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|  | JANUARY 20, 2006
Vital Signs for the Week of Jan. 23On tap: Fourth-quarter gross domestic product, December home sales and durable goods data, and moreThe first look at economic growth for the fourth quarter is expected to show a sluggish performance. According to economists, real gross domestic product increased by an annualized rate of just 2.8% during the last three months of 2005. If the report does come close to this forecast, there will be increased debate about reduced inflationary pressures, whether consumers are finally curbing their spendthrift ways, and if the Federal Reserve will stop raising rates after its Jan. 31 monetary policy meeting. The GDP report is expected to show that consumer spending was close to flat during the fourth quarter. However, most of the anticipated deceleration in consumer outlays involves auto sales and the on-again, off-again nature of incentive programs by the major U.S. automakers. While the GDP report may get the most headlines, there will be other news that's more important for gauging the outlook for the economy. The December figures on new and existing home sales will shed more light on the state of the housing market. Many economists believe housing could have a negative influence on consumer spending this year. In the past couple of months, housing data have reflected some signs of a slowdown. Sales have eased, inventories have risen, and homebuilders are not as optimistic. The December durable goods figures will provide readings on business investment and confidence. The past couple of months of data have been skewed by this year's round of hurricanes and the September Boeing strike. Once again, however, the topline number may be dominated by aircraft orders. Boeing reported orders for 204 aircraft in December, after a tally of 148 for November. The better way to gauge business investment in the durable goods report is to look at nondefense capital goods orders less aircraft. This is a less volatile measure of durable goods orders for the private sector. Business investment is expected to accelerate in 2006, helping to offset an anticipated pullback in consumer spending. In addition, durable goods figures provide an outlook for manufacturing activity, where high-tech is leading the way. November new orders for new computers surged 34.8% from a year ago, and bookings for electronic products were up 17.7%. And in December, the industrial production report showed output of computers and electronic products rose 24% from a year ago. Here's the weekly economic calendar. MEETING OF NOTE Monday, Jan. 23, 4:35 a.m. EST Federal Reserve Bank of New York President Timothy Geithner speaks about the world economic outlook at a conference on global financial imbalances in London. EARNINGS REPORTS Monday, Jan. 23 American Express, Avaya, Bank of America, E*TRADE Financial, Eaton Corp., Ford Motor, Pactiv, Texas Instruments, and more. LEADING INDICATORS Monday, Jan. 23, 10 a.m. EST The Conference Board's composite index of leading economic indicators most likely nudged 0.1% higher in December. That's the consensus among economists polled by Action Economics. The November index climbed 0.5%, after a 1% jump in October. The November leading remained 2.1% above its year ago level for a second straight month. The smaller levels of initial claims pushed the index higher in November, aided by an increase in money supply, and an improved consumer outlook for the coming six months. On the down side was the softening in the average workweek of production workers, which should be a drag on the December index as well. MEETINGS OF NOTE Tuesday, Jan. 24 Federal Reserve Bank of St. Louis President William Poole speaks at a luncheon in St. Louis, Mo. 6:30 p.m. EST Freddie Mac Chairman Richard Syron addresses the Money Marketeers of New York University in New York City. EARNINGS REPORTS Tuesday, Jan. 24 3M, Avery Dennison, BJ Services, Burlington Northern Santa Fe, Computer Associates, Centex Corp., Coach, Convergys Corp., Cooper Industries, Corning, CSX, DuPont, EMC Corp., Golden West Financial, Health Management Associates, Johnson & Johnson, Kimberly Clark, Lexmark International, Lucent Technologies, McDonald's, Meredith Corp., New York Times, Northrop Grumman, SAFECO Corp., Sun Microsystems, United Technologies, Waters Corp., Zions Bancorp, and more. ICSC-UBS STORE