Vital Signs: Consumers' Lost Buying Power

Coming next: January data on international trade and business inventories, and key February reports on retail sales and consumer prices

As the risk of at least a mild recession mounts, all eyes this week will be on consumers -- both in the U.S. and abroad. January data on exports, imports, and the trade balance will offer more evidence on the extent to which foreign demand is keeping the economy afloat. Last quarter, revised GDP data show that trade improvement boosted economic growth by 0.9 percentage points. Without that lift, the economy contracted 0.3%, the first drop in domestic activity since the 2001 recession. Economists expect trade to provide another lift in the current quarter.

No such lift from U.S. consumers is in the cards. At the end of the week, fresh data on February retail sales will show the extent to which households are feeling the effects of softer job markets, reduced buying power of incomes, falling house prices, and tighter credit. Consumer sentiment, which is already at recession levels, is also due for an update. Inflation-adjusted consumer outlays for all items, both good and services, stalled in December and January, and February retail buying will offer an important signal on where spending is headed.

Right now, the biggest problem facing consumers is lost buying power due to rapidly rising prices, especially for food and energy. That much was clear in the January jump in the consumer price index (CPI). This week, analysts both on Wall Street and at the Federal Reserve will be scouring the February CPI for any additional signs of inflation’s stubbornness. In addition, look for February data on import prices, which have also been climbing in recent months, as the dollar continues to slide.

Rounding out the week’s economic news will be reports on January business inventories, the February federal budget, and a February survey of activity at small businesses.

Here’s the weekly economic calendar from Action Economics, plus other events worth watching.

Reports
Report Date Time For Median Estimate Last Period
Wholesale Trade ($bil) Monday, Mar. 10 10:00 a.m. January 0.4% -0.7%
Trade Balance ($bil) Tuesday, Mar. 11 8:30 a.m. January -60.0 -58.8
Goods & Services Exports (Bln$) Tuesday, Mar. 11 8:30 a.m. January 144.8 144.3
Goods & Services Imports (Bln$) Tuesday, Mar. 11 8:30 a.m. January 203.0 203.1
Treasury Budget (Bln$) Wednesday, Mar. 12 10:00 a.m. February -130 17.8
Retail Sales Thursday, Mar. 13 8:30 a.m. February 0.3% 0.3%
Retail Sales (ex-auto) Thursday, Mar. 13 8:30 a.m. February 0.3% 0.3%
Export Price Index Thursday, Mar. 13 8:30 a.m. February 0.6% 1.2%
Import Price Index Thursday, Mar. 13 8:30 a.m. February 0.9% 1.7%
Business Inventories Thursday, Mar. 13 10:00 a.m. January 0.3% 0.6%
CPI Friday, Mar. 14 8:30 a.m. February 0.3% 0.4%
CPI (ex-food & energy) Friday, Mar. 14 8:30 a.m. February 0.2% 0.3%
U. Mich. Consumer Sentiment (prelim) Friday, Mar. 14 10:00 a.m. March 68.0 70.8
Other IImportant Reports and Events
Other Important Reports and Events Date Time For
NFIB Survey (Smal Business Activity Monday, Mar. 10 10:00 a.m. February
EARNINGS: Kroger (KR) Tuesday, Mar. 11  
ICSC-UBS Weekly Store Sales Tuesday, Mar. 11 7.45 a.m. Mar. 2-8
Johnson Redbook Weekly Store Sales Tuesday, Mar. 11 8:55 a.m. Mar. 2-8
ABC Consumer Confidence Index Tuesday, Mar. 11 5:00 p.m. Mar. 2-8
Mortgage Applications Wednesday, Mar. 12 7:00 a.m. Feb. 24-Mar. 1
EARNINGS: Dillard's (DDS) Thursday, Mar. 13  
Weekly Jobless Claims Thursday, Mar. 13 8:30 a.m. Mar. 2-8
EARNINGS: Liz Claiborne (LIZ) Friday, Mar. 14
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