Market Forecast: Consumer Credit, Job Openings, Retail Sales

Blog posted On January 08, 2018

Last week, mortgage rates started to trend slightly upward.  This week, there are no significant housing reports scheduled, other than the weekly mortgage application survey.  Market-moving reports include consumer credit, the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS), and retail sales. 

Consumer credit measures the total balance of outstanding consumer debt segmented by revolving and nonrevolving credit.  Revolving credit is comprised of monthly debts like credit card bills.  Nonrevolving credit measures longer-term debt like student loans and auto loans.  Growth in consumer credit can be a sign of economic strength because consumers are confident they will be able to repay debts.  Too much growth can be a sign of economic stress because consumers may be borrowing to offset lack of wage growth.

The JOLTS report tracks changes in the number of job openings from month to month.  Though the data lags by one month, it is still used to evaluate the health of the labor market.  In October, there were 5.996 million job openings.  The unemployment rate is near a historical low of 4.1% and employers are struggling to find skilled workers to fill open positions.

The retail sales report counts the total receipt of goods and services at retail stores.  This week’s December report will show how holiday spending impacted the figure.  In November, retail sales strengthened 0.8% month-over-month and were up a solid 1.0% less autos.  Specifically, e-commerce had a big holiday boost.

Economic trends like consumer spending and job creation influence housing activity.  When consumers are gainfully employed they are able to finance large purchases like houses.  When job growth is stunted, or consumers are borrowing too much to obtain financing, housing activity will suffer. 

Sources: Bloomberg, MarketWatch, Mortgage News Daily