Inflation does not rise as quickly, but sentiment slumps. Here are the five things we learned from U.S. economic data released during the week ending November 11.
Core inflation mellowed a bit in October. The Consumer Price Index (CPI) increased a seasonally adjusted 0.4 percent, matching its September gain. Energy CPI grew for the first time since June, rising 1.8 percent (gasoline: +4.0 percent). Food prices gained 0.6 percent. Net of energy and food, core CPI advanced 0.3 percent, down from two consecutive monthly 0.6 percent increases. Falling were prices for used cars/trucks (-2.4 percent), apparel (-0.7 percent), and medical care services (-0.6 percent). Prices increased for shelter (+0.8 percent), transportation services (+0.8 percent), and new vehicles (+0.4 percent). The Bureau of Labor Statistics reports that consumer prices have risen 7.7 percent over the past year. The 12-month comparable for core prices was +6.3 percent.
Americans were less confident in early November. The University of Michigan’s Index of Consumer Sentiment lost 5.2 points to a seasonally adjusted 54.7 (1966Q1=100). The index was down 12.7 points from a year earlier. The current conditions index plummeted by 7.8 points to 57.8 (November 2021: 73.6), while the expectations measure declined by 4.5 points to 52.7 (November 2021: 63.5). The press release notes that sentiment fell “across the distribution of age, education, income, geography, and political affiliation.” Consumers expect prices to rise 5.1 percent over the next year and anticipate that long-term annual inflation will be at 3.0 percent.
Small business owner sentiment continued to waver in October. The National Federation of Independent Business’s Small Business Optimism Index lost 8/10ths of a point to a seasonally adjusted 91.3 (1986=100), its lowest point since July. Seven of the ten index components made negative contributions, including those for plans to increase employment, expected real sales, expected credit conditions, and expected business conditions. Only measures for plans to increase inventories and earnings trends made positive contributions. The press release said that “[i]nflation, supply chain disruptions, and labor shortages” continued to weigh on small businesses.
Wholesalers continued to build inventories in September. Merchant wholesaler inventories jumped 0.6 percent to a seasonally adjusted $918.5 billion. The Census Bureau data series has risen 24.1 percent over the past year. Durable goods inventories swelled 0.8 percent to $560.4 billion, while that for nondurable inched up 0.1 percent to $358.1 billion. Wholesaler sales advanced 0.4 percent to $699.9 billion, 14.4 percent above year-ago levels. Sales of durables and nondurables increased by 0.7 percent and 0.1 percent, respectively. The inventory-to-sales (I/S) ratio held steady for the month at 1.31 (September 2021: 1.21). The I/S ratios for durables (1.72) and nondurables (0.96) also matched their August readings.
Consumer credit balances grew in September. The Federal Reserve estimates outstanding non-mortgage consumer credit balances increased by $25.0 billion to a seasonally adjusted $4.701 trillion. Balances have grown 7.9 percent over the past year. Revolving credit balances—that is, credit cards—increased $8.3 billion to $1.162 trillion (+15.1 percent versus September 2021). Nonrevolving credit balances (e.g., college and auto loans) rose by $16.7 billion to $3.539 trillion (+5.8 percent versus September 2021). There were $1.769 trillion in outstanding student loans.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending November 5, 2022, First-Time Claims, seasonally adjusted): 225,000, +7,000 vs. the previous week, -54,000 vs. the same week a year earlier). 4-week moving average: 218,750 (-24.8% vs. the same week a year earlier).
- Monthly Treasury Statement (October 2022, U.S. Government Budget Deficit): -$87.8 billion (-46.8% vs. October 2021)
- Mortgage Delinquency Rates (2022Q3, Delinquency Rate for Mortgages on 1-to-4 Unit Resident Properties, seasonally adjusted): 3.45 percent (down 19 basis points vs. 2022Q2; -143 basis points vs. 2021Q3).
- Senior Loan Officer Opinion Survey
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