News & Events

Economic Advisor: January 17, 2018
January 17, 2018


 

Retail sales saw healthy gains, while consumer credit enjoyed a major gain, and layoffs increased beyond forecasts.

Retail Sales

Retail sales ended 2017 in a good position thanks to healthy holiday spending. Retail and food service sales for December 2017 grew 0.4 percent to hit $495.4 billion, according to last week’s report from the Census Bureau. Compared to last year, sales were up 5.4 percent.

Retail categories that showed strong gains included non-store retailers, such as e-commerce sites and kiosks, which increased 1.2 percent; building material and garden supply stores, which also gained 1.2 percent; grocery stores, which were up 0.7 percent; and food and beverage services, which were up 0.7 percent. Notably, department stores were down 1.1 percent.

In related news, the National Retail Federation reported that this was the largest increase in holiday spending since the recession of 2008, with sales during November and December growing 5.5 percent over the same period in 2016 to $691.9 billion.

“We knew going in that retailers were going to have a good holiday season, but the results are even better than anything we could have hoped for, especially given the misleading headlines of the past year,” National Retail Federation President and CEO Matthew Shay wrote in a public statement.

Consumer Credit

Those consumers weren’t paying with cash, either, as evidenced by last week’s consumer credit report from the Federal Reserve. Overall, consumer borrowing grew 8.8 percent during November to hit a total of $3.827 trillion.

Of that, revolving debt, such as credit cards, grew a whopping 13.3 percent to hit $1.022 trillion. This was the largest monthly gain not only all year, but on record. Non-revolving debt, such as car loans or student loans, grew 7.2 percent, to reach $2.804 trillion.

That kind of credit card spending, even during the holidays, shows increased consumer confidence, and willingness to take on debt, and should reinforce optimism in the retail sector.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending January 6, increased to 261,000 claims, a gain of 11,000 over the previous week’s total of 250,000, according to last week’s report from the Employment and Training Administration. This outpaced market expectations of 250,000 jobless claims.

The four-week moving average, which is considered a more stable measure of jobless claims, notched up to 250,750, which was 9,000 claims over the preceding week’s average of 241,750 claims.

This latest report marked the 149th straight week that initial claims have come in below the 300,000-claim level, which economists consider an indicator of a growing job market. The Administration added that it continues to experience hurricane-related reporting difficulties in Puerto Rico and the Virgin Islands.

This week, we can expect:

  • Wednesday — Industrial production and capacity utilization for December from the Federal Reserve.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; housing starts and building permits for December from the Census Bureau.
  • Friday — Consumer sentiment for January from the University of Michigan Surveys of Consumers.

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