Key Economic Indicators Expected
Investors and others will be watching for a number of indicators on the economic front this week, including the consumer price index, a closely followed measure of inflation.
The overall November CPI, which will be released Tuesday, is expected to rise 0.1% from October. Core CPI, excluding volatile food and energy, is forecast to rise 0.2%, according to economists polled by Reuters.
Housing starts also are on Tuesday’s data calendar. Home construction is expected to have risen in November.
Construction starts of new homes rose 4.8% to a 1.68-million annual rate, Commerce Department statistics will probably show
Meanwhile, manufacturing numbers are expected to be stronger as the U.S. economy builds strength heading into 2003.
Industrial production probably increased 0.2%, the first rise since July, economists say the Federal Reserve is expected to report Tuesday.
Consumers, whose spending accounts for two-thirds of the economy, have been driving the recovery. Their borrowing costs have declined as Fed officials have kept the benchmark interest rate target at a 41-year low of 1.25% since Nov. 6. Personal incomes after taxes have increased 6.8% since the end of last year. Americans are refinancing their houses and are getting more bang for their buck because of low inflation.
“For the consumer, what’s not to like?” asked James Paulsen, who oversees $110 billion as chief investment officer for Wells Capital Management in Minneapolis. “They have rising real wages, they go to the store and everything’s on sale, their refi broker just saved them $200 a month and the Fed just lowered rates.”
The economy, he said, is “going to improve quite a bit next year.”
On Thursday, the Conference Board will issue its index of leading economic indicators, which probably rose in November by 0.6%, the most in six months. The gauge is designed to project the direction of the economy over the next three to six months and was unchanged in October.
Friday will see the final revision of the nation’s gross domestic product. Analysts forecast that the economy expanded at a 4% rate in the third quarter. That would be the same as the government reported last month.
