Get Caught Up on the Economy

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:

Wholesale Inventories Increase

The Commerce Department reported that wholesale inventories increased 0.5% in September, which was better-than-expected, as economists were expecting wholesale inventories to remain unchanged. August inventories were revised to a 0.3% gain, up from the previously reported 0.1% rise. Given the September sales pace, it would take 1.31 months to clear shelves. September’s increase was the largest since June, thanks in part to gains in furniture, autos, clothing and farm products. Since wholesale inventories were higher than expected, some economists look for GDP estimates to be revised higher.

Job Market Unchanged

For the week ending November 7, initial claims for unemployment were unchanged at 276,000. This missed economists’ estimates for jobless claims to fall to 268,000. The four-week moving average increased by 5,000 to 267,750. Jobless claims have now remained below the 300,000 threshold for 36-straight weeks and are staying near a 15-year low, which is a sign of a healthier jobs market.

Producer Price Index Declines

The Labor Department reported that the Producer Price Index (PPI) declined 0.4% in October, which was more than economists’ consensus estimate for a 0.3% decline. The price of services declined 0.3% last month, following a 0.4% dip in September. Excluding food and energy, core PPI fell a modest 0.1% in October. In the past 12 months, the PPI has declined 1.6%, while core PPI has risen 0.4%, due largely to higher service costs. However, now that wholesale service costs have fallen in the past two months, it raises a lot of uncertainty and further confirms that we remain in a deflationary environment.

Retail Sales Remain Low

The Commerce Department announced this week that retail sales only rose 0.1% in October, which was substantially below economists’ consensus estimate for a 0.4% increase. Vehicle sales declined 0.5% last month. Excluding gasoline and vehicle sales, retail sales rose a more healthy 0.3% in October. The strength in retail sales was in drug stores, restaurants, home improvement, home furnishings and internet retailing. In the past 12 months, overall retail sales are up 1.7%, which is below wage growth and personal income, so consumers clearly remain very cautious.

Business Inventories See Increase

The Commerce Department reported that business inventories increased 0.3% in September, while August inventories were revised up to 0.1%. Retail inventories, which exclude autos, grew 0.5% in September, the same as August. The recent rise in inventories could mean that inventories did not weigh as much on third-quarter GDP growth as originally thought. As a result, we could see third-quarter GDP estimates revised higher.

Have a great weekend,

Louis Navellier

Louis Navellier

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