The Week Ahead
Thursday, July 8, 8:30 a.m. EDT -- New filings for state unemployment benefits probably stood at around 300,000 for the week ended July 3, not much different from the 302,000 total in mid-June. Jobless claims have been trending higher since late February, when the four-week moving average hit a 10-year low of 291,000. But the number of new filers still remains small from a historical perspective. With the Federal Reserve focused on signs of price pressures coming from rising wages, the weekly jobless claims have become very important to the financial markets. The tightness of the labor markets was one factor behind the Fed's decision to raise short-term interest rates by a quarter-point on June 30.
Thursday, July 8, 3 p.m. EDT -- Consumers probably took on $5 billion more in installment debt than they paid off in May, according to the median forecast of economists surveyed by Standard & Poor's MMS, a division of The McGraw-Hill Companies. The expected increase is above the $3.7 billion added in April. Household borrowing has accelerated in 1999, with monthly gains averaging $8 billion, compared with $5.5 billion in 1998. One reason is that consumers are switching back to credit for purchases. Real consumer spending has soared by 5% in the past year, but real aftertax income has grown 3.4%. The gap has been financed by credit use as well as wealth gains from the stock market and rising home prices. The moderate gain expected for May would keep the ratio of installment debt to aftertax income at a high 21.3%. That's close to the record high of 21.4% set in March, and well above the 1980s' peak of 20.2%.