STOCKS BOUNCE BACK: A four-week losing streak for U.S. stocks ended. The big variable, once again, was U.S./China trade. This week there was optimism. Added to that was steady U.S. economic data and stronger-than-expected earnings reports from discount retailers. The month of August, the most volatile of the year so far, ended with U.S. stock indices on a high note, between 3% and 4% from their all-time highs. Of the 22 trading sessions in the month, the S&P 500 moved 1% or more 11 times. It fell 2.6% or more three times. For the month, the S&P 500 was down less than 1%.
U.S. CONSUMER SPENDING REMAINS SOLID: Much of the U.S. economy depends on consumer spending, and it was solid in July. Personal spending, as measured by the Personal Consumption Expenditures index, increased 0.6% in July. The consensus seems to be that this metric will remain solid for a while, but slow in coming months.
AND NOW THEY BEGIN: Beginning Sunday, the U.S. will levy 15% tariffs on lots of consumer goods including footwear, clothing and textiles. To date, tariffs have been on items that have not been directly noticeable by consumers. Now tariffs on Chinese goods will be much more broad and more likely to be noticed by U.S. consumers who are driving economic growth. Watch for prices to hit consumers just in time for the holiday season. The next round of tariffs, on technology goods such as mobile phones, smartwatches, and computer monitors, is scheduled to go into effect on December 15.
SERIOUS DELINQUENCIES: In July, (according to Fannie Mae) the amount of households that were three or more months delinquent (classified as a “serious delinquency”) on their home mortgages dropped to 0.67% of all mortgages. This rate peaked in February 2010 at 5.59%. The current rate is the lowest since June 2007.
STUDENT LOANS HIT TEACHERS THE HARDEST: According to a recent survey, the profession with the largest percentage of members carrying student loans is teachers, at 65%. They were also the profession with the lowest percentage of members who had paid back their student loans. The median salary for a U.S. high school teacher with a bachelor’s degree in 2018 was $60,320