What's Happening in the Economy This Week

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:

Consumer Credit Increases Slightly

In October, total credit increased by 5.5% to $15.98 billion. This is down from September’s revised rate of 9.9%. This was also well below economists’ estimates for a $20 billion increase. Revolving credit increased by 0.2%, which was sharply lower than September’s 8.7% increase. And non-revolving credit rose by 7.4%, also below September’s 10.3% pace. The slowdown in debt in October shows that the U.S. consumer is growing more cautious, given uncertainty about the U.S. economy and the upcoming Fed meeting.

Wholesale Inventories Fall

The Commerce Department reported that wholesale inventories fell 0.1% in October, and September’s inventories were revised to a 0.2% increase down from a 0.5% gain. October’s inventories missed economists’ expectations for a 0.1% gain. Sales were unchanged after September’s 0.5% increase. At the current sales pace, it would take 1.31 months to empty shelves. Falling wholesale inventories in October could weigh on economic growth in the fourth quarter, and, as a result, GDP estimates could be revised lower.

Initial Claims for Unemployment

For the week ending December 5, initial claims for unemployment increased by 13,000 to a seasonally adjusted 282,000. This is highest level in five months. The four-week moving average only increased by 1,500 to 270,750. Jobless claims have remained below the 300,000 threshold for 40-consecutive weeks. This, coupled with last week’s strong jobs report, shows that the labor market is continuing to improve.

Produce Price Index (PPI) Beats Forecast

This morning, the Labor Department reported that the Producer Price Index (PPI) increased 0.3% in November, which was better than economists’ forecast for prices to remain steady. Excluding food and energy, core PPI was also up 0.3% last month, topping estimates for a 0.1% rise. Overall, in the past year, producer prices have fallen 1.1%, while core prices are up 0.5%. So there still remains little evidence that inflation is brewing.

Retail Sales Rise Slightly

The Commerce Department announced this morning that overall retail sales rose 0.2% in November, missing estimates for a 0.3% increase. Core retail sales, excluding cars, gasoline, food and building material, increased 0.6% last month, which was above economists’ forecasts for a 0.4% gain. The holiday shopping season is helping boost retail sales this quarter, in spite of low fuel prices. This should further support consumer spending figures and the Fed’s decision to raise key interest rates.

Business Inventories Increase

Business inventories, excluding autos, rose 0.4% in October, which followed an unrevised 0.5% gain in September. Total business inventories were unchanged, missing economists’ estimates for a 0.1% rise. The increase in business inventories is a positive sign, as it could help support higher GDP growth in the fourth quarter.

Have a great weekend,

Louis Navellier

Louis Navellier

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