Post by unlawflcombatnt on Jan 13, 2008 6:00:17 GMT -6
from Market Watch:
www.marketwatch.com/news/story/retail-sales-expected-very-weak/story.aspx?guid=%7BF478D21C%2D122A%2D4716%2DB399%2DEA09A761B978%7D&dist=TNMostRead
Jan. 13, 2008
"With the resilient American consumer the only thing keeping the economy from sliding into recession, the December retail-sales report figures to be the biggest economic event in a week full of big events.
December's retail sales are expected to be very weak following a blow-out month in November.
Aside from the retail data on Tuesday, the calendar features another appearance by Federal Reserve Chairman Ben Bernanke, the Fed's Beige Book, the December reports on inflation, housing, and output, and the first January readings on the manufacturing sector and consumer sentiment....
Oh, and corporate America will be coming to the confessional with fourth-quarter earnings reports.
Even with all that, the retail sales report will be the one that "may tell whether consumer spending has the legs to keep the expansion on track," said Patrick Newport, an economist for Global Insight.
"The remarkable resilience of the U.S. consumer has been the biggest economic surprise of the last few quarters," said Meny Grauman, an economist for CIBC World Markets. Consumers have been able to maintain their spending because job and wage growth have been OK, but the "disappointing nonfarm payroll report raises the risk that we are in store for a letdown."
Retail sales were surprisingly strong in November, growing 1.2% and 1.8% excluding autos. But for December, economists surveyed by MarketWatch figure sales were flat and fell 0.2% excluding autos.
"As we begin 2008, significant headwinds are ever present for the consumer," said economists for Wachovia in their weekly outlook. "The weight of falling home prices, higher energy prices and slowing job growth will limit consumer spending growth in the months ahead."
Inflation and output
Energy prices may have ticked higher since then, but they were relatively stable in December, limiting their impact on the consumer price index and the producer price index.
Economists expect the PPI to settle down after the 3.2% jump in November, which was the biggest one-month gain in more than 30 years. For December, the PPI is expected to rise just 0.1%.
The CPI won't be quite so favorable, with an expected 0.3% rise after November's 0.8% gain. The CPI could end the year up more than 4% for the first time since 1990.... There's a chance that the core CPI increased 0.3% again in December, said Global Insight's Newport. "In that event, the wave of enthusiasm for slashing the target federal funds rate a full 50 basis points would lose momentum, in favor of a 25-basis-point reduction."
No one is happy about the inflation numbers, but the Fed has much bigger fish to fry coping with the economic slump, which has now spread to the manufacturing sector.
Industrial production likely fell 0.2% in December, economists say. Citigroup economists estimate that industrial output fell at a 2% annual rate in the quarter, a rare down move in a key indicator that the business cycle dating committee uses to judge whether a recession has begun.
Housing starts are expected to sink again in December, falling about 5% to a seasonally adjusted annual rate of 1.13 million from 1.19 million, down 51% from the peak two years ago.
Inventories of unsold new homes are high (even more so once cancelled sales are included), so further declines are probable. Morgan Stanley economists expect starts to fall another 25% to 850,000 or 900,000 annualized late in the year...."
www.marketwatch.com/news/story/retail-sales-expected-very-weak/story.aspx?guid=%7BF478D21C%2D122A%2D4716%2DB399%2DEA09A761B978%7D&dist=TNMostRead
Jan. 13, 2008
"With the resilient American consumer the only thing keeping the economy from sliding into recession, the December retail-sales report figures to be the biggest economic event in a week full of big events.
December's retail sales are expected to be very weak following a blow-out month in November.
Aside from the retail data on Tuesday, the calendar features another appearance by Federal Reserve Chairman Ben Bernanke, the Fed's Beige Book, the December reports on inflation, housing, and output, and the first January readings on the manufacturing sector and consumer sentiment....
Oh, and corporate America will be coming to the confessional with fourth-quarter earnings reports.
Even with all that, the retail sales report will be the one that "may tell whether consumer spending has the legs to keep the expansion on track," said Patrick Newport, an economist for Global Insight.
"The remarkable resilience of the U.S. consumer has been the biggest economic surprise of the last few quarters," said Meny Grauman, an economist for CIBC World Markets. Consumers have been able to maintain their spending because job and wage growth have been OK, but the "disappointing nonfarm payroll report raises the risk that we are in store for a letdown."
Retail sales were surprisingly strong in November, growing 1.2% and 1.8% excluding autos. But for December, economists surveyed by MarketWatch figure sales were flat and fell 0.2% excluding autos.
"As we begin 2008, significant headwinds are ever present for the consumer," said economists for Wachovia in their weekly outlook. "The weight of falling home prices, higher energy prices and slowing job growth will limit consumer spending growth in the months ahead."
Inflation and output
Energy prices may have ticked higher since then, but they were relatively stable in December, limiting their impact on the consumer price index and the producer price index.
Economists expect the PPI to settle down after the 3.2% jump in November, which was the biggest one-month gain in more than 30 years. For December, the PPI is expected to rise just 0.1%.
The CPI won't be quite so favorable, with an expected 0.3% rise after November's 0.8% gain. The CPI could end the year up more than 4% for the first time since 1990.... There's a chance that the core CPI increased 0.3% again in December, said Global Insight's Newport. "In that event, the wave of enthusiasm for slashing the target federal funds rate a full 50 basis points would lose momentum, in favor of a 25-basis-point reduction."
No one is happy about the inflation numbers, but the Fed has much bigger fish to fry coping with the economic slump, which has now spread to the manufacturing sector.
Industrial production likely fell 0.2% in December, economists say. Citigroup economists estimate that industrial output fell at a 2% annual rate in the quarter, a rare down move in a key indicator that the business cycle dating committee uses to judge whether a recession has begun.
Housing starts are expected to sink again in December, falling about 5% to a seasonally adjusted annual rate of 1.13 million from 1.19 million, down 51% from the peak two years ago.
Inventories of unsold new homes are high (even more so once cancelled sales are included), so further declines are probable. Morgan Stanley economists expect starts to fall another 25% to 850,000 or 900,000 annualized late in the year...."