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 Report
In March, consumer borrowing rose by 3.6%, or by $11.6 billion. This came below economists’ estimates of a $15.6 billion increase, and represented a deceleration from February’s $13.6 billion increase. Revolving debt, which includes credit cards, actually fell 3%. Meanwhile, non-revolving debt, which includes student and auto loans, jumped 6%. In dollar terms, consumer credit rose at the slowest rate in six months.
In March, wholesale inventories increased 0.3%. This surprised economists, as the consensus called for a 0.5% gain. February’s inventories were also revised to reflect a 0.9%. At the same time, sales at wholesalers increased 0.3%, following a 1.1% surge in February. At the current sales pace, wholesalers have enough in inventory to last 1.26 months.
Producer Price Index (PPI)
On Wednesday, the Labor Department announced that its Producer Price Index (PPI) increased 0.1% in April. This was substantially below economists’ consensus expectations of a 0.3% increase. The core PPI, which excludes food and energy prices, rose 0.1% in April. This was a welcome relief, since economists expected the core PPI to rise 0.4%. In the previous three months, the core PPI rose 0.4% each month. In the past 12 months, the PPI climbed 2.6%, while the core PPI rose 2.5%. A stronger U.S. dollar will eventually help to moderate commodity inflation somewhat, so some more price relief may be on the way.
Consumer Price Index (CPI)
On Thursday, the Labor Department also announced that its Consumer Price Index (CPI) rose 0.2% in April. This was lower than economists’ consensus expectations of a 0.3% rise. The core CPI rose only 0.1%. This was below economists’ consensus estimates of a 0.2% gain. Over the past 12 months, the CPI has risen 2.5%, while the core CPI has increased 2.1%. Despite a 3% rise in gasoline prices, consumer prices remain remarkably low. Nonetheless, I expect that the Fed will increase key interest rates at its next Federal Open Market Committee (FOMC) meeting, due to higher market rates.
That’s all I have for you this week. I’ll be in touch again next week with the latest ratings out of Portfolio Grader.
Until next week,