This busy week for economic data will be capped by the release of second-quarter gross domestic product data.
Last week’s report on housing starts offered some welcome evidence that the frigid housing market may be starting to thaw. Two housing indicators due out Tuesday may show no such promise.
Forecasters expect that new-home sales would have risen only 0.3 percent in June, after a 2.1 percent decline in May. That would be consistent with most of the evidence of recent months: that the housing market is going nowhere. Also Tuesday, an update on the S&P Case-Shiller home price index should give a read on May prices in 20 major metro areas.
New data on durable-goods orders are scheduled to be released. Orders are expected to have risen a modest 0.3 percent in June, after stronger growth in May. Drawing conclusions from the numbers can be difficult because of disruptions to supply chains due to Japan’s March earthquake, but ultimately the kinds of big-ticket items counted in this data will be a key to any strengthening of the U.S. economy.
Also Wednesday, the Federal Reserve will release its beige book, a compilation of information from businesses across the country about the business prospects they are encountering. The report is likely to show evidence of weak growth in recent weeks. Pay attention to what the book says about business confidence amid political stalemates in Washington and European capitals.
The big news this week will probably come from the release of figures estimating GDP growth in the April-through-June quarter. When the second quarter began, many analysts were expecting a bounce back.
They were wrong.
The report is set to be another disappointment, with forecasters expecting a 1.7 percent annual rate of growth. That is about on a par with the first-quarter growth (1.9 percent) and below the level needed to drive the unemployment rate down over time.
Pay particular attention to the components of GDP. If growth is driven by business investment in equipment and software, personal consumption and trade, it could bode well for the future.
For a thoughtful explanation of why the U.S. economic recovery seems to disappoint, quarter after quarter and year after year, see David Leonhardt’s New York Times analysis pointing the finger at the American consumer’s changing habits. See also Ryan Avent’s riposte on the Economist’s Free Exchange blog.
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