Consumer credit exceeded market expectations, and retail sales saw solid growth, but initial jobless claims also increased.
Consumer credit for November grew well beyond what credit market watchers had anticipated. Borrowing for the month expanded 7.9 percent or $24.6 billion, as opposed to the $18 billion the market expected, according to figures released last week by the Federal Reserve.
Total consumer borrowing expanded to $3.75 trillion for November from October’s $3.72 trillion. Non-revolving debt, such as student and car loans, represented the lion’s share of the increase, growing 5.9 percent to $2.75 trillion. That said, revolving debt, which is predominantly comprised of credit card debt, shot up a whopping 13.5 percent to $992.4 billion in November.
Consumer borrowing, especially credit card spending, is an indicator of increased consumer spending which fuels roughly 70 percent of the economy.
And when it comes to consumer activity, retail sales for December hit $469.1 billion, which was 6 percent higher than November’s sales, the Census Bureau reported last week. Compared to the same period a year ago, December’s performance was 4.1 percent higher than December 2015’s sales.
“American consumers remain remarkably resilient, and after a slow start to the holiday season, retail sales picked up momentum,” Customer Growth Partners President Craig Johnson told the Wall Street Journal. “[Consumers] are shopping at a rate not seen since the mid-2000s — just not so much at the mall.”
The open road was calling consumers last month, with automobile dealer and auto parts sales growing 2.4 percent, and gas station sales growing 2 percent. Other key retail growth sectors were non-store retailers, such as online and kiosk sales, which grew 1.3 percent; retail food services, which saw sales increase 0.6 percent; and sales at furniture stores and building material and garden supply stores, which notched up 0.5 percent.
Initial Jobless Claims
Turning to employment, layoffs continued to perform in yo-yo-like fashion. After taking a sizable drop in the last report, first-time claims for unemployment benefits filed by the recently unemployed took a jump.
Initial jobless claims for the week ending January 7 hit 247,000, a jump of 10,000 claims over the preceding week’s level of 237,000, the Employment and Training Administration reported last week. The four-week moving average — considered a more stable measure of layoffs — dipped to 256,500, a drop of 1,750 claims from the prior week’s average of 258,250.
This marked the 97th straight week of first-time claims falling below 300,000, which is a level economists consider an indicator of a growing job market. This is the longest such streak since 1970.
This week, we can expect a light calendar of economic reports, due to the holidays:
Wednesday — Consumer price index for December from the Bureau of Labor Statistics; industrial production and capacity utilization for December from the Federal Reserve.
Thursday — Initial jobless claims for last week from the Employment and Training Administration; housing starts and building permits for December from the Census Bureau.