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CCL Market Update: Consumer Spending & Credit, Job Openings & Labor Turnover, Consumer Sentiment, Mortgage Rates

The Gallup US Consumer Spending Measure for August was recently released, showing similar numbers to the prior few months. Americans’ self-reported dialing spending for the month averaged $89, which is the lowest August reading since 2012, but is still keeping near the trend of $90 and $91 found each month since April. Spending does not seem likely to increase going into September, based on the past 5 years of data, where September spending has consistently been lower than August.

The consumer credit report for the month of July showed positive activity, with consumer credit rising $19.1 billion in the month. Revolving credit—the component that tracks credit cards—rose $4.3 billion for a 5th straight month, its best run of the recovery. Non-revolving credit also increased $14.8 billion, reflecting strength for vehicle sales and student loans, which are both tracked by this component. This report shows an increasing willingness by consumers to take on debt, a plus for the upcoming holiday shopping season.

The Labor Department’s Job Openings and Labor Turnover Survey for July showed positive movement for job openings, up sharply in the month to 5.753 million from 5.323 million in June. The job openings rate rose 3.9% in July following 3 prior months at 3.6%. Professional and business services led gains with an increase of 122,000, followed by accommodation and food service, up 82,000, and retail, up 77,000. Despite the rise in job openings, hires trended slightly lower in July to 4.983 million, down from June’s 5.182 million. The quits rate, which is watched as an indication of worker confidence, was unchanged for the 4th straight month at 1.9%.

Consumer Sentiment for mid-September surprised analysts by dropping more than 6 points to 85.7, placing the index at its lowest point since last September. The drop was led by weakness in the expectations component, which is down more than 7 points to 76.4, a level also not seen since last September. The drooping expectations index likely points to a downgrade for the outlook on jobs and income in the upcoming weeks. The current conditions component also fell by nearly 5 points to 100.3 for its weakest rating since last October, which points to weakness for the September consumer spending report.

Keep an eye out this week for the Fed meeting announcement and forecasts, as well as news on consumer prices and housing starts.

Mortgage Rates

Mortgage rates for most loan programs displayed slight increases over the past week. All mortgage rate increases were less than 10 basis points, the largest being a 0.095% rise in 30-year high balance rates and the smallest a 0.001% increase in 30-year jumbo rates. The FHA, VA, manufactured conventional loan programs all displayed no rate movement within the week. 30-year fixed rates rose 7 basis points to 3.875% (3.938% APR), keeping under the 4.000% mark, and is still about 1/4 percentage points lower than the year-ago rate of 4.250% (4.264% APR).

Sean Becketti, chief economist for Freddie Mack, commented on the largely unchanged rates and recent economic events:

“Following a shortened week, mortgage rates were virtually unchanged…The employment report released last Friday provided mixed signals, adding one more note of uncertainty prior to the Fed’s September meeting. The unemployment rate dropped to 5.1 percent in August, the lowest rate since April 2008, but only 173,000 jobs were added, well below expectations. Wages grew 2.2 percent, a neutral indication at best.”

As mortgage rates remain below 4.000%, consider taking action on your home purchase or refinance. Call the Mortgage Experts at 805.543.LOAN for your personalized consultation and rate quote today!

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile