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Registered Investment Adviser Caleb Lawrence

The major averages enter the final hour with large losses despite generally positive news. Industrial production advanced .2% in July. The miss to expectations compliments of a significant decline in motor vehicle and parts production, capacity utilization was unchanged at 76.7%.

The Philadelphia Fed regional index slipped .6 in August to 18.9 despite large gains in new orders and the average work week. The inflation proxy prices paid advanced 2 points to 21.1.

Online or E-Commerce sales increased 5.8 billion to 111.5 billion in the 2nd quarter. The 16.2% gain from a year ago put online sales at nearly 9% of the total. This has been a particularly brutal year for traditional retail with the record bankruptcies generating a lot of fear in the sector.

Much has been said about debt in the post crisis period. Some insist it does not matter and even go so far as to use it as a measure of economic vibrancy. Others point to the historical record and the financial ruin debt often engenders particularly when it is excessive or poorly considered. As with most things the truth is somewhere in the middle. The New York Fed’s 2nd quarter report on Household Credit and Debt shows that households have reached a new record high debt level with a .9% gain to 12.84 Trillion dollars. Credit card delinquency rose for a 3rd straight quarter, though the overall rate was largely unchanged. Given the post crisis reduction in the labor force participation, and homeownership rates, and that real wages have declined for quite some time I would view this as evidence that consumers are worse off now than they were in 2007 on net compliments of more debt and less income and assets.

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