Consumer Payment Card News

Small Business Optimism Reinvigorates After Trump Slump

Small business optimism is shaking off the effects of the government shutdown of December and January as owners have added a record number of new employees in January and February. In fact, more than one-third of small business owners reported job openings they could not fill so far this year.

Small Business Optimism

The NFIB Small Business Optimism Index improved modestly in March, increasing 0.1 points to 101. The Uncertainty Index dropped six points to 79, returning to a more normal level for recent years.

Small Business Outlook

The NFIB notes three percent of owners reported all their borrowing needs were not satisfied, unchanged and historically very low.  Thirty-three percent reported all credit needs met (down one point) and 51% said they were not interested in a loan, unchanged.  Six percent reported their last loan was harder to get than the previous one, unchanged and historically low.

The NFIB also found five percent of all owners reported higher nominal sales in the past three months, a six-point improvement, rebounding back from the “shut down, slow down” in sales. The net percent of owners expecting higher real sales volumes rose three points to a net 19% of owners, a solid reading. 

Overall, the NFIB suggests the Index anticipates solid growth, keeping the economy at “full employment” with no signs of a recession in the near term.

Retail Sales Outlook

Meanwhile, the National Retail Federation (NRF) says retail sales were down 0.7% in February seasonally adjusted from January but up 2.7 percent unadjusted year-over-year as delays and revisions related to the government shutdown continued to make comparisons difficult.

The NRF is forecasting retail sales during 2019 will increase between 3.8% and 4.4% to more than $3.8 trillion. The consumer will continue to provide direction and strength to the U.S. economy in the months ahead.

Consumer Outlook

According to the University of Michigan Surveys of Consumers found rising incomes were accompanied by lower expected year-ahead inflation rates, resulting in more favorable real income expectations, posting a gain of +7.1 Index-points, while households with incomes in the top third fell by 1.1 Index-points.

The University of Michigan Surveys of Consumers notes no further decline in interest rate expectations were recorded in March, suggesting consumers anticipated additional increases in 2019. Overall, the data do not indicate an emerging recession but point toward slightly lower unit sales of vehicles and homes during the year ahead.

Meanwhile, the Conference Board Consumer Confidence Index declined in March to 124.1, compared 131.4 in February. The Present Situation Index (consumers’ assessment of current business and labor market conditions) declined, from 172.8 to 160.6. The Expectations Index (based on consumers’ short-term outlook for income, business and labor market conditions) – decreased from 103.8 last month to 99.8 this month.

Credit Card Outlook

Credit debt fever is coming down as jobs are going up. The February data reveal U.S. consumer revolving credit is growing about half the rate of last year. The news is good for consumers, but bad for credit card issuers. However, there still are signals the economic party may be winding down in 2019.

According to the Federal Reserve, the year-on-year (YOY) growth rate of consumer revolving debt (97% credit card debt) for February came in at 3.3%, compared to a revised 3.0% YOY for January, and a revised 1.3% YOY for December. On a quarterly basis revolving consumer credit grew at an annual revised rate of 6.0% in the fourth quarter of 2018, compared to a revised annual rate of 8.2% in the fourth quarter of 2017.