Key U.S. Data Releases and Events

We expect a negative reading on both the CPI and PPI for March because of lower energy prices, but core inflation for both will edge up. March retail sales will be up since light-vehicle sales, although depressed, were higher than in February; but excluding autos, retail sales will be down. Industrial production for March will be down by 1%, and the operating rate will fall to another record low. Finally, housing starts in March will be down slightly, partly because good weather pumped up February's numbers.

KEY U.S. DATA RELEASES THIS WEEK

Tuesday, April 14 – Producer Price Index (Mar.)

Total

• IHS Global Insight: -0.4%
• Consensus: 0.0%
• Last Actual: +0.1% (Feb.)

Core

• IHS Global Insight: +0.3%
• Consensus: +0.1%
• Last Actual: +0.2% (Feb.)

What to Look For

• The producer price index is expected to fall 0.4% in March, due primarily to a large drop in energy prices.
• A surge in cigarette prices will temper the retreat and contribute to a 0.3% gain in core producer prices.

Implications

The deflation threat is receding, but we cannot dismiss it yet. The global economy has further to fall, and unemployment has much further to rise. The core rate of PPI inflation will likely turn negative later in 2009, although as the recovery gathers pace during 2010 and 2011, we expect price increases to return.

Tuesday, April 14 – Retail Sales (Mar.)

Total

• IHS Global Insight: +0.3%
• Consensus: +0.3%
• Last Actual: -0.1% (Feb.)

Less Autos

• IHS Global Insight: -0.3%
• Consensus: +0.1%
• Last Actual: +0.7% (Feb.)

What to Look For

• Retail and food service sales increased an estimated 0.3% in March, led by a rebound in autos.
• Excluding the automotive group, sales fell about 0.3%, pulled down by lower average gasoline prices and weak chain-store sales.

Implications

With employment declining sharply and credit restricted, households will spend cautiously this spring. We expect that a slight rise in real consumer spending during the first quarter will be followed by a slight decline in the second quarter.

Wednesday, April 15 – Consumer Price Index (Mar.)

Total

• IHS Global Insight: -0.1%
• Consensus: +0.1%
• Last Actual: +0.4% (Feb.)

Core

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

What to Look For

• The consumer price index is expected to decrease 0.1%.
• Excluding food and energy, core consumer prices should rise 0.1%.

Implications

We expect to see the headline CPI drop about 1.4% on average this year, and the core CPI to increase about 1.4%.

Wednesday, April 15 – Industrial Production (Mar.)

• IHS Global Insight: -1.0%
• Consensus: -0.9%
• Last Actual: -1.5% (Feb.)

What to Look For

• Industrial production will be down by 1.0%.
• Capacity utilization will fall to another all-time low.

Implications

Manufacturing output is expected to contract 12.2% in 2009—if true, it would represent the largest decline in the post-World War II period. Unlike previous manufacturing recessions, this one is coming from all fronts: consumer spending, business investment, and exports. The only ray of hope currently in the works could be the government.

Thursday, April 16 – Housing Starts and Building Permits (Mar.)

Starts

• IHS Global Insight: 0.578 Mil.
• Consensus: 0.540 Mil.
• Last Actual: 0.583 Mil. (Feb.)

Permits

• IHS Global Insight: 0.546 Mil.
• Consensus: 0.549 Mil.
• Last Actual: 0.564 Mil. (Feb.)

What to Look For

• A double-digit drop in multi-family starts, but a solid gain in single-family starts.
• Focus on the single-family permits. These surged 16% in February. Another gain would be the strongest sign yet that housing is turning around.

Implications

February's 22% gain in housing starts was partly influenced by weather. We are not expecting a rebound until the second half of this year.

Friday, April 17 – Michigan Consumer Sentiment Index (Preliminary Apr.)

• IHS Global Insight: 60.0
• Consensus: 58.0
• Last Actual: 57.3 (Final Mar.)

What to Look For

• An improvement to 60.0, from the March average of 57.3. 

Implications

The boost to sentiment from the stock market rally will outweigh the continuing downdraft from widespread job losses and rising unemployment.