Markets & Finance

Vital Signs: How Bad Is the Damage to the Economy?


On deck: retail sales, producer and consumer price indexes, business inventories, industrial production, housing starts, consumer sentiment, Bernanke speaks, and earnings reports

As investors await nascent signs that Washington’s massive and paradigm-shattering policy response to the financial crisis is working, they realize a great deal of damage to economies in the U.S. and around the world has already been done. In the coming weeks, the economic data will begin to show just how much. Several reports for September, due this week, will provide some early clues for the U.S., but the sharp credit tightening didn’t begin until mid-September, so its full impact will not begin to show up until the October reports.

Consumers had already begun to pull back on their spending in the wake of oil prices that peaked at $145 per barrel back in July. Weekly store surveys through September suggest the government’s roundup of the month’s retail sales on Wednesday will show a third consecutive decline. On Friday, the Reuters/University of Michigan index of consumer sentiment will offer the first broad look at how the crisis is affecting household attitudes and expectations.

Businesses will be front and center this week as well, especially manufacturers. After the stunning drop in September factory activity implied by the plunge in the Institute for Supply Management’s latest report, economists expect the Federal Reserve’s September index of industrial production to fall for the second month in a row. A national survey of small business sentiment through September, along with regional soundings from the New York and Philadelphia Federal Reserve districts in early October, will offer additional evidence on the degree of retrenchment by businesses.

The Fed’s Beige Book report, a region-by-region snapshot of economic activity prepared for the Fed’s Oct. 28-29 meeting, will be of particular interest, because it could provide additional evidence that would support another rate cut by the Fed. The markets are now betting on at least a quarter-point cut, to 1.25%, but many analysts believe the policymakers will go for another half-point reduction, given the deteriorating state of the economy.

The Fed will have the leeway to cut rates further because of the improving inflation outlook. Market expectations of inflation, measured by the difference between yields on a 10-year Treasury note and a Treasury Inflation Protected Security, have shrunk to levels not seen since the deflation scare ealier in the decades, especially given that oil prices are down some 40% since July. This week’s September reports on producer and consumer prices are expected to validate the more favorable inflation scenario.

Fed Chairman Ben Bernanke will be in the spotlight again this week, when he addresses the Economic Club of New York on Wednesday.

U.S. bond markets and government offices will be closed Monday in observance of Columbus Day (the stock markets are open).

Here’s the weekly economic calendar:

Top Economic Reports

Report

Date

Time

For

Median Estimate

Last Period

Retail Sales

Wednesday, Oct. 15

8:30 a.m.

September

-0.6%

-0.3%

Retail Sales (excluding autos)

Wednesday, Oct. 15

8:30 a.m.

September

-0.3%

-0.7%

Producer Price Index

Wednesday, Oct. 15

8:30 a.m.

September

-0.2%

-0.9%

Producer Price Index (excluding food & energy

Wednesday, Oct. 15

8:30 a.m.

September

0.2%

0.2%

Empire State Index

Wednesday, Oct. 15

8:30 a.m.

October

-7.0

-7.4

Business Inventories

Wednesday, Oct. 15

10:00 a.m.

August

0.3%

1.1%

Consumer Price Index

Thursday, Oct. 16

8:30 a.m.

September

0.1%

-0.1%

Consumer Price Index (excluding food & energy)

Thursday, Oct. 16

8:30 a.m.

September

0.2%

0.2%

Industrial Production

Thursday, Oct. 16

9:15 a.m.

September

-0.6%

-1.1%

Capacity Utilization

Thursday, Oct. 16

9:15 a.m.

September

78.1%

78.7%

Philadelphia Fed Index

Thursday, Oct. 16

10:00 a.m.

October

-2.0

3.8

Housing Starts (millions)

Friday, Oct. 17

8:30 a.m.

September

0.880

0.895

Consumer Sentiment Index (preliminary)

Friday, Oct. 17

9:55 a.m.

October

68.0

70.3

Other Reports and Events

Report or Event

Date

Time

For

NFIB Survey (small business)

Tuesday, Oct. 14

7:30 a.m.

September

ICSC-UBS Store Sales

Tuesday, Oct. 14

7:45 a.m.

