Chart of the Week: US credit impulse

In this edition, we focus on our favorite macro gauge, credit impulse. Our leading indicator for the United States stands at its highest level since the end of 2017, at 1.8% of GDP. The positive trend in credit is also visible in demand for C&I loans which has been solid over the past quarters, reaching a peak at 9.3% YoY in Q1 2019.

Considering the United States in in late cycle and clearly not immune to the negative consequences of the trade war, the economy is rather resilient. In our view, it is at least partially the reflection of positive inflow of new credit in the economy over the past quarters.

The US surprise economic index is back in positive territory, close to levels previously reached in early 2018. On the top of that, the most recent economic data confirm the picture is far from being gloomy. Housing data rebounded in August, with positive surprise for building permits and housing starts, and US consumer spending are strong, probably due to mortgage refinancing in a lower rate environment. It seems that US households are already adjusting to Fed easing, which may drive away the specter of recession, at least in the short term.