This Week, march 7-11

Economic events for the week beginning March 7

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Monday, March 7, 2011

It is likely to be a quiet week for economic data, highlighted by two early indications of first-quarter gross domestic product growth.

Monday

American consumers made considerable progress from 2008 through late 2010 reducing their debt levels. But has that trend ended? The latest reading on consumer credit, from January, should give an indication.

Analysts expect that U.S. consumer debt outstanding will have risen by $3.4 billion in January, compared with a $6 billion increase in December. With the economy looking better, credit card companies and other lenders are offering credit more freely, and consumers are feeling more comfortable taking them up on it. Although a modest increase in consumer credit levels can be good for growth, if debt rises too far, too fast, it could trigger worries that Americans are reverting to bad habits.

Thursday

International trade is a key driver of swings in gross domestic product, especially in recent quarters. The Commerce Department's January trade report, therefore, will offer an early sign of what growth might look like for the first three months of 2011.

Forecasters are expecting the trade deficit to widen to$41.5 billion, from $40.6 billion, suggesting that imports are rising faster than exports and that trade will be somewhat of a drain on economic activity for the quarter. The number is exaggerated by higher fuel prices, which increase spending on oil imports.

Friday

February retail sales should give a sense of whether another key component of GDP, personal consumption expenditures, remained on a firm upward trajectory.

Economists are expecting a solid uptick of 1 percent, after a 0.3 percent rise in January. The February number will be affected by the steep rise in gasoline prices, so pay particular attention to retail sales excluding automobiles and gasoline - which is expected to show a more modest 0.4 percent gain - for a sense of the true underlying strength of consumer spending.

- Neil Irwin

Neil's Must Reads

What could the world have learned from the 1997-98 Asian crisis that might have helped prevent the current crisis? Galina Hale of the San Francisco Fed explores the lessons. And is there a way to achieve structural rebalancing of the global economy that doesn't cause massive pain? Kenneth Rogoff, proposes a strategy at Project Syndicate. Find links at washingtonpost.com/mustreads.


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