What You Need To Know (Before You Go)

It’s Friday and that means it’s time to review the latest economic data and identify which pockets of the economy are heating up and which are slowing down. Don’t worry about catching every headline and every report throughout the week—I recap all of the most important news impacting your wealth right here every Friday. Let’s take a look at this week’s big headlines:

U.S. Service Exports Hit All-Time High

In March the U.S. trade gap narrowed 3.6% to $40.4 billion, down from a revised $41.9 billion in February. Economists were expecting a $38.9 billion trade deficit. Exports rose 2.2% to $193.9 billion, with the bulk of the gains coming from capital goods, industrial supplies and materials. Exports of services hit a record high. Meanwhile, imports rose 1.1% to $234.3 billion. This minor miss may cause some economists to revise down their first-quarter GDP estimates. However, the fact that exports are outpacing imports suggests that the trade deficit is trending in the right direction, and that it may contribute to GDP growth in the second quarter.

Why Ballooning Credit Card Debt Is Good News

In March, consumer debt jumped $17.53 billion, or by 6.7%, to $3.14 trillion. This represents the largest gain in over a year. Economists had expected consumer credit to rise $15.75 billion. Breaking it down, revolving credit (which covers credit card debt) rebounded $1.13 billion, following a $2.73 billion plunge in February. Non-revolving credit (which includes auto and student loans) jumped $16.4 billion. This indicates that consumer confidence and spending is perking up. In February, consumer debt rose at a 5% annual pace, so the acceleration in March is very bullish for continued retail sales growth. Consumer debt has risen every month since August 2011.

Layoff Activity Nears Seven-Year Low

For the week ended May 3, initial claims for unemployment pulled back by 26,000 to an annual rate of 319,000. Economists had expected a shallower drop to 325,000 so these results were stronger than expected. The four-week moving average ticked up 4,500 to 324,750. The latest results signal a shift in the previous uptrend in jobless claims, which had persisted for the past three weeks. We’re seeing layoff activity approach the seven-year low set in early April, which is good news. In related news, the four-week moving average of continuing claims fell to 2,715,250, the lowest level since December 2007.

Wholesalers Start Contributing To The Recovery

In March, U.S. wholesalers increased their stockpiles by 1.1%; economists were looking for a 0.5% gain. Excluding auto sales, wholesale inventories increased 1.0%. Sales at wholesalers surged 1.4%, following a 0.9% gain in February. Meanwhile, February wholesale inventories were revised to reflect a 0.7% gain, up from the previously announced 0.5% rise. This was a strong report to end the week on. Slow inventory growth weighed on first-quarter GDP so this suggests that second-quarter GDP will rebound as businesses restock their shelves.

Have a great weekend,

Sincerely,

signed: Louis Navellier

Louis Navellier

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