Consumer Credit

The Federal Reserve claimed consumer credit in March grew at a seasonally adjusted annual rate of 3.6% or $11.6 billion, this is down from a 4.3% rate in February and marks the slowest gain since September of last year. Economists’ predicted an expected $15.6 billion increase. February’s gain was revised higher to show a $13.6 billion advance instead of a previously reported $10.6 billion gain. This decrease was caused by a 3.0% decline to a rate of $1.03 trillion in revolving debt for the second drop in a row; revolving credit is a largely a reflection of credit card debt. In February revolving credit decreased by only 0.6% in comparison. Nonrevolving credit which includes student and auto loans grew 6%, or a rate of $14.2 billion for the third straight month of growth around this level; it is now at a level of $2.85 trillion. Federal government holdings of student loans continue to be the largest portion of non-revolving credit with student loans comprising approximately 41.5% of all non-revolving credit. With rising employment and growing gains in income consumer credit should continue to increase.

Jerome Powell Speaks

Federal Reserve Chairman Jerome Powell stated Tuesday that moves by the Fed and other major central banks to raise interest rates after a long period of keeping them low should not be disruptive to the global economy. During the financial conference in Zurich, Powell also said that the role of the US monetary policy plays in driving global financial conditions and capital flows is often exaggerated. The pick up in both global growth and commodity prices have played bigger roles in the recent recovery of capital flows to emerging market economies than any policy moves by central banks. He went on, “Monetary stimulus by the Fed and other advanced economies played a relatively limited role in the surge of capital flows to emerging economies in recent years.” He continued, “there is a good reason to think the normalization of monetary policies in advanced economies should continue to prove manageable for those emerging economies. After the Fed kept its benchmark interest rate at a record low near zero for seven years following the 2008 financial crisis, the Fed began gradually increasing the rate beginning back in December 2015. It mad a sixth quarter point move in March. Many believe that the Fed will raise rates again in June and will continue to hike rates to a total of three or four times this year.

JOLTS

US job openings surged to a record high in March by 472k to 6.55 million, for the highest reading, it increased job openings rate by 0.3 percent to 4.2 percent. These record levels suggest that a recent slowdown in hiring was probably the result of employers having difficulty finding qualified workers. The report also showed more workers voluntarily quit their jobs in March, a sign of confidence in the labor market that economists believe will hep to push wage growth up this year. The JOLTS report expects that inflation will accelerate and keep the Federal Reserve on track to raise interest rates at least two more time this year, after one rate hike that already occurred during the March meeting. Job openings are a measure for labor demand, they increased 472,000 to a seasonally adjusted 6.6 million. March’s job openings were the highest since the data began being recorded in December 2000. Hirings, in comparison to job openings increase to 4.2 percent, fell to 5.4 million from 5.5 million in February, suggesting skills are not matching up with the available jobs.

Mortgage Applications

Despite the recent dip in mortgage rates potential homebuyers seem to be having reservations. Total mortgage application fell 0.4% in the week. Purchase applications dipped 0.2 percent, while refinances fell one percent from last week to a level that hasn’t been seen since October 2008. The refinance share of mortgage activity is down to its lowest level since September 2008 at 36.3% of total applications.

PPI-FD

US producer prices barely rose in April after strong gains in the first quarter, held down by a moderation in the cost of both goods and services, which could ease fears of inflation pressures. The slowdown in wholesale price growth is likely temporary as manufacturers have been reporting paying more for raw materials. Economists predict oil prices to surge after President Trump pulled the US out of an international nuclear deal with Iran on Tuesday. The producer price index for final demand edged up 0.1 percent last month after increasing 0.3 percent in March. That lowered the yearly increase in the PPI to 2.6 percent compared to March’s 3.0 percent. a gain of 0.2 A key gauge of underlying producer price pressures that excludes food, energy, and trade services nudged up 0.1 percent last month. The core PPI increased by 0.4 percent in each of the past three months. In the 12 months through April the core PPI rose 2.5 percent after jumping 2.9 percent in March. Core goods increased by 0.3 percent in April matching March’s gains.

