The major averages enter the final hour with modest gains on generally positive economic data. The Beige Book on regional economic activity showed more of the same moderate economic growth during September. Some weakness was noted in manufacturing and construction. Threats of tariffs and a protracted trade war is leading to considerable uncertainty. Price pressures remain but eased somewhat.
The August Consumer Price Index or CPI gained .2%, a little below expectations. On a year ago basis the CPI slipped to 2.7% on continued declines in core goods prices. That said most of the price pressures are driven by the energy complex and particularly oil costs. Wage pressures remain largely absent contrary to the Phillips Curve and modern history.
Consumer Credit came out after the close yesterday with a 3.9% gain in August. All lines advanced with student and auto loans particularly popular. Delinquencies increased slightly overall to a still low 2.43%, but student loan delinquency rates jumped .49% to 4.88%.
On the subject of debt the Congressional Budget Office or CBO reports that the Federal Deficit jumped 32% to 895 billion dollars in the first 11 months of fiscal 2018 as Trumps deficit funded tax cuts for the corporations and 10% hit the budget hard. Currently the deficit is on track to hit a trillion dollars in fiscal 2019. With the Republicans preparing another large tax cut, it could easily go a lot higher, particularly if things go south again.
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