Last Week’s Economic News in Review October 14, 2020

October 14, 2020

Wholesale inventories posted gains, while consumer borrowing fell, and layoffs declined.

Wholesale Activity

Wholesale inventories rose to $635.5 billion at the end of August, which marked a 0.4 percent gain over July, the Census Bureau reported. That said, wholesale inventories have a way to catch up, given that August’s amount was 5.2 percent below August 2019.

Some key categories that helped drive August’s inventory gains included farm products, which grew 3.1 percent in August; alcohol, which expanded 2.6 percent; lumber and chemicals, which were both up 1.8 percent; paper, which rose 1.2 percent; and hardware, which increased 1.1 percent. That increase in production pointed by wholesalers’ expectations of increased demand from retailers, despite the struggling economy.

Meanwhile, wholesale sales grew to $486.6 billion in August, which was 1.4 percent over July. While down 2.3 percent from August 2019’s sales, August’s gains helped narrow the inventory-to-sales ratio for the month to 1.31. A declining ration is a good thing, because it reflects an increasing demand for wholesale goods.


Consumer Credit

That said, consumer credit declined in August, and the weak point appears to be in credit card spending. Total consumer borrowing fell to $4.144 trillion in August, which was 0.17 percent down from July’s total of $4.151 trillion, the Federal Reserve reported last week.

Non-revolving debt, such as student and car loans, rose to $3.157 trillion. However, revolving debt, which is mainly credit card spending, fell to $985.3 billion, which was 0.94 percent down from July’s total to $994.7 billion. This was the lowest level for revolving debt since June 2017.

Many consumer credit watchers attributed August’s decline in credit card spending to consumers no longer receiving COVID-19 stimulus checks and Congressional partisanship holding up further aid. That said, it’s important to note that revolving debt has experienced a steep drop-off since March, regardless of aid programs.


Initial Jobless Claims

Initial jobless claims filed by recently unemployed Americans during the week ending October 3rd fell to 840,000, a decrease of 9,000 claims from the previous week’s 849,000 claims, the Employment and Training Administration reported last week.

The four-week, moving average, which is considered a more stable measure of jobless claims, fell to 875,000, which was 13,250 claims below the preceding week’s average of 870,250 claims.

“The level of claims is still staggeringly high,” Glassdoor Senior Economist Daniel Zhao told the New York Times. “We’re seeing evidence that the recovery is slowing down, whether it’s in slowing payroll gains or in the sluggish improvement in jobless claims.”


This week, we can expect:

  • Tuesday – Consumer prices for September from the Bureau of Labor Statistics.
  • Wednesday – Producer prices for September from the Bureau of Labor Statistics.
  • Thursday – Initial jobless claims for last week from the Employment and Training Administration; import prices for September from the Bureau of Labor Statistics.
  • Friday – Retail sales for September and business inventories for August from the Census Bureau; industrial production and capacity utilization for September from the Federal Reserve.

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Omar Khamisa
Mission San Jose Mortgage
2111 W. March Lane, Suite B100
Stockton, CA 95207
Office: 209-651-2000
Mobile: 510-648-5535
Fax: 209-434-2311
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