Friday, September 12, 2014

Retail Sales Increased a Strong 0.6% in August

Retail sales improved 0.6% in August, the fastest monthly pace since April. August’s report included upward revisions to previous months. Automobile sales led the increase, growing 1.5% in August. Year-over-year growth was also strong, improving 5.0%, the strongest yearly growth since July 2013.

Excluding automobile and gasoline sales, retail sales grew 0.5% in August. Building materials also saw strong growth at 1.4%. The report was generally positive, indicative of a growing and strengthening economy. The growth for the remainder of the year should continue August’s trend.

Gasoline sales declined 0.8%, however gasoline sales tend to be volatile from one month to the next.

Read the Census report.

Thursday, September 11, 2014

Survey: Most Bank Customers Pay Little or No Fees

The majority of Americans—62 percent—pay nothing at all for bank services such as checking account maintenance and ATM access, according to a recent survey by the American Bankers Association. Most bank customers (74 percent) spend $3 or less in monthly fees—less than the cost of a gallon of gas.

“Banking services are a great value for consumers, and bank customers have more choices than ever before,” said Nessa Feddis, ABA’s senior vice president and deputy chief counsel for Consumer Protection and Payments. “Increasingly, consumers are finding that simple steps like having their paychecks directly deposited or using ATMs owned by their bank result in a free service that protects their money and makes it available 24/7.”

The annual survey of 1,000 U.S. adults was conducted for ABA by Ipsos Public Affairs, an independent market research firm, Aug. 7-12, 2014. ABA has conducted the survey annually since 1998.

Read the full release.

Tuesday, September 9, 2014

Small Business Optimism at Second Highest Level Since 2007

Small business optimism increased in August by 0.4 points to 96.1, the second highest level since October 2007. August’s gain was driven by increases in plans to make capital outlays and expectations that the economy will improve.

Financing continues to be the least cited concern holding back small business conditions, with 2% of respondents citing it as the single most important problem. Taxes remained the top spot rising 2% to 24%, followed by government requirement and red tape, which declined to 19%.

Six of the ten index components improved slightly, three components declined and one component, credit conditions, was unchanged. Expectations that the economy will improve increased 3 points, the second consecutive month of strong growth.

Expectations for higher real sales took the biggest hit, dropping 4 points to 6%. August was first month plans to increase employment declined, following a ten month positive gain.

Read the NFIB report.

Monday, September 8, 2014

Consumer Credit Posted Record Gains in July

Consumer credit increased $26.0 billion in July, a new monthly record. July saw a 9.7% annualized gain, the largest monthly annualized gain since 2011. July’s gains continue to be largely driven by non-revolving credit.

Revolving credit grew $5.4 billion. It’s well above the $1.8 billion growth from the month prior. Non-revolving credit grew by $20.6 billion, as consumers continue to finance large ticket items. The spike in consumer credit reveals that consumers are increasingly comfortable taking on higher debt levels.

Read the Federal Reserve release.

CBO: Climbing Interest Rate, Large Effect on Federal Debt

Federal debt held by the public will reach about $12.8 trillion by the end of this fiscal year, an amount that equals 74% of the nation’s total output (GDP) this year, according to CBO projections. If current laws remain unchanged, CBO projects that the debt will reach $20.6 trillion, or 77% of GDP in 2024.

Furthermore, with the interest rate set to rise, the interest payments on the debt will increase from $231 billion in 2014, or 1.3% of GDP, to $799 billion in 2024, or 3.0% of GDP. The rising debt accounts for some of that increase, but much of it stems from CBO’s expectation that—largely owing to the improving economy—the average interest rate paid on that debt will more than double over the next 10 years, from 1.8% in 2014 to 3.9% in 2024.

Read more.

ABA Survey Finds Target Breach Costly to Banks

The Target consumer data breach last year was costly for banks of all sizes — and especially for community banks — according to an ABA survey of more than 500 banks. More than 8% of debit cards and nearly 4% of credit cards were implicated in the breach, and banks reissued nearly every card so implicated, representing tens of millions of cards reissued in response to a single breach. Community banks experienced disproportionately higher costs in reissuing cards. Banks with under $1 billion in assets spent just over $11 per debit card and $12.75 per credit card, including mailing, card production and staff time. The largest banks — those with over $50 billion — spent under $3 per card. ABA President and CEO Frank Keating said:
These costs are deeply troubling for all banks, especially for community banks. As each new retailer breach occurs, these costs will be repeated over and over. Enough is enough.
Banks also bear the costs of retailer breaches through low reimbursement rates. Although the survey did not cover reimbursement specifically for the Target breach, only one third of banks reported receiving any reimbursement for fraud losses and reissue costs in the previous five years. Of those that did receive reimbursement, 83% said they received less than 10 cents on the dollar — and 46% reported receiving not even a penny on the dollar. Keating said:
We have engaged for the past year in discussions with the card associations on increasing bank reimbursement levels for data breach costs. These findings make it clear that banks bear too much of the cost of retailers’ data breaches. We will continue to push to get these reimbursement levels up.
View the survey results.

Friday, September 5, 2014

Job Growth Slowed in August and Unemployment Dipped to 6.1%

Total nonfarm payroll employment rose by 142,000 jobs in August, the slowest pace since last December. The disappointing report was well below expectations. August’s report included on net loss of 28,000 jobs from revisions to previous months. The poor growth breaks a six-month run where jobs growth was above 200,000 per month.

August’s weaker report may be due, in part, to statistical noise as the monthly survey has a margin of error of 90,000 jobs. Moreover, we have seen strength in other labor market metrics recently.

The unemployment rate dropped slightly to 6.1%, according to the U.S. Bureau of Labor Statistics. The labor force participation rate declined to 62.8% as 64,000 people left the labor force in August. The number of long term unemployed, defined as those who have been out of work for over 27 weeks, dropped by 192,000 people — accounting for 31% of all unemployed individuals.

The private sector, particularly the service industry, continues to drive job growth. However the weak growth across the board in the private sector lagged the overall growth for August. The service sector added 112,000 jobs in August, lower than the previous two months and August 2013. The goods producing sector also saw weak job gains, improving 22,000 in August, well below the 67,000 seen the month prior.

Government employment increased by 8,000 jobs, well above the previous three month average of 2,000.

Read the BLS report.