Live Markets: Consumers bust out the plastic, wholesale inventories upwardly revised
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CONSUMERS BUST OUT THE PLASTIC, WHOLESALE INVENTORIES UPWARDLY REVISED
Monday offered very little for economic data geeks to chew on, so let's make do with some reheated leftovers, which show American consumers found their misplaced credit cards in September.
Late Friday, the Federal Reserve released its outstanding consumer credit report USCRED=ECI, which showed the outstanding total balance of US consumer credit increased by $27.83 billion in September, a whiplash-inducing 239.9% monthly acceleration, and well more than double the $12.0 billion increase analysts expected.
The skinny: August's credit card paydown was short-lived.
Drilling down, non-revolving credit balances — which include big-ticket items such as autos and tuition — grew by $11.54 billion, a 12.3% deceleration from the prior month.
But outstanding revolving credit, which includes credit card debt, surged by $16.30 billion, wiping out the $4.97 billion paydown in August.
At an annual rate, the total revolving credit balance has jumped 14.5%, compared with the 3.6% increase in revolving debt.
Recent consumer data looks rosy on the surface of things. The most recent retail sales report blasted past analyst estimates. Last month's wage growth, reported as part of the October jobs report, was hotter than consensus. UMich's advance take on November consumer sentiment showed expectations ticking higher.
But below the surface, the retail sales beat was largely due to money spent at the gasoline pump. Real wage growth (year-on-year wage growth minus headline CPI) has been in negative territory since April. The annual personal expenditures growth rate has been coasting around the 6% level for about three years, but the saving rate — the unspent share of disposable income — has dipped to 3.8%, the lowest in nearly four years.
And consumer expectations, despite this month's upturn, remain 22.6% gloomier than in May 2020, the nadir of the Covid shutdown shock.
Toss all of this atop the growing evidence supporting the so-called "K-shaped economy" thesis.
Consumer spending is keeping the US economy robust. But at the lower end of the income spectrum, consumers are also saving less and putting more on plastic.
And piggy banks aren't bottomless. Credit limits are things.
Focus now shifts to the Labor Department's Consumer Price Index (CPI) due on Tuesday. Economists polled by Reuters expect year-on-year headline and core readings of 3.9% and 2.7%, respectively.
Switching tack, the value of goods stacked in the warehouses of US wholesalers increased by 0.7% in September, according to the Commerce Department.
Economists called for a repeat of August's 0.6% growth.
That bodes well for this month's update to third-quarter GDP data. The private inventories component has been a net contributor to US GDP in nine of the last 12 quarters.
(Stephen Culp)
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