- Inflation trend is mixed.
- Wage growth is slowing.
- Consumers with weak credit see higher, now lower, rates.
The past week failed to deliver clarity on a number of topics that we had been waiting for while we got good news on housing and concerning news on credit.
Global trade uncertainty: The week did not deliver clarity on a Phase 1 trade deal with China or official movement or postponement of new tariffs on autos and parts from Japan or Europe. Likewise, we went from “imminent” action on ratifying USMCA to “it may not get through Congress in 2019.” Uncertainty remains on global trade.
Housing upbeat: We did get positive news on key housing trends and on consumer sentiment. Housing starts and permits increased in October and are solidly ahead of last year. Consumer sentiment improved in November.
Credit concerns: The main concern for the consumer is that mortgage and auto loan defaults are increasing, and severe delinquency trends continue to worsen. Mortgage and auto defaults are higher than a year ago, but all default levels remain well off the highs reached in the aftermath of the Great Recession. Credit continues to be available, but risk spreads have increased, so the story on rates varies greatly depending on type of loan and consumer credit score.
Looking ahead: This week we’ll take a break from commentary for Thanksgiving. We will return the week of Dec. 9 to a data-rich buffet including November new vehicle sales, jobs and unemployment, and used vehicle sales and prices.