August 11, 2017
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…
On Friday morning, The Labor Department released its July Consumer Price Index. The overall consensus was that last month saw a slight dip in inflation. Even though total prices edged higher, that was still lower than estimates. In addition, year-on-year rates were at the low point as well. Both indicators stood at only 1.7% each.
Housing costs remain a prime disinflationary force. They only rose 0.1% higher. This gives them a yearly 2.8% rise, which is still down from June. Another massive disinflationary force was wireless services continuing to move lower. They fell 0.3% last month adding up to a yearly decline of 13.3%. Other negative factors were vehicle sales, lodging away from home and energy prices. On the positive side, though, apparel prices, medical care and food were all up slightly for the month.
This overall lack of inflation, however, will most likely continue guiding the Federal Reserve's policy at the next Federal Open Market Committee (FOMC) meeting in September.
Wednesday's Wholesale Inventories report from the Commerce Department was positive. Inventories rose 0.7% in June. This is precisely what we were looking for given a comparable 0.7% rise in sales. The only major imbalance was in auto inventories. These rose 1.4% while sales still fell 0.5% to give us a negative imbalance.
Finally, this past Monday, the Federal Reserve Board of Governors released June's Consumer Credit Report. Even though headline consumer credit grew $12.4 billion in June, it still came in lower than expected. This was due to non-revolving credit growth being lower than usual, but still at a substantial $8.3 billion.
Revolving credit, on the other hand, posted a sizable increase once again, growing at $4.1 billion. Having already grown $6.9 billion in May, revolving credit, which is how credit card debt is tracked, has been rising this year. As a reminder, vehicle financing and student loans are tracked here as well.
This all raises the question of whether financial firms might have started lending to less qualified buyers. However, even though gains in this department are not necessarily good for individual credit quality, they're still a plus for short-term consumer spending.
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,
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