What I Saw Last Week

Consumer Credit rose by $20.5B in October – I had forecast $17B – after increasing a downwardly revised $19.2B (from $20.8B) in September.

Credit

The growth in October was driven by non-revolving credit, which was up $12.2B from September to $2.791T. Revolving credit increased by $8.3B to $1.012T.

Consumer credit increased at a seasonally adjusted annual rate of 6.5% in October, with revolving credit increasing at an annual rate of 10% and non-revolving credit increasing at an annual rate of 5.25%.

The takeaway here is that October saw the largest increase in consumer credit since November 2016.

U.S. Non-Farm Payrolls in November rose by 228,000 (I had forecast 190,000). Over the past three months, job gains have averaged 170,000 per month. October payrolls were revised down to 244,000 from 261,000 while September payrolls were revised up to 38,000 from 18,000.

Payrolls

November private sector payrolls increased by 221,000 with October private sector payrolls revised down to 247,000 from 252,000 and September private sector payrolls revised up to 50,000 from 15,000.

The takeaway here is that the job market continues to grow, but at a more modest rate than seen in 2016 with employment growth averaging 174,000 per month year-to-date, compared with average monthly growth of 187,000 for all of 2016.

The Unemployment Rate in November met my forecast and remained at 4.1%.

U Rate

Persons unemployed for 27 weeks or more accounted for 23.8% of the unemployed versus 24.8% in October. The U-6 unemployment rate, which accounts for both unemployed and underemployed workers, rose by a tenth to 8.0% versus 7.9% in October.

The takeaway here is that the current unemployment rate is at its lowest level since 2000.

Consumer Sentiment in early December came in at 96.8 – I had forecast 98.8 – down slightly from the final November reading of 98.5.

Sentiment

The Current Economic Conditions Index increased from 113.5 to 115.9 while the Index of Consumer Expectations slipped from 88.9 to 84.6.

The takeaway from the report is that consumers continue to remain upbeat about current economic conditions, with higher income expectations feeding their optimism. As an aside, there was also a jump in consumers’ inflation expectations for 2018.

 

What to Watch for This Week

Inflation, as measured by the Consumer Price Index, has really been a non-factor so far this year but I anticipate that it might have kicked up a bit in November with the total rate up by 0.4% and the core rate up by 0.2%.

The Federal Reserve meets this week and I can almost guarantee that they will raise the Fed Funds Rate by a quarter point.

U.S. Retail Sales growth in November should be an improvement over October with total sales up by 0.3% and core sales (ex-auto) up by 0.6%.

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