We monitor consumer spending because history has shown that increased consumer spending (which is approximately 70% of GDP), translates into increased steel consumption (and vice versa).
Consumer spending surprised to the upside in November after posting a disappointing October. Non-revolving credit led a strong surge to $24.5 Bn, exceeding analysts’ expectations by $6.1 Bn. Revolving credit also recorded a solid increase in November, up $11 Bn, its best showing in six months, (Figure 1). Heading into 2017, economists expect continued strong job creation at levels on-par with 2016. This bodes well for increased borrowing as consumer confidence continues to improve. However, headwinds in terms of higher interest rates will limit this growth as the FED Open Market Committee is likely to continue raising rates going forward.