The S&P 500 is consolidating its gains since the October 27 bottom. In recent days, its been trading between 4550 and 4600 (chart). Investors are trying to ascertain which way the economy is headed in 2024. We remain in the soft landing camp. Today's data continued to show that consumers have jobs. However, the latest reading on consumer credit borrowing was weak. Consider the following:
(1) Employment. Initial unemployment claims continue to hover just north of 200,000. During the week of December 2, they were 220,000, up 1,000 w/w. That suggests that the unemployment rate remains low. Insured unemployment during the week ending November 25 was 1,861,000, a decrease of 64,000 from the previous week's revised level. That too suggests that the labor market remains strong. Nevertheless, tomorrow's unemployment report might show a small increase in the jobless rate (chart).
(2) Consumer Credit. Retail sales edged down 0.1% during October. So it wasn't surprising to see a small increase in revolving credit in today's consumer credit report for the month. It was up just $2.9 billion (chart). Now that credit card interest rates are so high, more consumers are opting to pay their credit card balances on time.
