Vital Signs: Maximum Stress for the Economy

On deck: March updates on retail sales, consumer and producer price indexes, housing starts, industrial production, plus more company earnings

This week's big round of economic reports for March will help economists put the finishing touches on their expectations for first-quarter economic growth. The data will also help shape growth expectations for the current quarter.

The government will issue its first estimate of real gross domestic product on Apr. 30. Right now, most economists are betting the first quarter’s growth rate was essentially zero, with about equal chances of a fractional minus or plus. That performance would follow the fourth quarter’s slim 0.6% advance.

That’s hardly an obvious recession scenario. However, economists’ are taking a much more downbeat view of the second quarter. Many now expect growth in real GDP in the current quarter to turn decidedly negative. This will be a period of maximum stress for the economy this year.

Consumers are already reeling from costlier energy, falling home prices, and tighter credit. Now household income is taking a hit from shrinking payrolls and rising unemployment. Falling payrolls means businesses are also showing more signs of caution, and they're pulling back on their outlays for new equipment and construction. This quarter, the economy appears to be losing a big chunk of the support to overall demand that consumers and businesses had been providing up to now.

The coming week’s data will help to assess just how much momentum the economy was losing as it headed into the second quarter. Monday’s report on March retail sales will be especially crucial in that regard. March measures of consumer confidence collapsed amid dire news from the financial markets and downbeat headlines about the labor markets. March sales will show whether consumers are making equally dramatic cutbacks in their spending.

March industrial production will be scrutinized for two things: The extent to which exports are buoying manufacturing output and the degree to which production of business equipment is holding up. Those are key indicators of capital spending.

Other important indicators that will help economists assess the current path of GDP will be business inventories and housing starts. Rising inventories could be a sign that stocks are piling up in the face of weakening demand, a scenario that could lead to more cutbacks in output and jobs in the second quarter. Housing starts are expected to post another decline, with no sign that the housing drag is lessening in the current quarter.

Also, watch for fresh readings on producer and consumer prices, especially coming in the same week when several Federal Reserve policymakers will be speaking. Philadelphia Fed President Plosser, who dissented against the size of the Fed’s latest rate cut, will be speaking on the goals of monetary policy. Fed Vice Chairman Kohn will discuss credit market issues, while both Richmond Fed President Lacker and Boston Fed President Rosengren will speak on market liquidity and systemic risk.

Here’s the weekly economic calendar, from Action Economics.

Top Reports for the coming week
Top Reports Date Time For Median Estimate Last Period
Retail Sales Monday, April 14 8:30 a.m. March 0.1% -0.6%
Retail Sales (ex autos) Monday, April 14 8:30 a.m. March 0.2% -0.2%
Business Inventories Monday, April 14 10:00 a.m. February 0.3% 0.8%
Producer Price Index Tuesday, April 15 8:30 a.m. March 0.4% 0.3%
Producer Price Index (ex food and energy) Tuesday, April 15 8:30 a.m. March 0.2% 0.5%
Empire State Index Tuesday, April 15 8:30 a.m. April -15.1 -22.2
Consumer Price Index Wednesday, April 16 8:30 a.m. March 0.4% 0.0%
Consumer Price Index (ex food and energy) Wednesday, April 16 8:30 a.m. March 0.2% 0.0%
Housing Starts (Mln) Wednesday, April 16 8:30 a.m. March 1.029 1.065
Industrial Production Wednesday, April 16 9:15 a.m. March -0.1% -0.5%
Capacity Utilization Rate Wednesday, April 16 9:15 a.m. March 80.2% 80.4%
Philadelphia Fed Index Thursday, April 17 10:00 a.m. April -13.8 -17.4
Leading Indicators Index Thursday, April 17 10:00 a.m. March -0.1% -0.3%
Other events
Reports Date Time For
SPEECH: Fed Governor Warsh Monday, April 14 2:30 p.m.
Treasury International Capital Report Tuesday, April 15 9:00 a.m. February
Home Builders Survey Tuesday, April 15 1:00 p.m. April
Johnson Redbook Weekly Store Sales Tuesday, April 15 8:55 a.m. Apr. 13-19
ICSC-UBS Store Sales Tuesday, April 15 7:45 a.m. Apr. 13-19
Mortgage Applications Wednesday, April 16 7:00 a.m. Apr. 13-19
SPEECH: San Fran. Fed President Yellen Wednesday, April 16 11:45 a.m.
SPEECH: Philadelphia Fed President Plosser Wednesday, April 16 12:30 p.m.
Federal Reserve Beige Book Wednesday, April 16 2:00 p.m.
SPEECH: Fed Vice Chairman Kohn Thursday, April 17 9:45 a.m.
SPEECH: Richmond Fed President Lacker Friday, April 18 8:30 a.m.
SPEECH: Boston Fed President Rosengren Friday, April 18 8:30 a.m.
Earnings Reports
Company Date
Eaton Corp Monday, April 14
WW Grainger Monday, April 14
CSX Tuesday, April 15
Forest Labs Tuesday, April 15
Intel Tuesday, April 15
Johnson & Johnson Tuesday, April 15
Linear Technology Tuesday, April 15
M&T Bank Tuesday, April 15
Marshall & Ilsley Tuesday, April 15
Northern Trust Tuesday, April 15
Regions Financial Tuesday, April 15
State Steet Tuesday, April 15
U.S. Bancorp Tuesday, April 15
Washington Mutual Tuesday, April 15
Abbott Labs Wednesday, April 16
Altera Wednesday, April 16
Coca-Cola Wednesday, April 16
eBay Wednesday, April 16
IBM Wednesday, April 16
Illinois Tool Works Wednesday, April 16
J.P. Morgan Chase Wednesday, April 16
Legget & Platt Wednesday, April 16
SLM Corp Wednesday, April 16
St. Jude Medical Wednesday, April 16
Torchmark Wednesday, April 16
Wells Fargo Wednesday, April 16
Advanced Micro Devices Thursday, April 17
Bank of New York Mellon Thursday, April 17
Baxter International Thursday, April 17
BB&T Thursday, April 17
Capital One Financial Thursday, April 17
CIT GroupComerica Thursday, April 17
Danaher Thursday, April 17
E*Trade Financial Thursday, April 17
First Horizon National Thursday, April 17
Genuine Parts Thursday, April 17
Google Thursday, April 17
Harley-Davidson Thursday, April 17
IMS Health Thursday, April 17
International Game Technology Thursday, April 17
Keycorp Thursday, April 17
Marriott International Thursday, April 17
Merrill Lynch Thursday, April 17
New York Times Thursday, April 17
Nucor Thursday, April 17
Pfizer Thursday, April 17
PNC Financial Services Group Thursday, April 17
PPG Industries Thursday, April 17
Southwest Airlines Thursday, April 17
Stryker Thursday, April 17
SUPERVALU Thursday, April 17
Textron Thursday, April 17
United Technologies Thursday, April 17
Zions Bancorporation Thursday, April 17
Caterpillar Friday, April 18
Citigroup Friday, April 18
Honeywell International Friday, April 18
Schlumberger Friday, April 18
Wachovia Friday, April 18
Xerox Friday, April 18
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