Financial and Economic Brief - August 8, 2017

by © Liberty Publishing, Inc.

Economic Reporting Outlook

The latest reading on inflation is due out this week. It has been “persistently weak” in recent months. Reports on consumer credit and labor market dynamics are also due this week. Consumer credit has been growing at a healthy pace, led by an 8.7% annualized jump in revolving credit in May, but increases in non-revolving credit have slowed recently. Additionally, the Labor Department’s Job Openings and Labor Turnover Survey for June is due out on Tuesday. Economists expect the Labor Department to report this week that overall inflation rose 0.2% in July, which would be the largest increase since April, raising the annual gain to 1.8% from 1.6%.
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Positive Jobs Report

According to a government report, the U.S. economy added 209,000 jobs in July while the unemployment rate fell to 4.3%, the lowest since March 2001. Economists surveyed by Reuters had expected the report to show growth of 183,000; the unemployment rate met expectations. “This is an unambiguously positive jobs report, as it suggests that consumers will have the wherewithal to increase spending (with solid job gains and faster wage growth) and that inflation may be slowly pushed higher by tighter labor and product markets,” said David Berson, chief economist at Nationwide.
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Dow at Record High

On Monday, the Dow hit another record high, the Nasdaq opened “slightly” higher, and the S&P was even. The Dow is “powered by” a healthy July employment report that showed U.S. employers added more jobs than expected. The report is likely to clear the way for the Federal Reserve to announce a plan to start decreasing its $4.2 trillion bond portfolio in September, and possibly raise rates for the third time this year in December. “The jobs report was quite well-received on Friday despite suffering the same pitfall that has plagued the U.S. recovery for years, inadequate wage growth,” said Craig Erlam, senior market analyst at online forex broker Oanda.
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