Vital Signs: Will Housing Haunt Growth?

On tap the week of Sept. 4: Revised second-quarter productivity data, the Federal Reserve's Beige Book report, and the non-manufacturing business activity index

It will be another slow week on the economic front. Following the Labor Day holiday, there won't be a lot of data that typically drive the market. The most important economic numbers could very well be revisions to second-quarter labor productivity results.

The second pass at gross domestic product data for the second quarter had a big surprise. Besides producing more goods and services, American businesses also shelled out a lot more money to its workers. Wages and salaries paid out during the April to June period grew by 8.6% from a year ago rather than 6.8%. The original amount was pretty good but the new number shows the strongest yearly gain in compensation since the third quarter of 2000.

So even though productivity growth will likely be revised up, unit labor costs will probably show an even larger upward revision. The revision will likely catch the attention of investors, economists, and the Federal Reserve. The central bank has been on the lookout for signs of accelerating rising labor costs that could spark up additional price pressures through the economy.

At the same time more income for consumers should soften the blow from a weaker housing market. The Fed's Beige Book report, the Institute for Supply Management's non-manufacturing index, and weekly chain store sales will shed some light on how much of an impact housing is having on the health of the economy and on consumer demand.

Labor Day will make for a short week. Financial markets and government offices will be closed on Monday, September 4. Here's the weekly economic calendar, from Action Economics.

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