Whew!
After a dizzying week, we may get a breather, at least in terms of economic data releases, with no major statistical reports in the upcoming week.
The break will provide time to digest the numbers we did get: a sharp decline in payroll employment -- the steepest month-month drop in jobs since March 2003 -- as well as frightening increases in both the duration and depth of unemployment. The average weeks of unemployment jumped in September to 18.4 -- the highest since August 2005 -- from 17.4 in August, and the percentage of people unemployed for 27 weeks or longer shot up to 21.2%, the highest it has been since January 2005.
Friday’s employment report held some important warnings for dour numbers to come with a month-month decline in average weekly earnings, the first time that has happened since January. In the last year, average weekly earnings are up just 2.8%, matching June as the slowest year-over-year growth in earnings since September 2005. We’ll likely feel the impact of that downturn in retail sales numbers for September to be reported October 15 and then later in the month when we get the first pass reading of third quarter Gross Domestic Product.
Indeed, the GDP numbers -- to be reported after the next scheduled meeting of the Federal Open Market Committee -- are very likely to show the economy contracted in the third quarter, playing into recession fears, either that we are in one or approaching one.
The employment report was the last in a series of bad or disappointing reports for the week. About the only upbeat report was the service sector reading from the Institute for Supply Management which was subsumed by both the employment report and the TARP (Troubled Asset Relief Program) approval. And even the expansionary headline index of the service sector report masked warnings of further labor downturns as the employment sub-index retreated. The ISM non-manufacturing report followed a 6.4 point drop in the ISM manufacturing index two days earlier. In addition, auto makers reported a sharp downturn in sales in September.
One danger from the TARP passage is that it will offer a sense that the crisis is past and the economy is back on track. The Case-Shiller Home Price Index earlier in the week showing a continued slide in home values offered stark evidence that we have a long way to go to unravel housing which is at the root of the economy’s ills. As we’ve seen, the tentacles of the housing downturn have spread to other credit spheres and containment will be a major effort.
That said, one of the other under-the-radar reports in the last week was at least tentatively encouraging. The American Bankers Association reported only a slight increase in consumer loan delinquencies in the second quarter -- though the ABA cited the one-shot federal stimulus payments as keeping delinquencies from rising faster.
According to the ABA, the composite ratio which tracks eight loan categories rose to 2.68% in the second quarter from 2.62% in the first. The increase, the ABA said, was due largely to home equity loan delinquencies reflecting continuing weakness in the housing market. Home equity loan delinquencies jumped to 2.56% 2.34%.
The break in release of top-tier data reports at least allows time for the baseball playoffs.
Monday, October 6No Data ReleasesChicago Federal Reserve Bank President Charles Evans speaks on the `Economic Outlook and Productivity Trends in Manufacturing`Tuesday, October 7Job Openings and Labor Turnover Survey (August)OpeningsJuly actual: 3,416,000 DOWN 81,000 from JuneNo August consensusHiringJuly actual: 4,062,000 DOWN 376,000 from JuneNo August consensusSeparationsJuly actual: 4,308,000 DOWN 60,000 from JuneNo August consensusFederal Open Market Committee Minutes (Sep 16)Consumer Credit (August)July actual: UP $4.5 billionAugust consensus: UP $5.0 billionFederal Reserve Chairman Ben S. Bernanke speaks on the Economic Outlook and Financial Markets at the National Association of Business Economics’ Annual Meeting in Washington DCMinneapolis Federal Reserve President Gary Stern speaks on `Repercussions from the Financial Shock`Wednesday, October 8MBA Application Index (Week ended: October 3)Week Ended September 26: 455.4, DOWN 23.0%Four-week moving average: 551.2, UP 0.1%No October 3 consensusPending Home Sales (August)July actual: 86.5 DOWN 2.5August consensus: 85.6Philadelphia Federal Reserve Bank President Charles Plosser speaks on the economy at the C. Peter McColough Series on International Economics The Council of Foreign Relations in New YorkThursday, October 9Unemployment Insurance Claims (Week Ended October 4)September 27 Actual: 497,000 UP 1,000October 4 Consensus: 455,000Four-week moving average: 474,000, UP 11,500No October 4 consensusWholesale Trade (August)SalesJuly actual: DOWN 0.3% from JuneAugust consensus: UP 0.2%InventoriesJuly actual: UP 1.4% from JuneAugust consensus: UP 0.5%Friday, October 10International Trade (August)July actual $62.2 billion deficitAugust consensus: $59.5 billion deficitImport Prices (September)August actual: DOWN 3.7%September consensus: DOWN 1.5%Treasury Budget (September)August actual: $111.9 billion deficitSeptember consensus: $82.0 billion surplusMark Lieberman is the senior economist for the Fox Business Network. Prior to joining FOX, he served as first vice president and manager of economic analysis and research at Washington Mutual in New York. Before that, he served as senior vice president at Dime Savings Bank of New York (which was later acquired by Washington Mutual), where he specialized in credit and risk management. He is a member of the Executive Committee of the New York Association for Business Economics. He has a degree in Economics from the Wharton School of the University of Pennsylvania.
Holiday Weekend Transitions Into Heavy Week of Data