SALES Tuesday, Jan. 24, 7:45 a.m. EST This weekly tracking of retail sales, compiled by the International Council of Shopping Centers and UBS bank, will update buying activity for the period ending Jan. 21. Sales fell 1.4% for the week ended Jan. 14, after inching up 0.1% in the latest week, after dipping 0.8% in the week ended Dec. 31. INSTINET REDBOOK RESEARCH STORE SALES Tuesday, Jan. 24, 8:55 a.m. EST This weekly measure of retail activity will report on sales for the third fiscal week of January, ended Jan. 21. Through the first two fiscal weeks of January, ended Jan. 14, sales were off 0.6% from the same period in December. Sales during December were down 0.2% from November. RICHMOND FED SURVEY Tuesday, Jan. 24, 10 a.m. EST The Richmond Federal Reserve Bank will release the January survey of business conditions within its district. The regional manufacturing index dipped to -2, after easing to a reading of 9 in November, from 12 in October. The December report indicates a significant slowdown in new demand. The shipments index fell to 1, from 14 in both November and October. The new orders index fell to -2, from 10 in November, and 15 in October. With new orders coming to a halt, the region's manufacturers worked off some backlogged orders and trimmed payrolls. At the same time, the outlook for the first half of 2006 became much brighter. The shipments index climbed from 29 in November, to 50 in December. Expectations of new order volume also jumped. Logically, more manufactures than not see backlogged orders and employment increasing during the first half of this year. EARNINGS REPORTS Wednesday, Jan. 25 Abbott Laboratories, Air Products and Chemicals, Allegheny Technologies, Altera Corp., Ambac Financial Group, Amerada Hess, AmeriSourceBergen, Applied Micro Circuits, Ashland, Automatic Data Processing, BellSouth, Bemis Company, Bristol-Myers Squibb, Colgate-Palmolive, ConocoPhillips, Exelon, General Dynamics¸ Hershey Company, International Flavors & Fragrances, LSI Logic, Maxim Integrated Products, McCormick & Company, McGraw Hill, Norfolk Southern Corp., Novellus Systems, Parametric Technology, PMC-Sierra, Praxair, QUALCOMM¸ Rockwell Automation¸ Sanmina-SCI, St. Jude Medical, Stanley Works, WellPoint, Xerox Corp., and more. MORTGAGE APPLICATIONS Wednesday, Jan. 25, 7 a.m. EST The Mortgage Bankers Association releases its numbers on mortgage applications for both home buying and refinancing for the week ending Jan. 20. The purchase index slid to 443.9 in the latest week, down from 457.4 in the week ended Jan. 6, but up 418.3 for the week ended Dec. 30. The four-week moving average eased a little further, to 438.1, from 440.4 in the week ended Jan. 6 and 445.6 for the week ended Dec. 30. The average rate on a conventional 30-year fixed mortgage retreated some more, according to HSH Associates. For the week ended Jan. 13, the rate slid to 6.26%, from 6.34%. The MBA's refi index also improved. During the week ended Jan. 13, the refi index rose to 1645.2 from 1497.5 in the prior week, and 1363.2 in the week ended Dec. 30. As a result, the four-week moving average rose some more, to 1441.3, from 1384.5 in the week ended Jan. 6. EXISTING HOME SALES Wednesday, Jan. 25, 10 a.m. EST Existing home sales are expected to fall to an annual pace of 6.89 million in December. That's the consensus among economists queried by Action Economics. The National Association of Realtors data has shown a small slowdown in sales over the past couple months. The November pace of 6.97 million was down from an annualized rate of 7.09 million for October and 7.29 million in September. November sales cooled off across the country, with the largest decline of 3.7% occurring in the West. The annual pace of 1.58 million for the region was the weakest since last December. The supply of existing homes up for sale kept inching higher. The November level stood at 5 months. The October backlog was 4.9 months, up from 4.6 months in September, and 4.7 months in August. EARNINGS REPORTS Thursday, Jan. 26 Affiliated Computer Services, Alberto-Culver, Amgen, Andrew, AT&T, Ball Corp., Baxter International, Becton Dickinson and Company, Broadcom, Brunswick Corp.¸ Cardinal Health, Caterpillar¸ Compuware Corp.¸ Consolidated Edison, Danaher, Dominion Resources, Dover Corp.