Consumer borrowing is on the rise, jobless rates finally fall again, and the U.S. House approves a Pentagon budget without recommended cuts.
Consumers Charge Ahead with Borrowing
Consumer borrowing increased $17.5 billion in March, up from a gain of $13 billion in February, the Federal Reserve reported Wednesday. It was the biggest monthly increase since a $19.3 billion advance in February 2013. The category that includes auto and student loans rose $16.4 billion while the category that covers credit card borrowing increased $1.1 billion. The overall increase in consumer debt pushed total borrowing to a record $3.14 trillion. Gains in borrowing are seen by analysts as an encouraging sign that people are more confident and willing to take on debt. A separate quarterly report on consumer credit done by the Federal Reserve Bank of New York shows that student loan debt has been the biggest driver of borrowing since the recession officially ended in June 2009, The Associated Press reports..
Yellen: Economy is Improving
Federal Reserve Chair Janet Yellen, speaking Wednesday to Congress’ Joint Economic Committee, said that the U.S. economy is improving but the job market remains "far from satisfactory." As a result, she expects favorable borrowing rates will be needed for “a considerable time.” The Fed has kept short-term rates at a record low near zero since December 2008. She said the Fed expects to begin raising rates when it sees enough progress in restoring full employment and when inflation has returned to its target of 2 percent. Yellen also said that rising income disparities in the U.S. are “a very worrisome trend,” but cautioned, "it's hard to get clear evidence" that pay or wealth disparities have slowed economic growth.
Jet Magazine to Cease Print Edition
Jet Magazine, which hit newsstands in 1951 at the dawn of the civil rights era, will cease regular print publication in June and transform into a digital app for all smartphone and tablet platforms, The Associated Press reports. Johnson Publishing Co., which owns Jet along with Ebony Magazine, said Wednesday that the switch is a proactive effort to adapt to its readers' growing desires for quicker and easier access to information. The app will launch on June 30 and cost $20 a year. It will contain shorter, more mobile-friendly articles and return to a weekly publishing format, with breaking news updates on a daily basis. The print magazine, the No. 3 magazine in the African-American market, currently publishes every three weeks. No changes are planned for Ebony.
Jobless Claims Drop for First Time in a Month
The Labor Department Thursday announced the number of Americans filing new claims for unemployment benefits fell more than expected last week, another indication of a strengthening labor market. Initial claims for state unemployment benefits declined 26,000 to a seasonally adjusted 319,000 for the week ended May 3, the Labor Department reported. The decline was the first in four weeks after almost a month of increases. Claims for the week ended April 26 were revised to show 1,000 more applications received than previously reported. The drop in claims was beyond the prediction of economists polled by Reuters. The four-week moving average for new claims, considered a better measure of underlying labor market conditions as it irons out week-to-week volatility, rose 4,500 to 324,750. But that remains at levels considered consistent with an improving labor market. The Labor Department said employment growth is averaging more than 200,000 jobs per month through the first four months of the year.
FedEx Changes its Rates System
FedEx announced Thursday it would start charging for ground delivery by package size for all deliveries, including the smallest items that it previous charged by weight only. The so-called “dimension-based pricing’’ is a way to get large but light-weight packages to pay for the space they take up. Such items include sweaters and shoes as well as bulk items such as toilet paper. This decision could seriously affect online shopping, that has often included cheap or no-charge shipping. The example given by FedEx to explain the price change was a 10 inches-by-14-by-24 box of toilet paper that might only weight five pounds. That package previously would only be charged by weight despite the amount of space it would take up in trucks and cargo planes. Starting in January, that package would be billed for weighing 21 pounds under a computation created by the company. "Dimensional weight pricing is a common industry practice that sets the transportation price based on package volume—the amount of space a package occupies in relation to its actual weight," said FedEx in a statement.
U.S. House Denies Pentagon Budget Cuts
The U.S. House Armed Services Committee approved a policy bill Thursday that set the Pentagon base budget at $496 billion for next year, and in the process rejected many of the department’s suggested spending cuts. The Republican-dominated House committee sent the measure to the full House of Representatives, where it must be passed and then reconciled with a Senate version. It would then require the signature of President Barack Obama. The committee approved an additional $17.9 billion for defense-related nuclear programs in the Department of Energy. It also authorized $79 billion for war funding.