Oct. 5-11

Johnson Redbook Weekly Store Sales

Tuesday, Oct. 14

8:55 a.m.

Oct. 5-11

SPEECH: St. Louis Fed President Bullard

Tuesday, Oct. 14

8:30 p.m.

SPEECH: San Francisco Fed President Yellen

Tuesday, Oct. 14

10:00 p.m.

Mortgage Applications

Wednesday, Oct. 8

7:00 a.m.

Oct. 5-11

SPEECH: Boston Fed President Rosengren

Wednesday, Oct. 15

8:05 a.m.

SPEECH: Fed Chairman Bernanke

Wednesday, Oct. 15

12:00 p.m.

Federal Reserve Beige Book Report

Wednesday, Oct. 15

2:00 p.m.

Initial Unemployment Claims

Thursday, Oct. 16

8:30 a.m.

Oct. 5-11

Treasury International Capital Data

Thursday, Oct. 16

9:00 a.m.

August

SPEECH: Minneapolis Fed President Stern

Thursday, Oct. 16

9:00 a.m.

SPEECH: St. Louis Fed President Bullard

Thursday, Oct. 16

9:30 a.m.

SPEECH: Boston Fed President Rosengren

Thursday, Oct. 16

8:00 p.m.

NAHB Homebuilders Survey

Thursday, Oct. 16

1:00 p.m.

October

SPEECH: St. Louis Fed President Bullard

Friday, Oct. 17

12:45 p.m.

SPEECH: Chicago Fed President Evans

Friday, Oct. 17

2:00 p.m.

Earnings Calendar

Company

Report Date

Fastenal

Monday, Oct. 13

Charles Schwab

Monday, Oct. 13

PepsiCo

Tuesday, Oct. 14

WW Grainger

Tuesday, Oct. 14

Johnson & Johnson

Tuesday, Oct. 14

Altera

Tuesday, Oct. 14

CSX

Tuesday, Oct. 14

SUPERVALU

Tuesday, Oct. 14

Intel

Tuesday, Oct. 14

Linear Technology

Tuesday, Oct. 14

Abbott Laboratories

Wednesday, Oct. 15

Coca-Cola

Wednesday, Oct. 15

JPMorgan Chase

Wednesday, Oct. 15

St Jude Medical

Wednesday, Oct. 15

Wells Fargo

Wednesday, Oct. 15

Marshall & Ilsley

Wednesday, Oct. 15

Xilinx

Wednesday, Oct. 15

eBay

Wednesday, Oct. 15

Novellus Systems

Wednesday, Oct. 15

United Technologies

Thursday, Oct. 16

Harley-Davidson

Thursday, Oct. 16

Merrill Lynch

Thursday, Oct. 16

Sherwin-Williams

Thursday, Oct. 16

Parker Hannifin

Thursday, Oct. 16

BB&T

Thursday, Oct. 16

CIT Group

Thursday, Oct. 16

Huntington Bancshares

Thursday, Oct. 16

Danaher

Thursday, Oct. 16

Bank of New York Mellon

Thursday, Oct. 16

Citigroup

Thursday, Oct. 16

Illinois Tool Works

Thursday, Oct. 16

Stryker

Thursday, Oct. 16

Capital One Financial

Thursday, Oct. 16

Advanced Micro Devices

Thursday, Oct. 16

Leggett & Platt

Thursday, Oct. 16

Textron

Thursday, Oct. 16

Intuitive Surgical

Thursday, Oct. 16

Zions Bancorporation

Thursday, Oct. 16

Baxter International

Thursday, Oct. 16

PNC Financial Services Group

Thursday, Oct. 16

Southwest Airlines

Thursday, Oct. 16

PPG Industries

Thursday, Oct. 16

Nucor

Thursday, Oct. 16

International Business Machines

Thursday, Oct. 16

Hershey

Thursday, Oct. 16

Gilead Sciences

Thursday, Oct. 16

Google

Thursday, Oct. 16

Comerica

Friday, Oct. 17

Honeywell International

Friday, Oct. 17

VF Corp

Friday, Oct. 17

Schlumberger

Friday, Oct. 17

First Horizon National

Friday, Oct. 17

Genuine Parts

Friday, Oct. 17


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