Economy Watch: Euro Zone GDP Growth, U.S. Consumer Debt, Unemployment Claims

Though U.S. consumer debt dipped down in the second quarter, unemployment claims ticked up for the week ending Aug. 9. Eyes continue to rest on Europe, where GDP growth remains flat.

Eurostat, the statistics arm of the European Union, reported on Thursday that gross domestic product in the euro zone (the 18 nations that use the common currency) neither grew nor contracted in the second quarter of 2014 compared with Q1. During the first quarter, zone GDP was up 0.2 percent quarter-over-quarter. The larger European Union – 28 countries – saw GDP growth of 0.2 percent during Q2 2014.

A few countries eked out GDP gains for the quarter. The UK, for instance, was up 0.8 percent, and the generally beleaguered Spanish economy grew by 0.6 percent. France, like the euro zone, grew by 0 percent, and surprisingly, the German economy – a consistent growth engine most of the time – contracted 0.2 percent for the quarter.

Compared with the second quarter of the 2013, euro-zone GDP rose by 0.7 percent in Q2 2014, according to Eurostat. The 28 European Union countries experienced a 1.2 percent expansion of GDP year-over-year. The UK grew 3.1 percent since last year, Germany 1.3 percent, Spain 1.2 percent, and France 0.1 percent.

U.S. Consumer Debt Down Slightly in Q2

Aggregate U.S. consumer debt was roughly flat in the second quarter of 2014, showing a minor decrease of $18 billion, the New York Federal Reserve reported on Thursday. As of the end of Q2, total consumer indebtedness was $11.63 trillion, down by 0.2 percent from the first quarter of 2014. Overall consumer debt still remains 8.2 percent below its Q3 2008 peak of $12.68 trillion.

Mortgages, the largest component of household debt, decreased by 0.8 percent, the NY Fed said. Mortgage balances shown on consumer credit reports stand at $8.1 trillion, down by $69 billion from the first quarter. Non-housing debt balances increased by 1.9 percent, boosted by gains in all categories: Auto loan balances increased by $30 billion; student loan balances increased by $7 billion; credit card balances increased by $10 billion; and other non-housing balances increased by $9 billion.

Delinquency rates improved across the board in the second quarter, according to the New York Fed. As of June 30, 6.2 percent of outstanding debt was in some stage of delinquency, compared with 6.6 percent in at the end of the first quarter. About $724 billion of debt is delinquent, with $521 billion seriously delinquent (at least 90 days late).

Unemployment Claims Back Up

For the week ending August 9, initial unemployment claims came in at an annualized rate of 311,000, an increase of 21,000 from the previous week, according to the U.S. Department of Labor on Thursday. The four-week moving average was 295,750, an increase of 2,000 from the previous week. The increases came after recent weeks that saw the rate as low as it’s been since the mid-2000s

Wall Street had a modest up day on Thursday, with the Dow Jones Industrial Averaging gaining 61.78 points, or 0.37 percent. The S&P 500 and the Nasdaq both advanced 0.43 percent.