Advanced Recovery Group

Earlier this month we received the CPI for August 2024- given my limited letters ill get right to it! 1. All Items: +2.5% YoY (As opposed to MoM of 0.2%) Inflation reflects rising costs across sectors due to steady demand and supply chain constraints. For funders, businesses may seek more capital to manage operating costs, especially those with tight margins. Collections companies could see an increase in delinquent accounts as businesses face liquidity pressures, raising the risk of defaults and challenging debt recovery. 2. Food: +2.1% Food prices are rising due to labor shortages and higher input costs in agriculture and distribution. Funders may see increased demand for financing from restaurants and suppliers facing squeezed margins. Collections companies might encounter more overdue accounts as these businesses struggle to meet their financial obligations, driven by tightening cash flows and escalating costs. 3. Energy: -4.0% Declining oil prices have eased energy costs for sectors reliant on transportation and heavy energy usage. Funders may observe reduced loan demand from industries like logistics and manufacturing, as lower operational costs improve business liquidity. Collections companies could see better payment performance, as these businesses experience cash flow relief, reducing defaults and collection activity. 4. Shelter: +5.2% Rising residential rents are putting financial pressure on business owners and employees, affecting overall consumer demand and labor costs. Funders may find that businesses are seeking additional working capital to manage increasing wage demands from employees facing higher living expenses. Collections companies could experience slower repayment rates as business owners' personal financial strain impacts their ability to meet business-related debt obligations. 5. Used Vehicles: -10.4% Lower used vehicle prices, driven by improved supply chains, have reduced costs for businesses reliant on transportation. Funders might see lower financing needs as these businesses face reduced capital requirements for vehicle purchases. Collections companies are likely to benefit from improved liquidity in transportation-related industries, leading to more timely debt payments and reduced delinquency rates. 6. Medical Care Services: +3.2% Rising medical costs, fueled by higher demand and wage growth in the healthcare sector, are increasing financial burdens on businesses. Funders may notice more businesses requesting loans to cover healthcare expenses. Collections companies could face challenges recovering debts from businesses struggling with increasing employee healthcare costs, leading to higher default rates and more accounts entering collections. This is obviously; as most brief economic reports are, a major oversimplification of the multifaceted interconnectedness of economic gears and their influences- but better something than nothing! https://lnkd.in/eF97BJ_c

The CPI report for July 2024 released today has some exciting and vital points that indicate we may be seeing some reductions in interest rates in the near future. Overall Inflation: The CPI for all urban consumers increased by 0.2% in July 2024 on a seasonally adjusted basis. Over the last 12 months, the all-items index rose by 2.9%, which reflects a continued easing of inflation pressures. Core Inflation: The index for all items less food and energy (core CPI) rose by 0.2% in July and by 3.2% over the past year. This is slightly above the Fed's target, but the trend is moving in the right direction. Food Prices: The food index increased by 2.2% over the past 12 months. Within this category: Food at home rose by 1.1%. Food away from home increased by 4.1%, indicating stronger inflation in restaurant meals and other outside dining. Energy Prices: The energy index rose by 1.1% in July, with significant differences within subcategories: Gasoline prices fell by 2.2%. Electricity prices continued to rise, showing a 4.9% increase over the year. Natural gas prices increased slightly by 1.5%. Shelter Costs: Shelter remains a significant contributor to inflation, with a 5.1% increase over the last 12 months. However, the monthly increase has decelerated, signaling some easing in housing inflation. The index for rent of primary residence and owners' equivalent rent both rose by 5.1% and 5.3% respectively over the year. Transportation Costs: Motor vehicle insurance saw a sharp increase, up 18.6% year-over-year, continuing to put pressure on household budgets. Airline fares decreased by 2.8% over the year, which contrasts with the rising costs in other transportation services. Apparel: The apparel index remained nearly flat, with a minor increase of 0.2% over the past year. Medical Care: Medical care commodities and services saw varied changes: Medical care commodities increased by 2.8%. Medical care services rose by 3.3%, driven mainly by a 6.1% increase in hospital services. Other Notable Changes: Used cars and trucks prices fell significantly by 10.9%, reflecting ongoing normalization after the pandemic-driven surge in vehicle prices. New vehicles saw a minor decline of 1.0%. This reflects the various factors contributing to the current inflation environment, which continues to show signs of moderation, potentially paving the way for future adjustments in monetary policy by the Federal Reserve. https://lnkd.in/eF97BJ_c

