July 13, 2009
THE WEEK AHEAD IN THE DISMAL SCIENCE…
Every economic report these days seems to dispense a crucial piece of the puzzle for deciding what comes next, and this week promises (threatens?) to offer no less.
The question now is whether the stability of recent months is in danger of giving way, pushing the economy once again toward the forces of contraction. It's been tempting to conclude that we moved beyond that in the spring, thanks to some encouraging numbers. Growth still was a ways off, but at least the recession wasn't getting any worse, or so it seemed. If anything, the cycle appeared poised for some flat lining and perhaps a modest uptick down the road.
But in the wake of the June payrolls report, which surprised on the negative side, it's become fashionable once more to wonder aloud if another round of trouble awaits. In that case, do we need another round of stimulus? Several key economic numbers updated this week will offer some pivotal clues.
As for newly minted numbers, the fun starts tomorrow with the producer price report, which will offer the latest sign of whether deflation is dead or set for a revival. When we last heard from this corner of statistics, wholesale prices rose 0.2% for May, the second month running of increases. Will the update for June make it three? If so, that would help further diminish deflation worries.
We also learn on Tuesday if May's encouraging 0.5% rise in retail sales carried over into June. Some estimates are in fact calling for another rise, as reported by Bloomberg News.
On Wednesday, June updates arrive for consumer inflation and industrial production. CPI's last data point showed a thin increase of 0.1% for May, which comes after no change in April and a slight fall in March. Meanwhile, we're looking for some good news in industrial production to break the trend of losses for each of the seven months through May.
On Thursday, the weekly update on initial jobless claims will tell us if there's still reason to think that the "technical" end of the recession might be in sight.
Another leading indicator of economic activity is updated on Friday: housing starts for June. Optimists are looking for a follow-through on May's strong 17% rise—only the second time this year that the series posted a gain (the first is February).
By the end of the week, we may have a quite a bit more context for projecting the next phase of the business cycle. The only question is whether we'll be smiling or frowning when the last batch of numbers roll in on Friday afternoon.
Posted by jp at July 13, 2009 9:57 AM
May retail same store sales were down 4.8%.
Posted by: Mark at July 13, 2009 1:28 PM