A pair of third-tier US macro updates released on Monday were worth a quick mention even as they hardly constituted “news.”
The New York Fed released the December installment of its consumer survey, and to the delight of policymakers, median inflation expectations dropped significantly at every horizon.
Most notably, price growth expectations at the year-ahead point fell to just 3%, the lowest since January of 2021.
At 2.62%, the three-year horizon reading was the lowest since June of 2020.
On this score, anyway, things are back to normal. And to the extent runaway inflation is a psychological phenomenon (which it can be once things gets moving in the wrong direction), Monday’s news was welcome indeed.
Ironically, the NY Fed survey carries less weight with the Fed than the University of Michigan expectations series, but those too have receded.
In keeping with a broad-based upturn in sentiment across indicators in December, the NY Fed poll showed households felt better both about their current financial situation and their financial prospects over the next year. Earnings growth and spending expectations fell but remained above pre-pandemic levels.
Meanwhile, credit card spending soared in November, a separate update released on Monday showed.
Revolving credit outstanding jumped more than $19 billion to $1.3 trillion as Americans geared up (and levered up) for the holidays. That was the largest monthly increase since March of 2022.
Rates are now around 21.5%, up seven full percentage points since May of 2020.
Total credit rose almost $24 billion from October to November. Consensus expected an increase of just $9 billion. The data isn’t adjusted for prices.
I guess it is hard to definitively answer whether consumers are carrying higher balances on their 22% revolving credit, but I have a hard time thinking they’re not. If one group of consumers is using BNPL more and more for groceries, another group of consumers is probably using CCs more and more too.
Bloomberg citing a Fed study on credit cards.
$600BN being rolled over, up from $400BN at pandemic lows and $500BN pre-pandemic.
Delinquency rates now above pre-pandemic levels.
Pct of cardholders making only minimum payment above 10% for first time since pre-pandemic.
About 10% of cardholders are nearly at their borrowing limit.
3.2% of balances are 30 days past due, highest in 10 years, and +40bp QOQ.
This canary is peeping more loudly.