We have the US jobs report for June 2024 released 2 weeks ago that I think reveals pertinent information on the economy. Brief summary: New Jobs Created: 206,000 Unemployment Rate: Increased to 4.1% Wage Growth: Average hourly earnings rose by 3.9% year-over-year Labor Force Participation: Increased, with the size of the labor force growing faster than the working-age population The U.S. economy added 206,000 jobs in June 2024, demonstrating ongoing recovery and resilience in the labor market. This growth was notably strong in sectors like construction and health care, driven by infrastructure projects and high demand for medical services. However, the benefits of job creation are somewhat tempered by sectoral imbalances, as manufacturing and retail saw declines, highlighting potential vulnerabilities. Such uneven recovery suggests that while some sectors are thriving, others are lagging, which could lead to longer-term structural issues if not addressed. The unemployment rate rose to 4.1%, up from 4.0% in May, indicating a growing number of job seekers compared to those being hired. This increase has triggered the Sahm Rule, a historically reliable recession indicator. The Sahm Rule states that when the three-month moving average of the unemployment rate rises by 0.5 percentage points or more from its low during the previous 12 months, it signals a recession. While the rise in labor force participation can be seen as a positive sign of confidence, the inability of job creation to keep pace suggests underlying economic weaknesses and raises concerns about the sustainability of current growth rates. Average hourly earnings increased by 3.9% year-over-year, marking the smallest gain since June 2021. This slower wage growth helps control inflation by reducing upward pressure on prices, beneficial for businesses managing labor costs. However, slower wage increases also mean that consumers' purchasing power is not rising as quickly, potentially dampening consumer spending and economic growth. This deceleration reflects an easing of job market tightness and efforts by businesses to control costs amidst ongoing inflation concerns. The labor force participation rate increased, with the size of the labor force growing faster than the working-age population. This rise indicates more individuals are confident in their ability to find employment, a positive sign for economic recovery. However, if job creation does not keep pace with this increased participation, it could lead to higher unemployment and underemployment. Factors contributing to higher participation include more individuals re-entering the job market due to economic recovery and demographic changes such as delayed retirements and more young people entering the workforce. I'll skip the concluding paragraph as I am out of space- but you get the point https://lnkd.in/eVEBvFuB

Today we have the CPI report for June 2024 released! Overall CPI Increase: +3.0% (Year-over-Year) The Consumer Price Index (CPI) for All Urban Consumers rose by 3.0% over the past 12 months. Food Prices: +2.2% This change was driven by a combination of rising costs for food at home and food away from home. Prices for food consumed at home, which includes categories like cereals, bakery products, meats, poultry, fish, eggs, dairy, fruits, vegetables, and nonalcoholic beverages, increased modestly by 1.1%. This rise is largely due to supply chain disruptions, particularly in meats and processed foods, exacerbated by transportation bottlenecks, labor shortages in processing plants, and higher feed costs. Conversely, some food items, such as dairy products and fruits and vegetables, saw slight price decreases due to seasonal supply improvements. Food away from home, including full-service and limited-service meals, experienced a sharper increase of 4.1%. This is attributed to higher labor costs as restaurants and food services compete to attract and retain workers, alongside increased costs of ingredients and higher commercial rent. The combined effect of these factors underscores ongoing inflationary pressures within the food sector, significantly impacting household budgets by increasing essential food expenses and potentially reducing discretionary spending on other goods and services. These trends highlight the intricate interplay between supply chain dynamics, labor market conditions, and broader inflation trends, necessitating close monitoring by policymakers and businesses to mitigate consumer impact Energy Prices: +1.0% Energy prices showed mixed results, with a decrease in gasoline prices but an increase in electricity and natural gas prices. Lower gasoline prices are likely due to reduced crude oil prices and increased production, whereas higher electricity costs are driven by seasonal demand changes. Energy prices directly affect household and industrial costs, influencing overall inflation and economic activity. Core CPI (Excluding Food and Energy): +3.3% The core CPI, excluding volatile food and energy prices, rose by 3.3%, reflecting persistent inflation in services like shelter and medical care. Rising shelter costs indicate a tight housing market, while transportation services saw significant increases due to higher insurance and maintenance costs. The decline in used car prices is a correction from pandemic-era highs. Persistent inflation in core services suggests underlying inflationary pressures, impacting living expenses and household budgets. In conclusion the inflation outlook suggests continued vigilance is necessary. The Federal Reserve may maintain its cautious approach to monetary policy, balancing the need to control inflation with supporting economic growth. If current trends persist, we can expect the Fed to potentially adjust interest rates to manage inflationary pressures without stifling economic activity.

