Consumer credit rose by $7.9 billion in December to $1.023 trillion. This was the 31st consecutive monthly rise. Compared to a year ago, the total credit figure was up by 10.6%. This was the slowest annual growth rate since April 1994. The annual rate rose steadily from a sub-zero level, back during the 1990-91 recession, to a peak about a year ago at around 16%. So, consumer credit continues to grow; but at a slowing rate. However, at the present 10.6% level, the rate is still relatively closer to a peak than it is to a recessionary bottom.

On January 26, I reported that existing home sales had dropped by 1.9% in October, fell another 1.7% in November, and slumped an additional 3.2% in December. In that same article I reported that existing home sales for all of 1995 had dropped 3.4% from 1994. So, you can imagine my surprise today when I read that the National Association of Realtors announced that nationwide sales of previously-owned homes had risen by 6.9% in the fourth quarter of 1995. Well, as Einstein used to say, everything is relative. And, the key to the fourth quarter sales rise lies in what the rise was relative to. It turns out that existing home sales in the fourth quarter of 1995 rose by 6.9% relative to the fourth quarter of 1994. So, while sales in last year's fourth quarter may well have been up from the same quarter a year ago, the fact nevertheless remains that existing home sales have been eroding for the past four months.

Severe winter weather and January inventory clearance sales combined to present a confusing picture of January same-store sales at the nation's retailers. Among the largest chains, Wal-Mart eked out a gain of 1.3%, K-Mart had a big month, gaining 7.7%, Sears' sales rose by only 0.6%, Dayton Hudson's revenues increased by 2.0%, and J. C. Penney's troubles continued as sales for the month slumped by 4.3%. Maybe some semblance of a trend in retail sales will emerge when the weather begins to improve.

Today the Labor Department's Employment and Training Administration released its report on new claims for state unemployment insurance for the week ending February 3. During that week the number of claims decreased by 21,000 to 368,000. The four-week average of weekly claims was 371,250. This is up 13.62% relative to the four-week average for the same period last year. So, even though claims have dropped in 3 of the past 4 weeks, the average number of claims in the past month is still significantly higher than a year ago.

Byline: Lafferty (MF Merlin)