Businesses and Consumers Signaling Increasing Confidence

​The general tone of economic data released last week signals increasing confidence among both consumers and businesses.

• Consumer debt – According to the Federal Reserve, total credit outstanding rose $28 billion to a 17-year high in November, as revolving credit (e.g., consumer credit cards) increased $11.2 billion. The rise is the second largest rise of the ongoing expansion and may signal that consumers are less reluctant to increase balances on their credit cards. Non-revolving credit, such as auto and student loans, also rose sharply, with an increase of $16.8 billion.

• Business confidence - Small business owner optimism moderated in December after November’s 13-year high. The NFIB Small Business Optimism Index fell 2.6 points to 104.9. The consensus of analyst estimates was 107.9.

 

• Inventories - Wholesale inventories jumped 0.8% in November, just above analyst estimates of 0.7%, according to the Census Bureau. The monthly increase is one of the largest of 2017, which comes as the stock-to-sales ratio continues its decline at 1.24, down from the previous two months’ 1.25 and 1.26. Business inventories increased 0.4% in November, 0.1% more than the consensus estimate of 0.3%. Sales increased 1.2% in November, bringing the inventory-to-sales ratio to 1.33.

 

• Unemployment - Jobless claims increased 11,000 to 261,000 in the January 6 week, according to the Department of Labor. The gain was widespread, and Maine was the only state with an estimate. After reaching 44-year lows in December, January has shown some reversal, as the four-week moving average is up 9,000 on the week and roughly 15,000 above the month-ago trend.

 

• Inflation - The consumer price index (CPI) increased 0.1% from November to December and 2.1% year over year in December, according to the Bureau of Labor Statistics. The CPI less food and energy also increased 0.3% month over month and 1.8% year over year.