Key U.S. Data Releases and Events

Moreover, the aftermath of the president's "Jobs Summit" on Thursday points in the direction of additional federal policy measures to support hiring and innovation. Some administration officials and members of Congress are leaning in the direction of using remaining unused spending authority under the TARP to fund new initiatives, including possibly tax credits for small businesses and additional incentives for energy-efficiency improvements to housing. The president has indicated that he wants to move quickly on this, but tapping unspent TARP money will certainly put additional pressure on the fiscal deficit.

Economic reports next week will be relatively thin, but tilted on the positive side. The trade balance is expected to have widened in October on stronger inventory-related imports, but November retail sales should get a boost from a jump in auto sales, while consumer sentiment should move up in the first half of December.

KEY U.S. DATA RELEASES THIS WEEK

Thursday, December 10 – Trade Balance (Oct.)

• IHS Global Insight: -$40.0 Billion
• Consensus: -$37.0 Billion
• Last Actual: -$36.5 Billion (Sep.)

What to Look For

• We expect the trade deficit to widen to $40.0 billion in October, from $36.5 billion in September.

Implications

Exports may slip back temporarily after a strong increase in September, mainly on lower aircraft exports. In contrast, we expect imports to move higher to help replenish inventories. Foreign trade has become a drag on growth, since some of the benefit from the recovery in domestic demand is going to foreign producers.

Friday, December 11 – Retail Sales (Nov.)

Total

• IHS Global Insight: +0.4%
• Consensus: +0.7%
• Last Actual: +1.4% (Oct.)

Less Autos

• IHS Global Insight: +0.1%
• Consensus: +0.4%
• Last Actual: +0.2% (Oct.)

What to Look For

• Retail sales are expected to increase 0.4% in November, but only on the strength of auto and gasoline sales.

Implications

The holiday shopping season is off to a slow start. Light-vehicle sales advanced from an annual rate of 10.4-million units in October to 10.9-million units in November, while rising gasoline prices boosted sales of service stations. If chain-store sales are any guide, November dealt a setback to other retailers, notably department stores, luxury goods retailers, and apparel stores. With job losses continuing, consumers are focused on value shopping, which is benefiting wholesale clubs, discount chains, and drug store chains.

Friday, December 11 – Michigan Consumer Sentiment Index, (Preliminary Dec.)

• IHS Global Insight: 69.5
• Consensus: 68.5
• Last Actual: 67.4 (Final Nov.)

What to Look For

• After two monthly declines, the Reuters/University of Michigan's Index of Consumer Sentiment is expected to edge upward from an average of 67.4 in November to 69.5 in December.

Implications

This index and the ABC News/Washington Post Consumer Comfort Index were on an upward trajectory in late November, thanks to holiday bargains and a recovering stock market. Yet, sentiment remains at a very low level, suggesting that the recovery in consumer markets will be gradual.