WASHINGTON–One meeting and two data releases related to the economy are on the agenda this week in Washington.
Today, the Department of Labor’s Bureau of Labor Statistics will release its latest numbers around the Consumer Price Index (CPI). NAFCU’s chief economist, Curt Long, said he is expecting a “pretty soft number” around the increases in consumer prices.
Today, the Fed’s rate-setting body, the Federal Open Markets Committee, will also kick off two days of meeting. When the FOMC adjourns on Wednesday, Long said he expect “no moves” related to increases in rates.
Instead, the focus will be around the Fed’s updated forecast for the economy.
“I think you're likely to see some acknowledgement that inflation has moved closer to their target,” said Long. “I think markets right now are expecting to see somewhere between four and five rate cuts next year. I think the FOMC projections are probably going to come in a little below that, three cuts, tops. They want to make sure they don't give the impression they're going to cut rates before it's appropriate in 2024.”
Final Set of Numbers
On Thursday, the Federal Trade Commission will release its data around retail sales.
“There, I think we can expect another pretty modest number,” said Long. “Some of the private data that's coming out suggest that spending was maybe a bit soft in November.”
Consumer Credit Grows
Meanwhile, total consumer credit grew at a seasonally adjusted, annualized rate of 1.2% in October and is up 3.1% compared to a year ago.
Long noted the decelerated growth resulted “in the slowest pace of growth on a year-over-year basis since April 2021.”
“Revolving credit in particular is down sharply from a year earlier,” Long said. “When revolving credit growth exceeded 15%, this was taken as a signal of distress in the household sector, with the theory being that many were forced to borrow even in a high-rate environment due to rising inflation.
"An honest adherent of this view would have to conclude that the outlook for households has improved considerably as revolving debt growth has slowed,” Long continued. “What tends to get less attention is that developments in household credit expansion over 2023 track closely with changes in credit availability, as lenders have tightened credit supply over the course of the year due to ongoing liquidity stresses. NAFCU expects growth in consumer credit balances to continue to slow until liquidity conditions improve.”
Additional Data Points
Other data points in the new numbers:
- Revolving credit – primarily credit cards – rose 2.7% and is up 9.3% compared to October 2022. Non-revolving credit – primarily auto and education loans – rose 0.7% in September and is up 1% from a year ago.
- Total consumer credit for credit unions grew 0.3% in October. Banks experienced a 0.1% loss, and finance companies saw a gain of 0.3%. From a year prior, total consumer credit at credit unions rose 7.2%, while banks experienced a 4.3% gain and financial companies grew 5.8%, Long said.
- Over the past 12 months, credit unions’ share of the market rose 0.5% to 13.4%. Banks’ share rose 0.5%, and finance companies’ share rose 0.4%.
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