The coming week will see a flurry of reports expected to show that the nation’s economy is picking up, while the ordinarily important meeting of the Federal Reserve on Tuesday probably will be a nonevent.
On Monday, new and existing home sales for September will be announced. On Tuesday, besides the Fed meeting, results of a consumer sentiment survey are due. On Thursday, it’s the first look at third-quarter gross domestic product, and on Friday the Chicago purchasing managers index for October.
“They will show an economy that is reviving,” predicted Asha Bangalore, vice president and economist with Northern Trust.
Bangalore said the most important number will be the growth of gross domestic product. She expects it will show a 6 percent increase.
“That is a very robust pickup in economic growth,” Bangalore said. “It will confirm that the economy is in a growth pattern.”
Bangalore, like most economists, doesn’t think the Fed will change interest rates. She said it is likely the Fed will note that labor conditions are not weakening and may be improving.
A Bloomberg News survey of economists showed that most believe the central bank will maintain the interest rate for overnight loans between banks at 1 percent until summer.
Since May the Fed has said the economy is equally at risk from inflation and deflation, and it is expected to repeat that assessment this week.
Consumer spending, a sign of confidence in the future, has held up well for many months, even as other sectors of the economy suffered.
A good picture of consumer confidence should develop this week. The Conference Board will release its report on Tuesday, the ABC/Money Magazine consumer confidence survey is due Wednesday, and on Friday it’s the University of Michigan index of consumer sentiment.
“We are going to get a new reading on consumer confidence, which is important as we walk into the holiday season,” said Carl Tannenbaum, chief economist for LaSalle Bank. “Merchants are pretty nervous.”
Tannenbaum said some economic barometers are pretty predictable. The figures due Monday on sales of new and existing homes fall into that category.
“Everybody is assuming those are pretty good,” he said.
The Chicago purchasing managers index, due on Halloween, is a more significant indicator. The gauge of manufacturing activity in the Midwest measures a host of factors, including hiring and pricing trends, order backlogs and production rates.
“The mood of local manufacturers is very fragile right now,” said Tannenbaum, who expects the index to show improvement.
There is more to an economy than reports, of course. There is money, and who is making it.
Mark Sellers, equity strategist for Morningstar, pointed out that earnings reports this week will include results from consistently profitable heavyweights like Exxon Mobil and consistently gaunt contenders like United Airlines, both due out Thursday.
American Express issues its quarterly earnings report on Monday, and Sellers expects it to do well.
“They have a great franchise with the credit card,” Sellers said, adding that the company’s asset management business probably did well in the rising stock market.
U.S. Steel issues its quarterly report on Tuesday.
“That company is real sensitive to financial conditions,” Sellers said. “That will give us some read on the economy. Wednesday, it’s EDS, which will give us a read on tech spending.”
Don’t look for much good news there, he cautioned.
“I expect them to disappoint because they have been doing it every quarter for the last year,” Seller said.
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