What I Saw Last Week

Consumer Credit increased by $20.8B in September – I had forecast an increase of $18.3B – after increasing an unrevised $13.1B in August.


The growth in September was driven by non-revolving credit, which was up $14.4B from August to $2.782T, driven most likely by lending activity tied to replacement auto demand following the hurricanes. Revolving credit increased by $6.3B to $1.006T.

Consumer credit increased at a seasonally adjusted annual rate of 5.50% in September with revolving credit and non-revolving credit increasing at similar annual rates.

Consumer Sentiment in early November slipped to 97.8 from the final October reading to 100.7 – I had forecast a more modest drop to 100.5.


The Current Economic Conditions Index dipped from 116.5 to 113.6 and the Index of Consumer Expectations fell from 90.5 to 87.6.

The takeaway here is that while wage gains and the overall number of consumers has been trending positively, these favorable trends were countered by a slight rise in year-ahead inflation expectations and a growing consensus that interest rates will increase during the year ahead.

What to Watch for This Week

Inflation, as measured by the Consumer Price Index, has been soft and is not yet running afoul of the Fed’s price stability mandate. I anticipate that the October report will hold to the current pattern of benign inflation. Look for the top line number to come in at 0.1% month-over-month and the core rate rising by 0.2%.

U.S. Retail Sales rose by 1.6% in September – boosted by the recent hurricanes. I am looking for the October figure to show marginal growth (+0.1%) and the core rate (ex-autos) up by 0.2%.

U.S. Building Permits dropped by 4.5% in September to a seasonally adjusted annual rate of 1.215M units. The October number should show activity increasing to an annual rate of 1.243M units.

U.S. Housing Starts in September were measured at 1.127M units. The October figure will show an increase to 1.198M units.