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 Gap Widened in August
According to the Commerce Department, the U.S. trade deficit widened 15.6% to $48.3 billion in August, which was above economists’ expectations for an increase to $48 billion. The overall trade deficit is now at a five-month high. Exports slipped 2% to $185.1 billion, while imports increased 1.2% to $233.4 billion. The strong dollar and slowing economic growth in China continues to impede exports here in the U.S. As a result, many economists are expecting the U.S. trade deficit to impact third-quarter GDP growth.
Consumers Borrowed Less in August
In August, U.S. consumer borrowed at their slowest pace in six months. Total credit increased at a 5.6% annual rate, or by $16 billion, which missed economists’ forecast for a $19.5 billion increase. July’s figure was revised to an $18.9 billion gain, down from a previously reported $19.1 billion rise. Revolving debt grew by $4 billion, and non-revolving debt increased by $12 billion. August’s consumer credit figures show that lending has slowed down for automobiles and higher education; both increased at the slowest pace in nearly two years. While personal spending has increased recently, U.S. consumers are growing more hesitant to take on more debt.
Jobless Claims Drop to 3-Month Low
For the week ending October 3, initial claims for unemployment dipped to 263,000, beating economists’ estimate for claims to fall to 274,000. This was the lowest reading in three months. The four-week moving average also slipped, falling by 3,000 to 267,500. While last week’s Unemployment Rate Report was disappointing, the labor market is still showing signs of improvement and hiring is continuing to pick up.
Wholesalers Stockpiled Slightly More in August
The Commerce Department reported this morning that wholesale inventories increased only 0.1% in August, while sales dipped 1%. July’s inventories were revised to show a 0.3% fall, down from the previously reported 0.1% drop. Durable goods inventories increased 0.3% in August, while non-durable goods inventories slipped 0.2%. Given August’s sales pace, it will now take about 1.31 months to empty shelves. Cheap oil and low demand for automobiles and machinery impacted wholesale inventories in August. In the past 12 months, inventories have increased 4.1%, while sales have dipped 4.7%. Weak sales is a sign that the U.S. economy may be tapping the brakes.
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,