I'm back with my economic updates! This past Monday we saw the release of the Consumer Credit Report which gives us a detailed overview of changes in consumer borrowing behavior, reflecting the overall economic conditions and consumer confidence. Key Statistics: Total Consumer Credit Outstanding: Current Level: $5.065 trillion Previous Month: $5.053 trillion Change from Last Month: +0.22% One Year Ago: $4.963 trillion Change from One Year Ago: +2.05% Annual Growth Rate: Overall Consumer Credit: Increased at a seasonally adjusted annual rate of 2.7%. Revolving Credit (e.g., credit cards): Increased at an annual rate of 6.3%. Non-Revolving Credit (e.g., auto loans, student loans): Increased at an annual rate of 1.4%. Analysis and Implications: Revolving Credit Growth: The significant increase in revolving credit suggests that consumers are increasingly using credit cards, potentially reflecting rising consumer spending. This can be seen as a sign of confidence in personal financial stability but might also indicate increasing financial pressure as consumers rely more on credit for daily expenses. Non-Revolving Credit Growth: The modest growth in non-revolving credit indicates stable demand for longer-term financing options such as auto loans and student loans. The slower growth compared to revolving credit could reflect cautious borrowing behavior amidst higher interest rates. Economic Context: The overall growth in consumer credit aligns with ongoing economic recovery but also highlights the challenges of balancing consumer spending with financial prudence. The data can be used by policymakers to gauge the effectiveness of monetary policies and the need for potential adjustments to interest rates. Interest Rates and Consumer Debt: The rise in consumer credit, especially revolving credit, may be influenced by interest rates. Higher rates can increase the cost of borrowing, affecting consumer behavior and overall debt levels. Future Outlook: The future outlook for consumer credit depends on interest rate movements. If rates stay high, borrowing costs will deter consumer spending and slow economic growth, particularly in housing and auto markets. Stable rates would support steady credit growth and economic stability. Lower rates would reduce borrowing costs, stimulating credit growth, consumer spending, and overall economic activity. However, all scenarios carry the risk of high consumer debt levels, requiring careful policy measures to balance inflation control and economic growth while promoting financial health and innovation to manage debt effectively. Given current trends (strong labor market and modest inflation) the Fed may maintain a cautious approach to rate adjustments. This strategy aims to balance inflation control with sustainable growth. Hence we can predict moderate growth in consumer credit with heightened attention to debt levels and financial stability. https://lnkd.in/exbRMHds

A happy birthday to the greatest country in the world. Granted there is much to improve and a long road ahead to realizing the full potential of this country by the people for the people- nonetheless a moment of gratitude must be exhibited to not lose oneself in the heat of growth and change (especially so close to an election as unique as this years). As with a company, a personal relationship and any growing collective- a moment of mindful appreciation is necessary to elicit the happiness (which is really just a dopaminergic surge) which then fuels the willpower to continue developing the subject of that appreciation: A virtuous cycle. It is only when you take a moment to appreciate something that you gain the pleasure to further enjoy it in the present and the future. So a happy 4th of July everyone!

US Economic Updates: January 2nd the U.S. Census Bureau released their Monthly Construction Spending for November 2023. Key highlights include: 1. Total construction spending in November 2023 was estimated at a seasonally adjusted annual rate of $2050.1 billion ($2 trillion), a 0.4% increase from October 2023 and an 11.3% increase from November 2022. 2. Private construction spending reached $1595.0 billion ($1.5 trillion), with residential construction at $896.8 billion. 3. Public construction spending was at $455.1 billion, with educational construction and highway construction being significant components. These figures indicate a robust growth in construction spending, signaling a strong and expanding U.S. construction market. ? Broad economic indications: - Economic Growth: High construction spending is often a sign of economic growth, as it suggests increased investment and development activity. - Employment Opportunities: This level of spending can lead to more jobs in construction and related industries. - Real Estate Market Impact: A surge in residential construction points to growth in the housing market, possibly affecting housing prices and availability. - Infrastructure Development: Increased public construction spending suggests significant investment in infrastructure, which can improve transportation, education, and public services. - Investment Opportunities: For investors, such robust spending can signal opportunities in construction, real estate, and infrastructure-related stocks or funds. - Supply Chain Effects: High demand in construction can impact the supply chain, potentially leading to increased prices for materials and longer lead times. - Regional Variances: The impact might vary regionally, with some areas experiencing more growth and investment than others. Creditor and lender specific indications: - Increased Lending Opportunities: The growth in construction suggests opportunities for lenders to finance new projects, especially in residential and public sectors. - Rising Demand for Loans/Financing: Small businesses in construction-related fields may seek more loans/financing for equipment, staffing, and materials due to increased demand. - Higher Credit Risk: Rapid expansion can lead to higher credit risk, requiring careful assessment by creditors. - Collateral Value Increase: Enhanced real estate and construction activities might increase the value of collaterals used in loans. - Supply Chain Financing: Creditors might see increased demand for supply chain financing due to the heightened activity in the construction sector. Overall, the report reflects a dynamic market with both opportunities and risks for small business lenders and creditors..

THE WAIT IS OVER! Our short film, "Dedicated to Giving Hope," premieres NOW! Click this link to join us: ??????https://lnkd.in/gSQK-DMk Another thanks to the team who joined us this year! . Shawn R. Smith, Dan Murphy, Ryan Burke, CSBFP, Rachelle McManus, Terry Christensen, Alejandra Wilder, CSBFP, Mike Mroszak, Manny Yosipov, Austin Moss, Keith Kocinski, Curt Anderson, and @Courtney Smith.