The Federal Reserve reported that overall consumer credit rose $18.5 billion in July, which is up from the $11.9 billion increase in July.This increase brought consumer credit to total of $3.75 trillion. However, increased loan demand is often a sign of continued economic growth and the gain suggests that the overall growth is back on track after a slow start. It will be interesting to see the affects on consumer credit after the impacts of the hurricanes are felt and people are beginning to rebuild.
The article also highlights that employers added 156,000 jobs in August and the unemployment rate ticked up to 4.4 percent. More jobs and more unemployment? This could mean that more people entered the labor force and are looking for jobs. Also in July, consumer pending rose by 0.3 percent which is the best spending since April.
https://apnews.com/36c36cf77d9840cfbec9210ad074eb64/US-consumer-borrowing-increased-in-July
With the Federal Reserve previously raising interest rates, people may be more inclined to put money away and save. On the contrary, some may be less likely to borrow because they may not want to pay their loan back at such a "high" rate. The reason borrowing may have increased is due to the hurricanes, also the interest is not high relative to past years, so this interest rate may not affect borrowers as we may think.
ReplyDeleteThis increase in growth can lead consumers to spend more and therefore increase more growing. Consumers expectations can have an effect in prices which can either lead consumers to spend or save more. With an increase in income this will give consumers more disposable income. With their expectations of the change in price, this can lead them to spend more and save less and therefore this may lead to more borrowing. I agree that this increase in unemployment may be due to more people entering the labor force. When more people enter they are all looking for jobs which leads to a surplus of labor.
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