GDP.
That’s all I have for you this week; I’ll be in touch again next week with the latest ratings updates out of Portfolio Grader.
Have a great weekend,