Vital Signs for the Week of Apr. 4


Given the dearth of economic reports for the coming week, the energy sector will take center stage. Oil and gasoline prices are gaining economic importance as volatility and prices climb and the country approaches the peak summer season for oil and gas demand.

On Apr. 1, oil prices climbed above $57 per barrel to a new intraday record. The price gain came despite news earlier in the week that U.S. crude oil inventories are at pretty comfortable levels. So, why the jump? A Goldman Sachs report released Mar. 31 forecast the possibility of oil prices of $105 per barrel in the next couple of years. More immediately, oil refinery issues in Texas and Venezuela raised concerns about gasoline supplies for the summer driving season. The latest weekly average price for U.S gasoline stood at $2.15 per gallon.

The effect of higher oil prices is not predominantly inflationary; rather it puts the breaks on growth. A prolonged period of higher energy prices leads consumers to spend more money for necessary energy goods such as gasoline and less on more discretionary items such as vacations, eating at restaurants, or buying a new computer.

Economists will be watching for evidence that energy is taking some steam out of the economy. While the employment report has been quite unpredictable lately, the soft March numbers may have been an early indication that economic growth in the second quarter could cool down. At the same time, the March business activity indexes from the Institute for Supply Management showed no let up in the economy. Chain store sales report for March will provide a glimpse into whether consumers are adjusting their spending patterns.

The Federal Reserve will also be looking at energy. If climbing oil and gasoline prices do indeed dampen growth, it will likely reduce price pressures. If energy prices ease or the economy continues to barrel ahead, stronger Fed action may be necessary.

Here's the weekly economic calendar.

MEETING OF NOTE

Monday, Apr. 4, 12:30 p.m. EDT

Federal Reserve Board Governor Edward Gramlich discusses national savings at a National Press Club luncheon in Washington, D.C.

ICSC-UBS STORE SALES

Tuesday, Apr. 5, 7:45 a.m. EDT

This weekly tracking of retail sales, compiled by the International Council of Shopping Centers and UBS bank, will update buying activity for the week ending Apr. 4. In the week ended Mar. 26, sales were off by 1%, after a 0.2% increase in the previous period, and a 0.6% gain in the week ended Mar. 12.

INSTINET REDBOOK RESEARCH STORE SALES

Tuesday, Apr. 5, 8:55 a.m. EDT

This weekly measure of retail activity will report on sales for the fifth and final fiscal week of March, ending Apr. 2. During the first four weeks of March, ended Mar. 26, sales were down 0.7% compared with the same period in February. For the entire month of February, retailers reported a 2% increase in sales vs. January.

MEETINGS OF NOTE

Wednesday, Apr. 6

Federal Reserve Bank of St. Louis President William Poole speaks at Webster University in St. Louis, Missouri.

10 a.m. EDT

International Monetary Fund Managing Director Rodrigo de Rato to speak at Georgetown University in Washington, D.C.

12:30 p.m. EDT

Federal Reserve Board Chairman Alan Greenspan testifies about regulatory reform of government sponsored enterprises before the Senate Banking Committee in Washington, D.C.

EARNINGS REPORTS

Wednesday, Apr. 6

Alcoa, Monsanto, and more.

MORTGAGE APPLICATIONS

Wednesday, Apr. 6, 7 a.m. EDT

The Mortgage Bankers Association releases its tally of mortgage applications for both home buying and refinancing for the week ending Apr. 1. In the week ended Mar. 25, the purchase index bounced back up to 470.9, after slipping to 446.4 in the prior week, from 462.8 in the week of Mar. 11, and 451.7 in the week ended Mar. 4. The four-week moving average crept up to 458 for the week ended Mar. 25, after growing to 450.2 in the week ended Mar. 18.

The average rate on a conventional 30-year mortgage, according to HSH Associates, kept climbing. In the week ended Mar. 25, the rate stood at 6.14%, up from 6.05% for the week ended Mar. 18.

The MBA's refi index slipped. During the week of Mar. 25, the index dipped to 1857.2, from 1894.4 in the week ended Mar. 18 and 2267.5 in the prior period. The four-week moving average declined to 2049, from 2155 in the week ended Mar. 18.

MEETINGS OF NOTE

Thursday, Apr. 7, 10 a.m. EDT

U.S. Treasury Secretary John Snow testifies about reforming the government sponsored enterprises to the Senate Banking Committee in Washington, D.C.

12:30 p.m. EDT

Federal Reserve Bank of Philadelphia President Anthony Santomero gives a speech entitled "Making Monetary Policy: What Do We Know and When Do We Know It?" at a National Economists Club meeting in Washington, D.C.

CHAIN STORE SALES

Thursday, Apr. 7

The International Council of Shopping Centers will release its March same-store sales figures for major U.S. chain retailers. The latest weekly sales report by the ICSC states overall March sales probably improved by 3.5% to 4.5% from a year ago. The March numbers will get a boost from the early Easter holiday, although some of the boost may be offset by below average temperatures and winter weather. In the end, the result will be better March numbers with a corresponding softness in the April results.

In February, sales posted a surprising 4.7% increase from the same month a year ago. It was the best yearly performance since May of 2004. In January, sales rose 3.6% from a year ago.

JOBLESS CLAIMS

Thursday, Apr. 7, 8:30 a.m. EDT

First-time claims for jobless benefits for the week ended Apr. 2 most likely eased back to 335,000. Jobless claims unexpectedly hit 350,000 in the week ended Mar. 26, after edging up to 330,000 in the previous week, from 329,000 in the week ended Mar. 12. The latest jump was blamed on the early Easter holiday.

The four-week moving average increased to 336,000 in the week ended Mar. 26, from 327,500 during the week ended Mar. 19. During the week of Mar. 19, continuing jobless claims retreated to 2.61 million, from 2.67 million in the prior period.

WHOLESALE SALES AND INVENTORIES

Thursday, Apr. 7, 10 a.m. EDT

Wholesale sales probably accelerated. The median forecast among economists surveyed by Action Economics is for a monthly gain of 0.7% for February. The January report showed that wholesalers had another decent month. In January, sales grew by 0.5%. Durable goods sales were off 0.1% due to a 4% decline in the sales of computer equipment. Sales of non-durables rose 1.1% on the month.

In December, sales climbed 1.1% after a 0.8% gain in November. Compared to the same month in 2004, sales were up 13.5% in January, after a yearly pace of 14.1% in December.

Wholesaler inventories showed a big gain in January, increasing 1.1% during the month. In December, inventories grew by 0.4%, after 1.2% gains in both November and October. The faster pace of inventory growth left the inventory-to-sales ratio at 1.15, after dipping to 1.14 in December, from 1.15 in November.

CONSUMER INSTALLMENT CREDIT

Thursday, Apr. 7, 3 p.m. EDT

Consumers probably tacked on another $7 billion in debt during February. That's the median estimate among economists surveyed by Action Economics. During January, consumer debt surged $11.5 billion, after an $8.7 billion increase in December, and a $1.6 billion rise in November. For all of 2004, consumer credit grew by $98.3 billion, following an increase of $87.1 billion in 2003.

MEETING OF NOTE

Friday, Apr. 8, 12:30 p.m. EDT

Federal Reserve Board Chairman Alan Greenspan speaks at the Fed's Community Affairs Research Conference in Washington, D.C. By James Mehring


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