Another Lackluster Q1 Metric (And One That Wasn’t So Bad)

More evidence that the first quarter is going to be remembered as one in which the U.S. economy ran in place (which doesn't do anyone any good, including various stripes of real estate): consumers didn't do much more borrowing of any kind during the quarter.

More evidence that the first quarter is going to be remembered as one in which the U.S. economy ran in place (which doesn’t do anyone any good, including various stripes of real estate): consumers didn’t do much more borrowing of any kind during the quarter. Also, small business owners are still feeling a little better about their prospects, but not much. All in all, those metrics are more bits of the picture for the Fed, which will soon decide whether an interest rate increase is a good idea.

The Federal Reserve Bank of New York’s Household Debt and Credit Report, which was released on Tuesday, noted that aggregate household debt was largely flat in the first quarter of 2015 compared with the previous one. As of the end of March, total household indebtedness stood at $11.85 trillion, which was a $24 billion, or 0.2 percent, uptick during the first quarter of the year. The report is based on data from the New York Fed’s Consumer Credit Panel, a sample drawn from (anonymized) Equifax credit data. The slowdown in growth can be chalked up to a piddling uptick in mortgage balances, which are the largest component of household debt. A lot of people are still unwilling, or unable, to take on more mortgage debt, or any at all.

Non-housing debt balances increased by 0.7 percent from the end of 2014, mainly because of increases in student loans ($32 billion) and auto loans ($13 billion). Credit card balances, on the other hand, were down by $16 billion for the quarter, which might hint at disappointing retail sales in the coming months as consumers remain cautious. But at least some of the pressure is off consumers (as a whole): the New York Fed also said that about 112,000 individuals had a new foreclosure notation on their credit reports in the first quarter of this year, the lowest total since 1999.

Separately, the National Federation of Independent Businesses said that its Small Business Optimism Index increased a bit in March in spite of a quarter of almost no economic growth. Nine of the 10 Index components gained, with only real sales expectations weaker. Small businesses also posted another reasonably good month of job creation. Those that hired produced an average increase of 0.14 workers per firm, and 27 percent of all owners reported job openings they couldn’t fill in the current period, up three percentage points from March. More jobs in among small businesses, which employs such a high percentage of Americans, eventually leads to more commercial space leasing.