By Matthew Gardner, Gardner Economics LLC
August 23, 2010

What to Watch This Week

• Existing home sales for the month of July will be announced on Tuesday, and I expect that we will see further declines to an annualized rate of 5.14 million units from June's number of 5.37 million. We will continue to experience a "payback" following the high demand from buyers that took advantage of the tax credit, which will weigh down transactions. Additionally, and as I have said before, I am noting that buyers appear to be in no big hurry to transact, and this too will pull the number down.
  Year-over-year home prices have seen some stabilization in recent months, and it will be interesting to see where this number ends up considering 32 percent of June’s transactions were distressed sales which generally sell for lower prices.
• Durable goods orders for July should swing upward from its negative figure last June. Manufacturing has been hit hard, and I am hopeful for a good figure here.
• New home sales, which jumped last month, are likely to see an additional uptick, but I am slightly cautious here. The increase that we saw in June was partly attributable to a downward revision in May's figures. Still, I am looking for an increase to 338,000 units (annualized) from 330,000 in June.
• Initial unemployment claims, which were not at all good last week, are likely to remain elevated at just below the 500,000 mark. This is certainly not good, but I discuss my reasoning for not being totally despondent with the numbers below.
• The latest estimate for U.S. GDP is likely to be revised lower, and I am looking for a figure of 1.4 percent from the initial estimate of 2.4 percent. All indications are that the government overestimated growth last quarter.
• Revised consumer sentiment figures for August will remain basically where the advanced figures were (or maybe just a hair higher) than the 69.6 number announced earlier this month.

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By Matthew Gardner, Gardner Economics LLC
August 2, 2010

What to Watch This Week

• General consensus is that we will see a reduction in construction spending when figures are announced today; However, I am not so sure. The improved sales that were announced last week may lead to a moderate increase in residential construction, but this may also be offset by weakness in the commercial sector.
• Personal incomes should rise, although the increase will be very modest. My model is calling for a 0.2 percent increase following May's 0.4 percent rise. We are not in an inflationary environment at the present time.
• Auto and truck sales numbers are also likely to see a modest bump that will be led by autos, but we will likely see a reduction in truck sales. Numbers are, however, well off the pre-recessionary levels.
• I will be focused on payroll numbers when they are announced on Friday, and I am predicting that we will see a modest rise following the 125,000 decline seen in June. As I mentioned earlier this month, June's decline was a result of laying off 225,000 Census workers, and in fact, private payrolls expanded by 83,000. I am looking for a modest gain in the July figures.
• Consumer Credit, which has been on the decline since October 2008, will continue its downward trend. We saw a very substantial reduction in revolving debt levels (-10.5 percent year-over-year), and this will continue to slide as banks contract further and consumers continue to try to deleverage.

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By Matthew Gardner, Gardner Economics LLC
July 26, 2010

What to Watch This Week

• New home sales numbers may be disappointing after they are released this morning; However, I personally think that there might be a little uptick as we come off the horrendous low of 300,000 units reported last month. The whiplash effect following the expiration of the tax credit pushed transactions to an all-time low, and being the contrarian I am, a small uptick may be on the cards. That being said, the numbers are sure to still be very low from an historic perspective.
• Tuesday's Case Shiller figures will likely show very modest improvement across the entire index, and as I have said for some months now, the Seattle region will continue to claw its way back into positive territory.
• I fear that consumer confidence numbers will continue to retract as the public agonizes over the snail’s pace of our economic recovery.
• Initial and continuing unemployment claims are likely to remain elevated. While we are seeing additional temporary hiring occur in the summer months, employers remain particularly cautious when it comes to new hires. I am sure that there are many readers with children home from school and who are wondering where all the summer jobs are!
• Consumer sentiment numbers are also released this week, and similarly to the confidence index, I expect that these numbers will continue to disappoint. Last month the figure remained benign, but I would not be surprised to see it lower as our economic engine continues to splutter and not roar.
• Finally, we will see the preliminary estimates for U.S. gross domestic product for the second quarter of this year. It is my anticipation that we should see a figure of around 2.7 percent annualized growth that will match that of the first quarter. This is far from stellar, but inventory growth will continue to keep this figure on positive territory.

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By Matthew Gardner, Gardner Economics LLC
July 19, 2010

What to Watch This Week

• I am expecting to see further contraction in housing permits across the U.S. as builders remain wary of demand for housing following expiration of the tax credit. I expect this tocontinue the rest of the summer. We will also see a contraction in housing starts for the same reason.
• Initial and continuing employment claims should continue to show modest improvement but not at the pace that all of us would like to see.
• Existing home sales figures, released on Friday, will also show a substantial drop following the boost in sales from the tax credit. It would not surprise me to see a figure of 5.1 million sales (annualized) from last month’s figure of 5.66 million units.

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By Matthew Gardner, Gardner Economics LLC
July 12, 2010

What to Watch This Week

• Last week was fairly slim when it came to economic announcements; however, this week there is far more to sink our teeth into. I will be delving into our local employment situation for June when data is released on Tuesday. Although I do not believe that we will see positive growth on a year-over-year basis quite yet, we are on the verge of it and recent month-over-month numbers have shown signs of growth in some sectors. The unemployment rate might bump up a little with temporary census workers contracts ending, but this decrease is fairly minimal.
• Retail sales figures will continue to point to improvement and that consumers are buying, albeit modestly. Last months figure of negative 1.2 percent will likely improve to negative 0.1 percent.
• Business inventories should contract slightly as demand for goods grows.
• Prices paid at factory gates (PPI) will show a very slight increase, furthering my belief that inflation remains very tame.
• Consumer prices, which retracted slightly in May, will more than likely stay flat in sync with the PPI figure.
• I am hopeful that initial employment claims, which came in better than expected last week (see below), will continue to show modest improvement. 

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