Wholesale Trade

A measure of US wholesale trade continued its growth streak in March, though gains fell below expectations. The wholesale inventories in March increased by 0.3 percent from the prior month, totaling about $627 billion. The latest reading fell short of the 0.5 percent increase expectation. This metric posted significant gains in both February and January. The ratio of inventories to sales for merchant wholesalers was 1.26 in March meaning it would take merchants 1.26 months to clear shelves of their inventory. This is down slightly from the year ago ratio of 1.28

Consumer Price Index

US consumer prices rose less than expected in April, suggesting that inflation was increasing at a moderate pace; this could allow the Federal Reserve to continue raising interest rates. With the labor market tightening and oil prices rising, price pressures are expected to accelerate in coming months. Inflation is near the US central bank’s target of 2 percent. Policymakers have in recent days signaled they would not be too concerned if inflation overshot the target, reiterating what the fed said in a statement last week. The Consumer Price Index rose 0.2 percent in April as the cost of gasoline and rent increased while motor vehicle prices dropped. The CPI had slipped 0.1 percent in March. On a yearly basis, April’s CPI increased 2.5 percent for the biggest gain since February 2017. March’s yearly gain was 2.4 percent. Excluding the volatile foo and energy components the CPI edged up 0.1 percent after two successive monthly increases of 0.2 percent.

Jobless Claims

Reported in the jobless claims report, initial jobless claims fell to 233,000 a decrease of 9,000 from the previous week’s unrevised level of 242,000. Economists had expected jobless claims to drop to 230,000. The less volatile four week moving average rose to 230,000, an increase of 1,750 from the previous week’s unrevised average of 228,250. The Labor market said claims taking procedures in Puerto Rico and the Virgin Islands have yet to return to normal levels. The report said continuing claims, a reading on the number of people receiving ongoing unemployment assistance increased by 53,000 to 1.871 million in the week ending in March 31st. The four-week moving average of continuing claims edged down to 1,850,250 a decrease of 1,500 from the previous week’s revised average of 1,851,750.

Treasury Budget

The US government posted the highest surplus on record in April, although the federal deficit over the past several months widened as spending rose along with revenues. Government revenue rose by 12% or $55 billion in April from a year ago. That brought April’s surplus to $214.3 billion, the largest April surplus on record. More broadly the budget deficit widened in the first seven months of fiscal 2018. The difference between the amount of money the government spent and what it took in, stood at $385.4 billion in October through April, which was 12% larger than the deficit during this time last year. Both receipts and outlays in April this year were affected by special factors such as calendar adjustments to reflect the fact that April 20108 had one more Monday than April 2017, when individual income taxes are due, is typically the government’s bi9ggest month for revenue collection. In a possible sign that businesses and individuals are experiencing stronger economic growth this year, gross payments of individual income taxes that aren’t subject to withholding rose from 218.2 billion in April of 2017 to 277.8 billion in April 2018, for a 21 percent increase. Taxes are paid in April that aren’t withheld come from people making payments at the mid-April deadline and from people making estimated tax payments on their first quarter earnings beyond what’s withheld from paychecks.

Import and Export Prices

US import prices rose les than expected in April as a rebound in the cost of petroleum products was tempered by a drop 9n food prices, the latest indication that inflation pressures were increasing moderately. Import prices gained 0.3 percent last month after falling 0.2 percent in March. Import prices are consistent with economists views that domestic inflation pressures will continue to gradually develop. Signs of a moderate build up of price pressures suggest the Federal Reserve will continue to gradually raise interest rates even as inflation is near the 21 percent target rate. The Fed’s preferred inflation, the personal consumption expenditures price index excluding food and energy accelerated 1.9 percent year on year in March after rising 1.6 percent in February. Economists forecasted import prices rising 0.5 percent in April. On a yearly basis April’s import price increased 3.3 percent matching March’s gain. With oil prices surging in recent days, economists expect monthly inflation measures to push higher in the upcoming months. Last month, prices for imported petroleum rebounded 1.6 percent after declining 2.2 percent in March. Excluding petroleum import prices edged up 0.12 percent in April after being unchanged in the prior month. Import prices excluding petroleum rose 1.7 percent in April on a yearly basis. The cost of imported food fell 0.4 percent in April, declining for a second straight month, while prices for imported capital goods were unchanged. Import prices for non fuel industrial supplies and materials increased 0.7 percent after jumping 1.0 percent in March. They were driven by a 4.0 percent surge in the prices or iron and streel mill products. Export prices increased 3.8 percent on a yearly basis for ,the largest gain since November 2011, after rising 3.4 percent in March.

Consumer Sentiment

American consumer sentiment was unchanged in May from the previous month, but it did top expectations. Household expectations for inflation over the next 12 months edged up to 2.8 percent from 2.7 percent previously. This report shows the survey of current economic conditions slipped 113.3 compared with 114.9 the previous month. The index of consumer expectations decreased from 89.5 to 88.4