News & Events

Economic Advisor: February 14, 2018
February 14, 2018


Consumer borrowing continued to increase as did wholesalers’ anticipation of increased retail activity, indicating confidence on both the supply and demand sides of the economy. Meanwhile, layoffs enjoyed a healthy drop.

Consumer Credit

Consumer borrowing for the month of December grew 5.8 percent to hit a total of $3.84 trillion, up from November’s total of $3.822 trillion, according to last week’s report from the Federal Reserve.

December’s growth was driven by increased borrowing of both types: Revolving debt, such as credit cards, expanded by 6 percent to hit a total of $1.027 trillion; non-revolving debt, such as car loans and student loans, saw a similar gain of 5.7 percent to hit a total of $2.813 trillion. (Non-revolving borrowing does not include home loans, as it is intended to monitor monthly consumer activity.)

With December’s gain, revolving debt has now exceeded $1 trillion for two quarters in row. The continued gains in revolving debt point to increased assurance among consumers, and it will be interesting to see how that is reflected in this week’s consumer sentiment report (to be released on Friday.)

Wholesale Inventories

Inventories for merchant wholesalers during December hit $612.1 billion, which marked a 0.4 percent gain over November’s inventories, according to last week’s report from the Census Bureau. Compared to last year, this was 3.4 percent higher than December 2016’s inventories.

Wholesale inventories are important to monitor because they are an early indicator of final consumer retail sales. When wholesalers stock up, they are anticipating increased retailer demand, and consumer activity ultimately drives roughly 70 percent of the U.S. economy.

Sales for wholesalers during December also saw strong performance, growing 1.2 percent during December to hit $500.2 billion. Compared to the same period a year ago, December’s sales were a solid 9.1 percent higher than December 2016’s performance. This put the December wholesale inventories-to-sales ratio at 1.22 which narrowed from December 2016’s ratio of 1.29.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending February 3 fell to 221,000, a drop of 9,000 claims from the preceding week’s total of 230,000, the Administration reported last week. The Administration added that the impacts of hurricanes Harvey, Irma and Maria continued to skew lay-off data.

The four-week moving average — regarded as a more reliable measure of initial jobless claims — dropped to 224,500 claims, a fall of 10,000 claims from the prior week’s average of 234,500. This was the lowest average since March 10, 1973’s four-week average of 222,000. Last week’s report also marked the 153rd week in which initial claims were below the 300,000-claim level, which economists consider an indicator of a growing job market.

This week, we can expect:

  • Monday — Federal budget for January from the Treasury Department.
  • Wednesday — Consumer Price Index for January from the Bureau of Labor Statistics; retail sales for January and business inventories for December from the Census Bureau.
  • Thursday — Initial jobless claims for last week from the Bureau of Economic Analysis; industrial production and capacity utilization for January from the Federal Reserve.
  • Friday — Housing starts and building permits for January from the Census Bureau; import prices for January from the Bureau of Labor Statistics; consumer sentiment for February from the University of Michigan Surveys of Consumers.

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