News & Events

Economic Advisor: May 16, 2018
May 16, 2018


 

Consumer credit growth continued to grow, but at a tapering rate, while wholesale inventories ticked up, and layoffs flattened.

Consumer Credit

Consumer credit grew to $3.874 trillion in March, which was 3.6 percent higher than February’s total of $3.863 trillion, according to last week’s report from the Federal Reserve. While consumers continue to borrow more, this was the slowest pace of growth in six months.

There are two main types of debt: revolving, such as credit cards, and non-revolving, such as car and student loans. For March, non-revolving debt was the clear driver for the month’s credit growth, growing six percent from February’s $2.833 trillion to hit a total of $2.847 trillion.

Meanwhile, revolving debt fell 3 percent in March from February’s $1.029 trillion to $1.027 trillion for the month. Could that reticence to whip out the plastic at the cash register signal a future slow-down in consumer spending? So far, recent retail sales continue to grow (up 0.6 percent for March according to last month’s report from the Census Bureau), so what we might be seeing is better credit card discipline.

Wholesale Inventories

Wholesale inventories grew 0.3 percent to hit $627.4 billion in March, the Census Bureau reported last week. Moreover, when compared to the same period last year, March’s inventories were 5.5 percent higher than March 2017’s level.

When wholesalers stock up their inventories, this indicates that they expect increased demand from the retail sector. So, the increase was a welcome sign that continued consumer spending is anticipated. That said, analysts had anticipated a 0.5 percent gain, so the growth wasn’t as substantial as expected.

Sales for wholesalers grew at a similar 0.3 percent pace in March to hit $497.9 billion, which put March’s inventory-to-sales ratio at 1.26. Looking at a year ago, March 2017’s ratio was 1.28, which is a relatively healthy level.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending May 5 hovered at 211,000, which was unchanged from the prior week’s total of 211,000, according to last week’s report from the Employment and Training Administration.

The four-week moving average, which is considered a more stable measure of jobless claims, dipped to 216,000, a decline of 5,500 claims from the preceding week’s average of 221,500 claims. This was the lowest level for the average since December 20, 1969’s 214,500.

This latest report marked the 166th 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 the Virgin Islands and Puerto Rico.

This week, we can expect:

  • Tuesday — Retail sales for April and business inventories for March from the Census Bureau.
  • Wednesday — Housing starts and building permits for April from the Census Bureau; industrial production and capacity utilization for April from the Federal Reserve.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; leading economic indicators for April from the Conference Board.

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