Economic Data Expected to Show More Cooling

More signs of a slowing economy--from rising jobless claims to sluggish retail sales--are expected this week as the Federal Reserve meets to decide whether to raise interest rates for the seventh time in a year. The National Assn. of Realtors is likely to report today that sales of previously owned homes declined 1% in May to a seasonally adjusted annual rate of 4.83 million units. A report Thursday from the Commerce Department will probably show that sales of new single-family homes also fell, declining by 1% to an annual rate of 900,000. A record 5.2 million previously owned homes were sold in 1999. Higher mortgage rates make it doubtful another record will be set this year. During May, 30-year fixed mortgage rates rose to 8.64%, the highest in five years, according to Freddie Mac, the No. 2 buyer of U.S. mortgages. That compares with an average rate of 7.15% a year earlier.

A Commerce Department report on income and spending, set for release Friday, will likely suggest that the economy is cooling. Personal income probably increased 0.3% in May after rising 0.7% during April, while consumer spending rose 0.2% for the month after increasing 0.4% a month earlier, analysts said. Consumer confidence in the economy, although still close to a record level, also may be cooling, analysts said. The Conference Board’s index of consumer confidence, set for release Tuesday, probably declined to 140 for June from 144.4 in May. Still, the economy isn’t about to stall, and underscoring that point, Commerce Department statistics due out Wednesday and Thursday are likely to show factory orders for big-ticket goods staged a rebound--rising 2.8% in May after falling 6.4% in April--while the overall economy grew at a respectable 5.4% pace in the first three months of the year.