What I Saw Last Week

Total outstanding Consumer Credit rose by $11.7B in March – below my forecast for an increase of $16.1B – after increasing by an upwardly revised $13.6B (from $10.6B) in February.


The growth in March was driven entirely by non-revolving credit, which rose $14.2B month-over-month to $2.85T.  Interestingly, revolving credit dropped by $2.6B to $1.03T after decreasing by $0.5B in February.

Consumer credit rose at a seasonally adjusted annual rate of 4.25% in March, with revolving credit decreasing at an annual rate of 1.0% and non-revolving credit increasing at an annual rate of 6.0%.

The takeaway from the report is that there was a decline in outstanding revolving credit for the second straight month, which reflects a propensity by consumers to pay down debt in a rising interest rate environment. That inclination also helps explain why consumer spending growth was lackluster in the first quarter.

Inflation, as measured by the Consumer Price Index, rose 0.2% in April with the core rate up by 0.1% – I had forecast the reverse with total inflation up by 0.1% and the core rate up by 0.2%.


The monthly readings left CPI up 2.5% year-over-year, versus 2.4% in March, and core CPI up 2.1%, which was unchanged from March. In other words, there wasn’t a bothersome acceleration in the consumer inflation trend in April.

The month-over-month increase in total CPI was driven by a 1.4% increase in the energy index, a 0.3% jump in the shelter index, and a 0.3% uptick in the food index. A 0.3% jump in the shelter index pushed up core CPI in the face of mixed readings for other indexes.

The takeaway from the report is that both total CPI and core CPI headlines were weaker than expected, which helped temper concerns about the potential for the Fed to be more aggressive than expected.

Consumer Sentiment in early May held steady matching the final April reading of 98.8.  I had expected to see it drop modestly to 98.0.


The Current Economic Conditions Index slipped to 113.3 from 114.9 while the Index of Consumer Expectations rose to 89.5 from 88.4.

The data, according to the report, is consistent with a growth rate of 2.7% in real personal consumption expenditures from the second half of 2018 to the first half of 2019.

The takeaway from the report is that there was some slippage in income expectations and a small uptick in the one-year inflation expectation (to 2.8% from 2.7%).

What to Watch for This Week

U.S. Retail Sales rose by 0.6% in March and the April data should indicate growth of 0.3%. Core sales (that exclude auto sales) rose by 0.2% in March and the April figure should come in up 0.5%.

The NAHB Housing Market Index dropped one point to 69 in April and the May number is likely to remain unchanged.

U.S. Building Permits rose by 2.5% in March and I expect to see the April figure drop by 0.3%.

U.S. Housing Starts were up by 1.9% in March and the April data should show an increase of 0.5%.