Key U.S. Data Releases and Events

The G-20 meetings in Pittsburgh concluded at the end of the week with a press statement stressing the need to maintain the general forward thrust of stimulus efforts to secure a more durable recovery. Beyond that, it stated that the G-20 forum would be the premier forum for international policy discussions and coordination, thus replacing the old G-8 mechanism. In addition, attempts will be made by the G-20 to forge a better balance of demand and spending across the major regions so as to avoid the buildup of large trade and capital account imbalances.

Next week, the economic releases will remind us that the U.S. economic recovery still remains quite fragile. Consumer confidence is expected to be about flat in September, while motor vehicle sales—which energized real consumption spending in August—are expected to retreat sharply in September. August construction spending is expected to fall under the weight of weak commercial and multi-family residential activity, and the September manufacturing ISM index creeps only slightly higher.

The bright spot will be the finale at the end of the week, when payroll employment is expected to decline at a much reduced rate of 175,000.

KEY U.S. DATA RELEASES THIS WEEK

Tuesday, September 29 – Conference Board Consumer Confidence (Sep.)

• IHS Global Insight: 54.0
• Consensus: 57.0
• Last Actual: 54.1 (Aug.)

What to Look For

• The overall index is expected to hold steady, as labor market conditions remain difficult.

Implications

The Conference Board's consumer confidence index is expected to hold steady in September, at 54.0, well above its low of 25.3 in February, but also still in recession territory. The boost to confidence from the stock market rally is offset by continuing job losses and the end of the "cash-for-clunkers" rebates on new vehicle purchases. We expect that the confidence index will make stronger gains next spring as employment begins to recover.

Wednesday, September 30 – Real Gross Domestic Product (Third estimate, Q2)

• IHS Global Insight: -1.1%
• Consensus: -1.2%
• Last Actual: -1.0% (Second estimate, Q2)

What to Look For

• Real GDP to decline by a downwardly revised 1.1% in the second quarter, but the mix of output should be healthier.

Implications

We expect little change in the third estimate of second-quarter GDP, with a small downgrade to a 1.1% decline (from 1.0%). The mix of output should be healthier, though, since we expect more final sales and a steeper inventory decline than previously estimated.

Thursday, October 1 – Personal Income, Consumption and Prices (Aug.)

Personal Consumption, Nominal

• IHS Global Insight: +1.0%
• Consensus: +1.1%
• Last Actual: +0.2% (Jul.)

Personal Consumption, Real

• IHS Global Insight: +0.8%
• Last Actual: +0.2% (Jul.)

Core PCE Price Index

• IHS Global Insight: +0.1%
• Consensus: +0.1%
• Last Actual: +0.1% (Jul.)

Personal Income

• IHS Global Insight: +0.1%
• Consensus: +0.1%
• Last Actual: +0.0% (Jul.)

What to Look For

• Real consumer spending to jump 0.8%, pushed up by a jump in auto sales.
• Core inflation to barely move the needle forward, at 0.1%.

Implications

August was a good month for consumer spending because of "cash for clunkers," and because back-to-school sales were pushed back by schools opening a bit later than usual (this boosting retail sales in August at July's expense). Overall, we expect that consumer spending jumped 1.0% in August. Adjusted for inflation, the gain was 0.8%. Going forward, though, we expect anemic gains for the rest of this year.

Thursday, October 1 – Construction Spending (Aug.)

Construction Put in Place

• IHS Global Insight: -0.4%
• Consensus: -0.2%
• Last Actual: -0.2% (Jul.)

Construction Excl. Residential Improvements

• IHS Global Insight: -0.5%
• Last Actual: -0.2% (Jul.)

What to Look For

• Overall construction to decline by 0.4%.
• Single-family construction to rise, but commercial and nonresidential to decline.

Implications

Single-family construction will post another strong gain. But this will be offset by drops in private nonresidential and multi-family construction. Overall, we project that construction spending dropped 0.4%. Excluding improvements, the drop will be 0.5%.

Thursday, October 1 – ISM Manufacturing Index (Sep.)

• IHS Global Insight: 53.5
• Consensus: 54.0
• Last Actual: 52.9 (Aug.)

What to Look For

• The index is expected to creep higher.

Implications

The September ISM-manufacturing index should creep higher, but gains will likely moderate after the outsized increases of July and August, when the PMI spiked by four points in each month. The index should remain solidly above the neutral 50 reading, at 53.5, but just not add much to August's 52.9 reading.

Thursday, October 1 – Motor Vehicle Sales (Sep.)

• IHS Global Insight: 9.3 Mil.
• Consensus: 9.9 Mil.
• Last Actual: 14.1 Mil. (Aug.)

What to Look For

• Motor vehicle sales are expected to drop sharply in September.

Implications

The drop in the selling rate from 14.1-million units in August to 9.3 million in September is a result of the ending of the "cash-for-clunkers" program. The deals are no longer as attractive, and inventory is low, so producers have less of an incentive to offer deep discounts.

Friday, October 2 – Employment Report (Sep.)

Nonfarm Payrolls

• IHS Global Insight: -175,000
• Consensus: -187,000
• Last Actual: -216,000 (Aug.)

Unemployment Rate

• IHS Global Insight: 9.7%
• Consensus: 9.8%
• Last Actual: 9.7% (Aug.)

Average Hourly Earnings

• IHS Global Insight: +0.2%
• Consensus: +0.2%
• Last Actual: +0.3% (Aug.)

What to Look For

• Payroll employment to decline by a relatively shallow 175,000.
• Unemployment rate to pause at 9.7%.

Implications

We expect the rate of payroll employment decline to ease again, from 216,000 in August to 175,000 in September. Initial claims for unemployment insurance continue to slide towards 500,000 per week, which is good news, although they would have to be around 400,000 per week for employment to stabilize. We expect the unemployment rate to remain at 9.7% after its big jump last month. But that does not mean we think unemployment has peaked—it remains on the way to 10%.