What I Saw Last Week
Consumer Credit expanded to $16B in November from a revised $14.2B in October. This number easily exceeded my forecast for growth of around $8B. Consumer credit is notoriously volatile and often goes through substantial revisions before the final numbers are released three months after the data are originally reported. That said, it is unlikely revisions to the November data will result in a contraction.
Revolving credit increased by $0.8B following a $3.4B increase in October. Non-revolving credit increased by $15.2B, up from a $10.6 B gain in October. I would note here that non-revolving credit has expanded for the past 15 months and 29 out of the last 30 months.
Initial Unemployment Claims for the week ending December 29 rose to 371,000 and were above my forecast for an increase to 365,000. For the past several months, labor conditions have remained neutral. That has left the initial claims level bounded between 350,000 and 400,000. Until conditions improve, the initial claims level will not break out of its current range.
The continuing claims level decreased from a downwardly revised 3.236M for the week ending December 22 to 3.109M for the week ending December 29. That was the lowest continuing claims level since July 2008.
What to Watch for This Week
I will be eyeing Retail Sales data for December to see how Christmas played out. I am looking for modest total growth of around 0.2% and a figure of 0.3% when automobiles are excluded.
Inflation dropped by 0.8% in November, with the core rate – minus food and energy – expanding by a modest 0.1%. Look for December to show that the Consumer Price Index remained static. Inflation is still not a concern.
The National Association of Homebuilders Housing Market Index has been on a proverbial tear with 8 consecutive months of improvement. I think that this will continue with the January data showing further improvement on the 47 figure seen in December. Look for a figure of 48.
Initial Unemployment Claims will rise modestly to 375,000.
Housing Starts fell by 3% in November to 861,000 (SAAR) and I anticipate that they should show improvement to an annual figure of 889,000.
Building Permits rose to 899,000 in November and I think that December will show an increase to 905,000.
The early reading on Consumer Sentiment in January should improve now that the initial “fiscal cliff” issue is behind us. Look for the figure to increase from 72.9 to 75.0.