3 Reports Indicating Slow Economic Recovery

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Almost every day a major government agency or private organization releases new information covering the status of some pocket of the economy.

Weeklys Can Offer a Better Way to Play the NewsI’m here to help you sift through the barrage of economic data out there and determine what this will mean for your stocks.

Consumer Credit

What It Measures: This report is released by the Federal Reserve every month to measure consumer debt for the past month. Consumer credit is broken down into three categories: auto, revolving (credit card) and other debt (student loans, etc.). Periods of strong spending can be accompanied by relatively weak credit growth and vice versa.

The Breakdown: U.S. consumer credit increased by $15.5 billion in February, and January’s figure was revised down to a $10.8 billion gain. Economists were looking for a $12.5 billion increase. Much of February’s increase can be attributed to non-revolving debt, which gained $19.2 billion. Revolving debt fell by $3.7 billion in February.

The Bottom Line: U.S. consumers remain cautious in taking on too much debt as the U.S. economy slowly recovers; yet, they are willing to take out loans for automobiles and education.

Initial Claims for Unemployment

What It Measures: It is an indicator of the direction of the job market. Increases in jobless claims show slowing job growth; decreases in claims signal accelerating job growth. On a week-to-week basis, jobless claims are volatile, so one of the best ways to track this measure is to look at the four-week moving average. It usually takes a jump or decline of at least 30K claims to signal a meaningful change in job growth.

The Breakdown: For the week ending April 4, initial claims for unemployment increased by 14,000 to 281,000, which was slightly above economists’ expectations for 280,000. The previous week was revised down by 1,000 to 267,000 claims. The four-week moving average slipped to 282,250.

The Bottom Line: Despite the increase last week, jobless claims in the past four weeks have averaged 282,500 per week, which is the lowest level in 15 years. So even though hiring may have cooled a bit in March, the job market continues to slowly improve.

Wholesale Inventories

What It Measures: The Commerce Department releases its wholesale trade report every month, which includes sales and inventory statistics from the second stage of the manufacturing process. Although the sales figures don’t say much about personal consumption, wholesale inventories sometimes swing enough to affect the Gross Domestic Product outlook.

The Breakdown: Wholesale inventories increased 0.3% in February, outpacing economists’ expectations for a 0.2% gain. January’s figured was revised from a 0.3% gain up to 0.4%. At the February sales pace, it would take 1.29 months for wholesales to use their entire inventory, which is the same pace as January.

The Bottom Line: Wholesalers struggled to move products off their shelves in February, likely a result of cold temperatures and winter weather throughout much of the U.S. However, the increase in inventories suggests that wholesalers may have little incentive to restock warehouses in the near term.

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


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