Economic Data May Put Fed Under Pressure
More evidence of anemic economic growth and low inflation across the U.S. may clear the way for this year’s eighth Federal Reserve interest rate reduction, analysts said in advance of this week’s economic statistics.
With Friday’s report that the unemployment rate hit a four-year high of 4.9% in August, “the Fed is under immense pressure to stabilize the economy,” said Chris Rupkey, senior economist at Bank of Tokyo-Mitsubishi Ltd. in New York. Fed policymakers next meet Oct. 2.
The anxiety over the jump in the jobless rate will carry over to Friday, when August retail sales figures and the producer price index are due before the markets open.
The producer price index, a measure of wholesale inflation, is expected to have risen 0.2% in August from July, while the core PPI, which excludes volatile food and energy prices, is forecast at up 0.1%, economists polled by Reuters said.
Economists expect a rise of 0.3% in August sales from a flat reading for the previous month.
Investors also will closely watch consumer confidence, to see if it has been dented by all the doom and gloom of layoffs.
The University of Michigan will issue its reading on August consumer sentiment Friday. Economists expect that gauge to fall to 90.8 from 91.50.
Other economic reports due out this week:
* Monday: The Federal Reserve Board will report on consumer credit, which analysts said increased by $3.8 billion in July after falling $1.6 billion during May.
* Thursday: The Labor Department issues its weekly report on first-time claims for state unemployment benefits. Analysts said claims probably increased by 3,000 to 405,000 for the week ended Sept. 8. That would be the fourth consecutive week at or above 400,000, a level that points to further increases in the unemployment rate, analysts said.
* Friday: The Federal Reserve reports on industrial production and capacity utilization for August. Analysts forecast a 0.1% dip in industrial production, for the 11th consecutive decline. The plant-use rate, which measures industrial capacity in use, also likely declined to 76.8%, the lowest level since 1983.
