News & Events

Economic Advisor: November 15, 2017
November 15, 2017


 

Consumer credit posted its biggest gain since November 2016, and wholesale inventories grew as expected, while layoffs saw increases.

Consumer Credit

Consumer borrowing for the month of September grew 6.6 percent over August’s $3.76 trillion to hit $3.78 trillion for the month, the Federal Reserve reported for last month. This was the biggest monthly gain for consumer credit in 10 months.

The growth was evenly distributed across the two main segments of consumer credit. Revolving debt, such as credit cards, grew 7.7 percent from August’s $999.3 billion to hit $1.01 trillion. Non-revolving debt, such as car loans and student loans, grew 6.3 percent from August’s $2.76 trillion to reach $2.78 trillion for the month.

Wholesale Inventories

Total wholesale inventories for September hit $609.5 billion, which marked a 0.3 percent gain over August’s inventories, according to last week’s report from the Census Bureau. This was in line with market expectations of a 0.3 percent gain for the month. Compared to last year, September’s inventories were 4.6 percent higher than September 2016.

Wholesale inventories are an important indicator because they show wholesalers’ expectations for future retail demand. This is important given that consumer spending drives 70 percent of U.S economic activity.

Total sales for wholesalers saw solid growth in September, growing 1.3 percent to hit $480.5 billion. This put the September inventories-to-sales ratio at 1.27, which is down from September 2016’s ratio of 1.32. This indicates better inventory turnover, which shows that wholesalers’ expectations of increased demand from retailers were on the money.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending November 4 grew to 239,000, an increase of 10,000 claims from the preceding week’s total of 229,000, the Administration reported last week. This was higher than the market’s expectations of 231,000 claims for the week.

The Administration noted that the hurricanes’ impact on the jobs report is now mainly localized to the Virgin Islands Administration, with Puerto Rico still seeing some difficulty.

The four-week moving average — regarded as a more reliable measure of initial jobless claims — declined to 231,250 claims, a fall of 1,250 claims from the prior week’s average of 232,500. This marked the lowest level for the average since March 31, 1973’s average of 227,750.

This was the 140th consecutive week in which initial claims were below the 300,000-claim level, which economists consider is an indicator of a growing job market.

This week, we can expect:

  • Monday — The October federal budget from the Treasury department.
  • Tuesday — October producer price index from the Bureau of Economic Analysis.
  • Wednesday — October consumer price index from the Bureau of Economic Analysis; October retail sales and September business inventories from the Census Bureau.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; industrial production and capacity utilization for October from the Federal Reserve; October import price index from the Bureau of Labor Statistics.
  • Friday — Housing starts and building permits for October from the Census Bureau.

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