U.S. Consumer Credit Usage Slows Dramatically
Consumer credit outstanding grew $8.20 billion (5.8% y/y) during April following a $19.54 billion March gain, revised from $16.42 billion. February’s rise also was raised to $16.49 billion from $13.75 billion. During the past ten years, there has been a 49% correlation between the y/y growth in consumer credit and y/y growth in personal consumption expenditures.
Nonrevolving credit usage slowed sharply to $6.66 billion (5.9% y/y) in April after a $14.11 billion gain. It was the weakest rise since a decline in August 2011.
Revolving consumer credit balances grew $1.53 billion (5.7% y/y) after a $5.42 billion rise.
I just don’t see any “drama” just yet. Total credit grew 6.5% in 2016.
Manhattan Renters Send Leasing to a Record for May
(…) Renters are taking advantage of a market that’s crowded with listings, weighing offers of free rent and other perks from landlords who are working to keep their units filled. Twenty-five percent of all new leases signed last month in Manhattan came with some kind of concession from the owner, about double the share in May 2016, Miller Samuel and Douglas Elliman said. In Brooklyn, sweeteners were offered on 15 percent of new agreements, up from 8.8 percent a year earlier. (…)
In Manhattan, the surge of renter interest was enough to push down the vacancy rate to the lowest in two years, 1.72 percent, the firms said. It was the first time since 2015 that the figure dipped below 2 percent.
While all that dealmaking helped attract tenants, it kept a lid on rent growth. In Manhattan, net effective rents — calculated after incentives are factored in — were up 0.6 percent in May from a year earlier, to a median of $3,377, the firms said. In Brooklyn, the median rent after concessions dropped 2.1 percent to $2,782. (…)
Economic Surprise Index Is No Longer Surprising
(…) An even more disconcerting trend is the recent dip in the Bloomberg Economic Surprise Index when survey data is excluded. This looks at economists’ expectations for hard data, such as industrial production and retail sales, versus the actual release data. Unlike the survey-based indicator, this index never experienced a post-election surge, and has actually turned negative over the past several months.
Typically, a steep increase in survey-based data has augured an eventual improvement in hard economic data, but a lack of progress on Trump’s fiscal agenda and only gradual improvements in the U.S. economy indicate that this will not be the case. Growth in the current quarter may be above 3 percent, due to payback from the first quarter’s near 1 percent activity, but the underlying trend appears to be holding steady close to 2 percent.
BI Economics still expects the Fed to hike interest rates in June and in the third. (Bloomberg Briefs)
China Exports Grew for Third Straight Month in May Chinese exports in May were up 8.7% from a year earlier, more than expected, as resilient global demand drove a third straight increase. Imports were up 14.8% and the trade surplus widened to $40.81 billion.
The increase followed an 8% gain in April and beat the 7% forecast of economists polled by The Wall Street Journal.
Imports in May were up 15%, the General Administration of Customs said Thursday, accelerating from April’s 11.9% pace. (…)
Economists say Chinese exports last month benefited from strong U.S. and European Union demand—China’s shipments to both grew at close to double-digit rates from a year earlier—and a more stable Chinese currency. (…)
U.S. imports from China rose 13.7% YoY in April after +14.6% in March.
CETERIS NON PARIBUS
Amazon to ramp up lending in challenge to big banks Company targets more of the 2m businesses on its ‘marketplace’
(…) Amazon supplies funds from its own balance sheet within 24 hours, then deducts loan payments every two weeks automatically from the seller’s account. If the account runs dry, or if sales suddenly dip, Amazon can put a freeze on any merchandise held in its warehouses until the seller pays up.
“It’s a ‘can’t lose’ proposition for Amazon,” said Jordan Malik, a Las Vegas-based publisher, noting that the company has a near-perfect view of any seller’s cash flows. “It’s a very clever thing they’ve done.” (…)
He added that Amazon could offer more bank-like services in future. (…)
Bill Gross Says Market Risk Is Highest Since Pre-2008 Crisis
(…) “Instead of buying low and selling high, you’re buying high and crossing your fingers,” Gross, 73, said Wednesday at the Bloomberg Invest New York summit. (…)
Despite being concerned about high asset prices, Gross said he feels required to stay invested (…).
”If there’s a common factor it’s the expansion of credit,” Gross said on Bloomberg TV Wednesday. “And the credit that’s being generated by central banks. Money is being pumped out into the system and money that is yielding less than nothing seeks a haven not only in bonds that are under-yielding but in stocks that are overpriced.” (…)