Extremely high personal income growth throughout the United States is making the case for the Federal Reserve to raise interest rates in December.
A new study by the Bureau of Economic Analysis shows that personal incomes grew by 4.6% on average throughout 2014 in metropolitan areas, after rising only 1.1% in 2013.
Initial unemployment claims fell in the U.S. as one indicator of manufacturing activity showed a modest increase.
Weekly initial unemployment claims fell to 271,000, according to a new report by the Department of Labor. For the week ending November 14, seasonally adjusted initial claims fell by 5,000 from the prior week, while the 4-week moving average rose 3,000 from the previous week’s average. Unemployment claims have remained at a 4-week moving average of around 270,000 for most of 2015, making this week’s report roughly in-line with the year’s trend.
A Federal Reserve president has said he wants an interest rate hike immediately, although new data suggests the housing market is turning weaker in the country.
Atlanta Fed President Dennis Lockhart said at a conference Tuesday that the job market has improved sufficiently to justify an interest rate hike, adding that he supported a rate hike in September. Lockhart’s hawkish viewpoint is in the minority.
Indications of quickening inflation and improvements in the housing market indicate the U.S. economy is continuing to improve.
The Consumer Price Index rose 0.2% in October according to the Federal Reserve Bank of Cleveland, while the Bureau of Labor Statistics also reported the same seasonally adjusted CPI for urban consumers.
The October employment data convinced many that a Fed hike in December is a strong probability. On top of the strongest average hourly earnings in several years, the US reported a record increase in September consumer credit. Earlier last week, the US reported the stronger than expected October auto sales. It was the second month in excess of 18 mln vehicles at an annualized rate. This happened two other times since 1990.
Finance and insurance is seeing the largest increases in its contribution to America’s GDP, largely due to more Federal Reserve banks and use of credit in America and in foreign markets.
Finance and insurance saw a 12.4% increase in its value as a contribution to GDP in the second quarter of 2015 after falling 3.8% in the first quarter. The Bureau of Economic Analysis attributed the growth to “an increase in Federal Reserve banks, credit intermediation, and related activities.”
The trade deficit in the United States fell by $7.2 billion while employment rose due to increased business activity.
America’s total trade deficit for goods and services fell to $40.8 billion in September after spiking in August, while exports rose by $3 billion from the prior month. The Bureau of Economic Analysis also noted a fall in imports, with $4.2 billion less goods and services brought into the American economy in September, a decrease of 1.8% from August.
American manufacturing activity is growing at a slower pace, while deliveries to suppliers are slowing and construction remains near flat.
The United States Senate has increased the country’s debt ceiling and avoided a default while nationwide growth remains positive, but lower than previous readings.
GDP growth fell to 1.5% in the third quarter from 3.9% in the second quarter, a slight disappointment from 1.6% growth estimates. While still positive, the sharp deceleration in economic growth suggests that the ongoing economic recovery in the United States is not as strong as some economists had previously predicted, and may indicate the beginning of a slowdown that leads to a recession.
We just learned America’s rental affordability crisis is as bad as it has ever been. Unfortunately, it is about to get a whole lot worse. The American Community Survey for 2014, released a few weeks ago, found that the number of renters paying 30% or more of their income on housing – the standard benchmark for what’s considered affordable – reached a new record high of 20.7 million households, up nearly a half-million from the year before. Despite the improving economy, the increase was nearly five times bigger than last year’s gain.
