• Kyle Tetting
• Tom Pappenfus
• Kendall Bauer

(with Max Hoelzl and Joel Dresang, engineered by Jason Scuglik)

U.S. consumer credit debt outstanding surged in July, rising at a 9.7% annual rate, the most in more than four years. The Federal Reserve reported that the increase in so-called revolving credit outpaced overall consumer credit debt, which rose at a 3.8% annual rate. Non-revolving credit, entailing student debt and car loans, rose at a 1.8% pace. Since peaking in October, credit card debt has tapered off and plateaued. Economists follow credit card use because it suggests consumers’ confidence in their spending, which accounts for more two-thirds of U.S. economic activity.

No major announcements

The Bureau of Labor Statistics said its Producer Price Index, a measure of wholesale inflation, declined slightly in August. The 0.1% setback marked the index’s first decline in four months, caused by a fall in prices for services. Goods prices rose for the fourth month in a row. Since August 2024, the index was up 2.6%, down from a 12-month increase of 3.1% in July. Excluding food, energy and trade services, the core PPI rose 0.3% from July and was up 2.8% from the year before.

The broadest measure of inflation rose in August, reaching its highest level since January. The Consumer Price Index increased 0.4% from the month before, led by a 0.4% gain in shelter costs, according to the Bureau of Labor Statistics. Compared to the same time last year, the inflation rate rose to 2.9%. The core CPI, which excludes volatile prices for food and energy items, rose 3.1% from the year before, unchanged from July. The Federal Reserve Board has a long-range target of 2% inflation and used higher interest rates to dampen price increases since the CPI hit a four-decade high of 9.1% in 2022. Analysts expect the central bank to resume cutting rates this month to address concerns of a weakened labor market.

The four-week moving average for initial unemployment claims rose for the fifth week in a row to the highest level since June. According to Labor Department data, the average moved to 240,500 new applications, which was 34% below the average since 1967  and 19% higher than just before the COVID-19 pandemic. More than 19 million Americans claimed jobless benefits in the latest week, down 2% from the week before and more than 5% higher than the year before.

Based in part on continued concerns over tariffs, consumer sentiment continues to weaken, according to the University of Michigan. A preliminary reading of the university’s September index showed sentiment dropping nearly 5% below where it ended August and down 21% from where it was a year ago. Consumer expectations declined more than their feelings toward current economic conditions. About 60% of the survey respondents expressed unprompted fears about the effects of increased tariffs on inflation. Sentiment still was higher than recent lows in April and May, just after stricter trade policies were announced. Economists consider sentiment a leading indicator of consumer spending.

• Nasdaq – 22154, up 453 points or 2.1%
• Standard & Poor’s 500 – 6584, up 103 points or 1.6%
• Dow Jones Industrial – 45834, up 433 points or 1.0%
• 10-year U.S. Treasury Note – 4.06%, down 0.03 point