U.S. economy hits another big bump
Latest batch of data unlikely to show improvement in growth
WASHINGTON (MarketWatch) — In the wake of last week’s disappointing U.S. jobs report, investors will be searching for clues that the economy is not as weak as it appears.
And that’s about all this week’s slate of economic data is likely to yield: small clues. On tap are second-tier reports on consumer confidence, wholesale inflation, consumer credit and U.S. imports and exports. http://www.marketwatch.com/story/us-economy-h...2012-07-08
What’s undoubtedly clear is that the U.S. economy has slowed sharply as the third quarter gets underway. Hiring in the second quarter fell to an average of 75,000 a month from 226,000 in the first three months of the year. And gross domestic product is expected to decline from the first-quarter’s mediocre 1.9% rate.
| date | report | Consensus | previous |
|---|---|---|---|
| July 11 | Trade deficit | -$48.2 bln | -$50.1 bln |
| July 12 | Weekly jobless claims | 364,000 | 374,000 |
| July 13 | Producer price index | -0.2% | -1.0% |
| July 13 | Core PPI | 0.2% | 0.2% |
| July 13 | UMich consumer sentiment | 73.2 | 73.2 |
The path to recovery has been strewn with bumps since the U.S. exited the last recession in mid-2009. The economy has grown in fits and starts and the threat of another downturn has occasionally reared its head.
“We seem to be kind of limping along,” said Kathy Jones, fixed income strategist at Charles Schwab. “We are not getting the kind of growth you’d expect at this stage of an expansion.”
The limping economy, what’s more, is unlikely to straighten out its gait anytime soon. The unresolved financial crisis in Europe and an economic slowdown in China continue to weigh on market confidence and Washington is divided about how to boost hiring and growth at home.
Consumers and small business
A big reason the U.S. economy is not growing as fast: consumers have cut back on spending to rebuild their savings after a winter splurge. The May report on consumer credit, issued Monday, will offer more details on whether Americans are scaling back.
The canaries in the coal mine, America’s small businesses, are the first to stop hiring when consumers cut spending and the economy slows. If that’s the case, the monthly survey by the National Federation of Independent Business will probably decline. The index, which stood at 94.4 in May, comes out Tuesday.
Perhaps the most important report of the week is the U.S. trade balance. The May report, issued Wednesday, will show how much American exporters are being hurt by the slowdowns in Europe and China.
U.S. exporters have led the recovery over the past two years and a sharp deterioration in trade would be another blow to the economy.
Economists will also closely watch the weekly jobless claims report on Thursday to see if last week’s decline is repeated. Claims fell by 14,000 last week to 374,000, the lowest rate in a month and a half. The forecast is for a further decline.
Claims are a rough gauge of whether layoffs are rising or falling. They spiked in the spring after a touching a four-year low in February, corresponding with the plunge in net employment growth.
Rounding out the week are reports Friday on wholesale prices and consumer sentiment. The University of Michigan’s sentiment index is projected to show no change in consumers’ moods, based on the latest MarketWatch survey of economists.
Falling inflation over the past few months is one of the few bright spots in the economy. Gasoline prices have retreated after surging earlier in the year, putting more money in people’s pockets.
Whether consumers spend that cash and boost the economy, however, is far from certain given all the uncertainty at home and abroad. They might just pocket the money — and keep the economy on edge.