¸ Dow Chemical Company, Dow Jones & Company, Eastman Chemical Company, Eli Lilly, Estée Lauder Companies, Federated Investors, First Data¸ Franklin Resources¸ General Motors¸ Genworth Financial¸ Halliburton Company, Hartford Financial Services, Honeywell¸ Ingersoll-Rand¸ Janus Capital Group¸ KLA-Tencor, Leggett & Platt, Lockheed Martin, Marathon Oil Corp., McKesson Corp., MeadWestvaco, Microsoft, Millipore¸ NCR Corp., Newell Rubbermaid, Noble Corp., PerkinElmer, Quest Diagnostics, Robert Half International¸ Rockwell Collins, Sherwin-Williams, Southern Company, Stryker¸ Tellabs, Textron, Unisys¸ United Parcel Service¸ UST¸ Verizon, W.W. Grainger, and more. JOBLESS CLAIMS Thursday, Jan. 26, 8:30 a.m. EST First-time claims for jobless benefits for the week ended Jan. 21 probably moved back up to 300,000. That's the consensus among economists queried by Action Economics. Jobless claims plunged to 271,000 for the week ended Jan. 14, after bouncing up to 307,000 in the previous period, from 292,000 during the week ended Dec. 31. The four-week moving average fell to 299,000 for the week ended Jan. 14, the first four-week average reading below 300,000 since October of 2000. In the week ended Jan. 7, the average stood at 311,000. Continuing jobless claims for the week ended Jan. 7 dropped to 2.53 million, from 2.69 million for the week ended Dec. 31. DURABLE GOODS ORDERS Thursday, Jan. 26, 8:30 a.m. EST New orders for durable goods grew a little more in December. According to the consensus estimate from Action Economics, new orders rose 1.2%. In November, durable goods orders soared by 4.4%. However, the increase was due to a 134.3% surge in civilian aircraft orders. The aircraft orders category is very volatile and may have been further influenced by the September Boeing strike. Analysts will be looking for a broader distribution of increased orders for December, especially in the machinery, and computer and electronic products industries. Unfilled orders kept growing, up 3% in November. However, the rise was also dominated by nondefense aircraft orders. Excluding this category, unfilled orders were up just 0.2% in November. HELP WANTED ADS Thursday, Jan. 26, 10 a.m. EST The Conference Board releases its December index of help-wanted ads, based on ads culled from major newspapers across the nation. The national index edged up to 39, after rising to 38 in October, from 37 in September. A year ago, the index was at 36. The Conference Board's online job ads index was already reported to be down in December. The percentage of markets with a rising want-ad volume fell back to 47%, from 65% in October. Help-wanted advertising showed a broad improvement. In six of the nine U.S. regions, help-wanted ads increased during the prior three months. EARNINGS REPORTS Friday, Jan. 27 Black & Decker Corp., Chevron, FPL Group, Gannett, ITT Industries, Manor Care, Nucor, Peoples Energy, Procter & Gamble, T. Rowe Price, and more. GROSS DOMESTIC PRODUCT Friday, Jan. 27, 8:30 a.m. EST The advanced report on economic growth for the final quarter of 2005, measured by real gross domestic product, is expected to show the economy expanded by a annual rate of 2.8%. That's the median estimate among economists polled by Action Economics. A fourth-quarter growth rate in line with the consensus would be the weakest since the first quarter of 2003. In addition, the first look at fourth-quarter growth is likely to show that most of the weakness was in consumer spending. Following an incentive-laden sales push by American automakers in the third quarter, fourth-quarter vehicle sales plunged. Some economists believe consumer spending was nearly flat for the period. In addition, the fourth-quarter trade deficit mushroomed. NEW RESIDENTIAL SALES Friday, Jan. 27, 10 a.m. EST The pace of new single-family homes sales in December probably slowed a little more. The median forecast among economists queried by Action Economics is for an annualized rate of sales of 1.22 million. In November, sales pulled back to a rate of 1.25 million, after jumping to a record pace of 1.4 million in October. Just like November existing home sales, the weakest region for new home sales was the West. Monthly sales in the West tumbled 22.1%, followed closely by an 18.3% retreat in the Midwest. As a result of the November fallback in the rate of new home sales, inventories surged up to 4.9 months, from 4.2 months in October, and 4.7 months in September.  By James Mehring
BW MALL
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