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Key U.S. Data Releases and Events24 Dec 08The final week of 2008 will be extremely light for economic indicators, providing a well-earned respite for the economic forecasting pundits. There may be more information drizzled out from the Obama camp on the size and composition of the fiscal-stimulus package. With respect to year-end funding pressures, these should have been largely dissipated by the Fed's aggressive action to auction forward liquidity in November for the month of December. The banking system has plenty of liquidity. If this strategy has worked, we should see minimal pressure on short-term interest rates at the end of the year. We expect that Conference Board consumer confidence will remain steady in December, with heavy crosscurrents pushing confidence in contradictory directions. The ISM-manufacturing survey for December likely slid down further, mainly on account of further aggressive, broad-based production cuts and a higher frequency of layoff notices. Weekly retail sales reports and other major announcements from large-scale vendors will be dissected for any signs of a late-month catch-up bounce in consumer spending activity, as sales reports so far in December have not been encouraging. KEY U.S. DATA RELEASES THIS WEEK Tuesday, December 30 – Conference Board Consumer Confidence (Dec.) Global Insight: 45.0 What to Look For
Implications The Conference Board's Consumer Confidence Index is expected to hold steady at 45 in December, buoyed by falling gasoline prices and widespread price discounts by retailers throughout the holiday season. But concerns about a deepening global recession, rising unemployment, and falling asset prices are dampening spirits and limiting spending. As a result, we expect that real consumer spending will remain on a downward path into 2009, until a new round of tax cuts provides a boost to disposable income. Friday , January 2 – ISM Manufacturing Index (Dec.) Global Insight: 34.0 What to Look For
Implications The ISM-manufacturing index will remain under downward pressure, and is expected to fall from 36.2 in November to 34.0 in December. Manufacturers are taking aggressive action to reduce production in line with weak demand, and on top of this do not want to be caught with unwanted inventories. Inventories not only eat up precious cash, but also face significant valuation risk as many product prices remain under downward pressure. All current measures of activity (orders and shipments) are extremely weak, and unfilled orders should continue to decline. Moreover, regional Federal Reserve District manufacturing surveys offer no hope of a moderating retreat in December. by Brian Bethune and Nigel Gault
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