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The Week Ahead


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THE WEEK AHEAD

HOUSING STARTS

Tuesday, May 19, 8:30 a.m. EDT -- Starts of new single-family homes are expected to have edged lower in April, to an annual rate of 1.58 million, according to the median forecast of economists surveyed by Standard & Poor's MMS, a division of The McGraw-Hill Companies. March starts stood at 1.59 million. With mortgage rates still low, new construction is expected to remain at a high level this spring, but further big gains are unlikely.

FOMC MEETING

Tuesday, May 19 -- The Federal Reserve's policymaking Federal Open Market Committee will meet to set interest rates. Only two of the 30 or so economists surveyed by S&P MMS expect the Fed to hike the federal funds rate, currently at 5.5%. However, about a third expect a rate increase in July, and 50% foresee a hike by August. Wall Street is increasingly wary that the Fed is moving toward a rate hike, suggested by the April employment report, which showed ever-tighter labor markets.

INTERNATIONAL TRADE

Wednesday, May 20, 8:30 a.m. EDT -- The U.S. trade deficit, including both goods and services, is expected to have edged lower in March, to $12 billion, based on the S&P MMS survey. The February gap was $12.1 billion. Exports are projected to have increased 1.3% from $77 billion in February, while imports are expected to have risen by 1%, from $89.1 billion. The impact of the Asian crisis is expected to keep the trade deficit unusually wide in March.

FEDERAL BUDGET

Thursday, May 21, 2 p.m. EDT -- Amid an expected gusher of tax receipts, the April budget will show a surplus of $119 billion, according to the S&P MMS survey. The April, 1997, surplus was $93.9 billion. If so, the budget would be in surplus by $49 billion for the first seven months of the 1998 fiscal year, vs. a deficit of $17 billion in the first seven months of 1997. This year's full-year surplus could hit $50 billion.


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