Consumer credit for April was on the rise, increasing by 0.5 percent for a total of $2.44 trillion, the Federal Reserve reported last week. This ran counter to analysts’ expectations of a drop in consumer credit for the month.
There was a distinct difference in the reports on two types of consumer debt. Revolving debt, such as credit card debt, dropped 12 percent to $838 billion, while non-revolving debt, such as car loans, increased 7.1 percent to $1.6 trillion.
The drop in revolving debt paired with an increase in non-revolving debt seems to suggest that consumers are better managing their debt. That would be a hopeful scenario for economists, who look for stable but measured credit growth as a sign of a healthy economy.
That hope could be shaken by the fact that the Federal Reserve also revised its March consumer credit figures last week to show that consumer credit had actually dropped for the month by $5.4 billion, when it had initially had been estimated to increase by $2 billion.
While consumer credit was on the rise, so too was wholesale trade, the Census Bureau reported last week. Sales by merchant wholesalers for April, after adjustment for seasonal variations and trading-day differences but not for price changes, reached $351.1 billion, up 0.7 percent from March’s sales. Strong performers for the month included durable goods, which were up 2 percent over March; lumber and other construction materials, which were up 9.1 percent; and electrical and electronic goods, which were up 3.5 percent.
Like sales, total inventories for merchant wholesalers, after adjustment for seasonal variations but not for price changes, were $397.8 billion at the end of April, up 0.4 percent from March’s inventories. This put April’s inventory-to-sales ratio at a record low of 1.13, which would indicate that while sales are up, wholesalers remain extraordinarily cautious about managing their stocks of goods.
This week, monitor the headlines for news on export and import prices (June 15) from the Census Bureau and the Bureau of Economic Analysis; construction permits and housing starts (June 16) from the Census Bureau; the producer price index (June 16) and the consumer price index (June 17) from the Bureau of Labor statistics; capacity utilization and industrial production (June 16) from the Federal Reserve; and leading economic indicators (June 17) from the Conference Board.