Making Sense of 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:

Balance of Trade Report

The U.S. trade deficit narrowed by 3% to $44.3 billion in December. Breaking it down, exports rose by 2.7% to $190.7 billion, while imports rose by 1.5% to $235 billion. However, I do not expect this trend to continue. Given the headwinds of the strong dollar, it will be difficult for the trade deficit to improve significantly from here. To put things into perspective, for all of 2016 the U.S. trade deficit rose to $502.3 billion, the highest level in four years.

Consumer Credit Report

U.S. consumer credit slowed in December, logging a $14.2 billion increase compared with the $25.2 billion surge in November. Economists were forecasting a $19.0 billion increase in debt. Notably, credit card usage rose just $2.3 billion, the smallest such increase since February 2016. Meanwhile, non-revolving credit, which is predominantly student loans and auto loans, jumped $11.8 billion. Given the recent retail sales data, which showed only modest growth during the holiday shopping season, this wasn’t a huge surprise.

Wholesale Inventories

On Tuesday, the Commerce Department reported that wholesale inventories climbed 1.0% in December, following a 1.0% rise in November. This was in line with analysts’ expectations. Sales increased 2.6% in December, the largest such jump since March 2011. At the December sales pace, it would take 1.29 months to empty shelves.

Jobless Claims

For the week ending February 4, initial claims for unemployment dipped by 3,000 to a seasonally adjusted 234,000. Economists were looking for claims to total 243,000. The four-week moving average dropped to 244,250. Jobless claims are now near a 43-year low, which is good news for the labor market.

That’s all I have for you this week; I’ll be in touch again next week with the latest ratings updates out of Portfolio Grader.

Have a great weekend,

Louis Navellier

Louis Navellier

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