Consumers cautious, not panicked, latest U.S. economic reports show

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U.S. consumers are wary of possible threats to future economic growth, but not worried enough yet to start retrenching and cutting back on their spending, economic data shows.

The University of Michigan’s preliminary November consumer sentiment index reading released on Friday inched up to 95.7, from the final October reading of 95.5. Economists surveyed by IFR Markets had expected a reading of 95.9 for November. On a year-over-year basis, the index is down 1.8%.

“Consumers indicated they were slightly more positive on the economic outlook, but were more downbeat on their own future personal finances,” said Scott Anderson, chief economist at Bank of the West. “Inflation expectations remain low by historical standards with median one-year ahead inflation expectations unchanged at 2.5%. Finally, consumers appear to be more cautious in their spending as fewer think now is a good time to buy a major household appliance, vehicle, and house.”

Scott Anderson, chief economist at Bank of the West.

The other indexes were mixed, with consumer expectations rising to 85.9 from 84.2 and current conditions falling to 110.9 from 113.2. The November reading is in line with the 2019 average of 95.6.

The University of Michigan said negative references to tariffs were made by one-in-four consumers, while references to the impact of impeachment on economic prospects were virtually non-existent.

“Although consumers have become somewhat more cautious spenders, they see no reason to engage in the type of retrenchment that causes recessions,” the university said. “While most consumers do not anticipate year-to-year increases in the unemployment rate, the majority of consumers expect the unemployment rate to remain largely unchanged at its lowest level in 50 years.”

On Thursday, the Federal Reserve reported that consumer credit rose $9.5 billion in September, the slowest rate since last year.

Economists polled by IFR Markets had expected consumer credit to have risen by $15.1 billion.

August’s reading was revised downward to show a $17.8 billion increase from the originally reported $17.9 billion gain.

In September, consumer credit increased at an annual rate of 2.75%, the Fed said.

In the third quarter, consumer credit increased at a seasonally adjusted annual rate of 5%. Revolving credit increased at an annual rate of 2.25% while non-revolving credit increased at an annual rate of 6%.

On Friday, the Commerce Department reported that wholesale inventories fell 0.4% to $676.7 billion in September after a revised 0.1% gain to $679.5 billion in August, originally reported as a 0.3% decline. Economists surveyed by IFR Markets had expected inventories to have fallen by 0.3%.

Wholesale sales in September were unchanged from August’s revised level of $498.6 billion, but down 0.6% from September 2018. The September inventories to sales ratio for merchant wholesalers was 1.36, up from September 2018’s ratio of 1.29.

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