Wholesalers, the companies which act as a conduit between retailers and manufacturers, saw their inventories rise by 0.3% in April. Most of the increase was due to a 6.3% increase in petroleum inventories. March's wholesale-inventory figure was revised upward to 0.4%, also boosted mostly by petroleum. Wholesalers generally increase inventory in anticipation of more sales by retailers.
This week's report on consumer credit for April revealed something that hasn't happened in quite a while: consumers not only borrowed at a much slower pace (1.3%) than they did in March (7%), they actually paid off more plastic debt than they took out, according to the Federal Reserve.
The nation's trade deficit, the difference between what America imports and what it exports, turned in unexpected good news on Friday, falling by 6% to $58.5 billion. Our appetite for imported goods, particularly autos and clothing, fell 1.9% in April while exports rose very little.
How much stronger the second quarter will ultimately be won't be revealed until the end of July, and even that will be only a preliminary estimate. Some early forecasts point to present levels of growth near "potential" for the economy, somewhere around 3% GDP. In light of how little slack in resource utilization was achieved after a year of approximately 2% growth, faster GDP growth -- and rising resource utilization -- isn't the way to trim already-stubborn inflation.
Inflation concerns are evident around the world; the European Central Bank raised rates a quarter percentage point this week, setting their key interest rate at 4%. Opportunities in other bond markets are drawing off investor dollars, adding more firmness to U.S. interest rates.
Mortgage rates took quite a hit this week, but this was due largely to the Treasury selloff caused by a surprise rate hike by New Zealand's Reserve Bank; this spurred fears that other countries' central banks might follow suit. Even without this scare, the general run up in rates over the past few weeks isn't wholly unexpected given the reports of stronger economic data and a revival of economic growth from a truly anemic 0.6% in the first quarter of this year. Investors have given up on a rate cut by the Fed this year.
This week saw the 10-year benchmark Treasury rising to new highs only to fall back again. Given that the general trend for interest rates has been upward in recent months, bucking the trend seems unlikely. Mortgage rates will likely drop back in our daily averages early next week, but our next weekly average will be a little higher again by week's end.