Vital Signs: Economy’s Worst Quarter since 1981-82 Recession?
On deck: external trade, import prices, federal roll, retail sales, producer and consumer prices, industrial production, and much Fedspeak
By James Cooper
A raft of economic facts and reports in quest of December in the coming week will just about stop the door on what will likely be the worst quarter for economic growth since the 1981-82 recession. The Commerce Dept. will tally up the full damage in it’sitting first estimate of real gross domestic product for the fourth quarter on Jan. 30. The GDP numbers are expected to show that the brunt of the frugality’s weakness is now shifting from consumers to businesses.
Up to late summer, corporate cutbacks in hiring and first-class expenditure have been relatively demulcent. Companies went into the recession having added conservatively to their payrolls, plant and furniture, and inventories in recent years. Now the plunge in consumer spending that began at mid-year and the new witty round of tighter influence following the Lehman Brothers bankruptcy are overwhelming those moderating influences. Companies are slashing costs to preserve what’s left of their produce prospects, and those efforts are showing up in drastic reductions in payrolls and steeper cuts in capital expenditure.
Nowhere is this retrenchment clearer than in the manufacturing sector, as this week’s report without interruption industrial production, along with couple regional surveys of industrial activity, give by will show. Industrial production in the fourth deal out appears to have shrunk more than 9% at an annual rate, which would be the largest quarterly drop since 1980. Manufacturing is reeling under the load of the impact of credit tightening on housing, autos, and first-rate goods.
The week’s report in retail sales is expected to muse the continued weakness in consumer demand, even as falling global demand is hammering exports. The Institute for Supply Management’s index of export orders fell further in December, hitting a fresh memorial low.
Foreign exchange in commerce is also on this week’s agenda, and both exports and imports are expected to show weakness. Sagging U.S. demand is reducing imports, which resolution actually be a plus by reason of GDP growth in the fourth quarter, but any one fall in imports will most likely be swamped by the sudden and drench decline in exports. That means the trade gap will greatest part likely widen, resulting in a net negative drive firmly together on GDP growth.
In addition to the state of economic activity heading into the modern year, emporium attention will also be firmly fixed upon the body inflation. The week offers December reports on the one and the other agriculturist and consumer worth indexes. Both are expected to post hard declines from November, reflecting falling gasoline and other strength costs. However, the markets bequeath be particularly interested the path of heart inflation, which excludes energy and food. Some Federal Reserve officials registered concerns that inflation could fall to uncomfortably low levels in arrival months that could awake fears of deflation. Plunging spirit prices are expected to send overall inflation into negative territory in coming months, but any impress in the core increase rate toward zero would spark deflation worries.
Many Fed policymakers will have plenty of suitable to air their views on deflation and other issues this week. No fewer than seven Fed officials will be speaking on a range of topics, including remarks by means of Chairman Ben Bernanke in London.
Here’s the weekly economic calendar, from Action Economics:
Top Economic Reports
Top Reports
Date
Time
For
Median Estimate
Last Period
Trade Balance ($Billions)
Tuesday, Jan. 13
8:30 a.m.
November
-$55.0
-$57.2
Goods & Services Exports ($Billions)
Tuesday, Jan. 13
8:30 a.m.
November
$150.6
$151.7
Goods & Services Imports ($Billions)
Tuesday, Jan. 13
8:30 a.m.
November
$203.8
$208.9
Treasury Budget ($Billions)
Tuesday, Jan. 13
2:00 p.m.
December
-$44.0
-$164.4
Retail Sales
Wednesday, Jan. 14
8:30 a.m.
December
-1.2%
-1.8%
Retail Sales (Excluding autos)
Wednesday, Jan. 14
8:30 a.m.
December
-1.2%
-1.6%
Export Price Index
Wednesday, Jan. 14
8:30 a.m.
December
-1.9%
-3.2%
Import Price Index
Wednesday, Jan. 14
8:30 a.m.
December
-4.9%
-6.7%
Business Inventories
Wednesday, Jan. 14
10:00 a.m.
November
-0.4%
-0.6%
Producer Price Index
Thursday, Jan. 15
8:30 a.m.
December
-1.9%
-2.2%
Producer Price Index (Excluding food & energy)
Thursday, Jan. 15
8:30 a.broil.
December
0.1%
0.1%
Empire State Index
Thursday, Jan. 15
8:30 a.m.
January
-24.5
-25.8
Philly Fed Index
Thursday, Jan. 15
10:00 a.broil.
January
-32.0
-32.9
Consumer Price Index
Friday, Jan. 16
8:30 a.fight.
December
-0.8%
-1.7%
Consumer Price Index (Excluding food & energy)
Friday, Jan. 16
8:30 a.m.
December
0.1%
0.0%
Industrial Production
Friday, Jan. 16
9:15 a.m.
December
-0.4%
-0.6%
Capacity Utilization
Friday, Jan. 16
9:15 a.m.
December
75.0%
75.4%
Consumer Sentiment Index (Preliminary)
Friday, Jan. 16
9:55 a.m.
January
59.2
60.1
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