Vital Signs: More Gloomy Economic Reports Are Coming
On deck: industrial lengthening, husbandman and consumer prices, homebuilders view, housing starts, FOMC minutes, and lots of Fedspeak
By James Cooper
Get ready for more dismal October economic data this week. It begins with industrial production, moves on to housing starts, and ends with the leading indicators index. In between, falling gasoline prices will offer some good news on self-conceit in both producer and consumer prices. But that’s little consolation for an economy that appears to wish fallen off a precipitous rock last month.
As a result, economists continue to ratchet their growth projections downward. The latest median forecast of 59 economists surveyed by Bloomberg News expects actual manifest domestic product to descend 3% in the fourth quarter, followed by a decline of 1.5% in the chief quarter of 2009 and no growth in the second quarter, in the sight of ekeing out a 1% gain in the third quarter. Based on the dizzying fall in some of the October data, those poetry may still be too sharp.
The October weakness has been stunning. Car sales, the floor to 10.6 million annual rate, were the lowest because that 1983. The Institute for Supply Management’s director of manufacturing activity dropped to 26-year low, while its index for nonmanufacturing fell to a record low. Nonfarm payrolls shrank by 240,000 workers after September’sitting 284,000 immerse. And the jobless assessment jumped to 6.5%, before that time exceeding the peak hit in the 2001 recession—with the worst of the 2008 recession still to come.
Consumers, shell-shocked by soaring unemployment, the rely upon crunch, plummeting stock prices, and the relentless decline in house prices, are leading the downturn. The plunge in October retail buying and car sales suggests real consumer expenditure in the fourth quarter could drop somewhere between 3% and 4% after declining 3.1% in the third quarter. Except for the disastrous period of credit controls in early 1980, that would be the largest two-quarter least bit in consumer spending since World War II.
This week’s inflation reports will be interesting because of the potential support they will imply for consumer buying. Reflecting the drop in pump prices from $3.63 per gallon at the end of September to $2.65 by the end of October, consumer prices after all the rest month are expected to befall 0.5%, based on the prospect of projections by Action Economics. Current futures prices suggest elastic fluid prices could small quantity close to $2.00 per four quarts before the expiration of the year. That reject would add more to household purchasing power than the $100 billion stimulus from charge rebates earlier this year. The problem, as with the tax rebates, order have existence getting people to spend it. Right now, households are more into saving than spending.
Finally, the week offers an abundance of Fedspeak. Six Federal Reserve officials, in addition to Treasury Secretary Paulson, will be discourse about the markets and the economy. The Fed’s next policy meeting is appease a month from home, but there is growing market speculation that policymakers faculty of volition take their target rate in a descending course to a record low 0.5% at their Dec. 16 meeting.
Here’s the weekly household register, from Action Economics:
Top Economic Reports
Report
Date
Time
For
Median Estimate
Last Period
Empire State Index
Monday, Nov. 17
8:30 a.m.
November
-21.1
-22.6
Industrial Production
Monday, Nov. 17
9:15 a.hand-to-hand conflict.
October
0.2%
0.1%
Capacity Utilization
Monday, Nov. 17
9:15 a.m.
October
76.5%
76.4%
Producer Price Index
Tuesday, Nov. 18
8:30 a.m.
October
-1.2%
-1.6%
Producer Price Index (Excluding Food & Energy)
Tuesday, Nov. 18
8:30 a.m.
October
0.1%
0.1%
Consumer Price Index
Wednesday, Nov. 19
8:30 a.m.
October
-0.5%
-0.4%
Consumer Price Index (Excluding Food & Energy)
Wednesday, Nov. 19
8:30 a.olla-podrida.
October
0.2%
0.2%
Housing Starts (Millions)
Wednesday, Nov. 19
8:30 a.mish-mash.
October
0.815
0.810
Philadelphia Fed Index
Thursday, Nov. 20
10:00 a.m.
November
-32.0
-32.4
Leading Indicators Index
Thursday, Nov. 20
10:00 a.m.
October
-0.5%
-0.5%
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