WASHINGTON (MarketWatch) — The U.S. economy remains stuck on slow-revolving merry-go-round that won’t bring much mirth ahead of the holiday season.
The plodding nature of the economy is likely to be underscored by the latest snapshots of retail sales, existing-home sales and manufacturing.
None of the reports this week are expected to show much — if any — improvement.Don’t look to the Federal Reserve to offer much solace, either.
The minutes of the central bank’s last big meeting in late October are expected to reflect uncertainty about when the Fed should start to cut back on a massive economic-stimulus program meant to speed up U.S. growth. Most economists don’t expect the Fed to ease the throttle until early 2014.
“It looks like we are going to see a softer fourth quarter,” said Sam Bullard, an economist at Wells Fargo. “Underlying domestic demand is running in place, confidence is still depressed historically speaking and the unemployment remains above 7%.That’s producing a cautious consumer.”
Holiday blues
Early signs of consumer caution are evident in a fresh Gallup poll of holiday-shopping plans as well as the sales forecast by Wal-Mart Stores, the giant U.S. company that accounts for about 10% of the nation’s overall retail sales.
A Gallup poll last week indicated that Americans plan to spend less on Christmas gifts this year than they did in 2012. Wal-Mart WMT +0.18% , for its part, trimmed its sales forecast for 2014 after mildly disappointing third-quarter results.
The company’s chief executive, Mike Duke, said “some customers feel uncertainty about the economy, government, jobs stability and their need to take care of their families through the holidays.”
The government’s retail-sales report for October, released Wednesday, is forecast to be flat to slightly higher.
The federal shutdown may have curtailed some spending because hundreds of thousands of workers were not paid immediately, but the sluggish pace of U.S. retail sales is largely a story of stagnant paychecks and a persistently high unemployment rate.
“There’s really been no growth in [inflation-adjusted] disposable income,” said Steven Ricchiuto, chief U.S. economist of Mizuho Securities.“Consumers are buying cars but not a lot of much else.”
Growth, where are thou?
Lackluster results are also expected for October’s existing home sales and manufacturing activity in the Philadelphia region in November.
Sales of previously owned homes are forecast to fall slightly from an annual pace of 5.29 million in September, as higher mortgage rates dissuade some prospective buyers from pulling the trigger.
Mortgage rates jumped a full percentage point toward the end of summer amid talk that the Fed would soon reduce its stimulus, halting a surge in momentum in the housing market.
And the Philadelphia Federal Reserve’s survey of manufacturing executives is projected to drop in November for the second straight month.
Over the past few months, polls of manufacturing executives have shown to be more optimistic than the sheer amount of goods their companies have produced. “The survey numbers are much higher compared to the actual production numbers,” Bullard noted.
Against the backdrop of choppy economic growth, the minutes of the Fed’s Oct. 29-30 meeting are likely to reveal ongoing concern by the nation’s top central bankers about withdrawing stimulus too early.
Janet Yellen, who’s slated to become the new Fed chairman next year, signaled in Senate testimony last week that the bank will proceed with caution. What’s is it going to take for the Fed to pull back? At least a few months of consistently strong or improving economic data.
While the preliminary October employment report showed surprising strength in hiring — some 204,000 net jobs were created — it could have been just a flash in the pan. “The economy is still stuck in the same slow-growth groove it’s been on for a while,” Ricchiutto said.
“Fed officials are still debating what they need to do and when they need to do it.” The minutes will be released Wednesday.
“The economy is still stuck in the same slow-growth groove its been on for awhile. The Federal Reserve, of course, is doing all it can to speed up the economy, but details of the central bank’s latest meeting are likely to underscore their concern about the lackluster pace of growth.
The minutes of the Oct. 29-30 meeting will also become available this week.
marketwatch.com
The plodding nature of the economy is likely to be underscored by the latest snapshots of retail sales, existing-home sales and manufacturing.
None of the reports this week are expected to show much — if any — improvement.Don’t look to the Federal Reserve to offer much solace, either.
The minutes of the central bank’s last big meeting in late October are expected to reflect uncertainty about when the Fed should start to cut back on a massive economic-stimulus program meant to speed up U.S. growth. Most economists don’t expect the Fed to ease the throttle until early 2014.
“It looks like we are going to see a softer fourth quarter,” said Sam Bullard, an economist at Wells Fargo. “Underlying domestic demand is running in place, confidence is still depressed historically speaking and the unemployment remains above 7%.That’s producing a cautious consumer.”
Holiday blues
Early signs of consumer caution are evident in a fresh Gallup poll of holiday-shopping plans as well as the sales forecast by Wal-Mart Stores, the giant U.S. company that accounts for about 10% of the nation’s overall retail sales.
A Gallup poll last week indicated that Americans plan to spend less on Christmas gifts this year than they did in 2012. Wal-Mart WMT +0.18% , for its part, trimmed its sales forecast for 2014 after mildly disappointing third-quarter results.
The company’s chief executive, Mike Duke, said “some customers feel uncertainty about the economy, government, jobs stability and their need to take care of their families through the holidays.”
The government’s retail-sales report for October, released Wednesday, is forecast to be flat to slightly higher.
The federal shutdown may have curtailed some spending because hundreds of thousands of workers were not paid immediately, but the sluggish pace of U.S. retail sales is largely a story of stagnant paychecks and a persistently high unemployment rate.
“There’s really been no growth in [inflation-adjusted] disposable income,” said Steven Ricchiuto, chief U.S. economist of Mizuho Securities.“Consumers are buying cars but not a lot of much else.”
Growth, where are thou?
Lackluster results are also expected for October’s existing home sales and manufacturing activity in the Philadelphia region in November.
Sales of previously owned homes are forecast to fall slightly from an annual pace of 5.29 million in September, as higher mortgage rates dissuade some prospective buyers from pulling the trigger.
Mortgage rates jumped a full percentage point toward the end of summer amid talk that the Fed would soon reduce its stimulus, halting a surge in momentum in the housing market.
And the Philadelphia Federal Reserve’s survey of manufacturing executives is projected to drop in November for the second straight month.
Over the past few months, polls of manufacturing executives have shown to be more optimistic than the sheer amount of goods their companies have produced. “The survey numbers are much higher compared to the actual production numbers,” Bullard noted.
Against the backdrop of choppy economic growth, the minutes of the Fed’s Oct. 29-30 meeting are likely to reveal ongoing concern by the nation’s top central bankers about withdrawing stimulus too early.
Janet Yellen, who’s slated to become the new Fed chairman next year, signaled in Senate testimony last week that the bank will proceed with caution. What’s is it going to take for the Fed to pull back? At least a few months of consistently strong or improving economic data.
While the preliminary October employment report showed surprising strength in hiring — some 204,000 net jobs were created — it could have been just a flash in the pan. “The economy is still stuck in the same slow-growth groove it’s been on for a while,” Ricchiutto said.
“Fed officials are still debating what they need to do and when they need to do it.” The minutes will be released Wednesday.
“The economy is still stuck in the same slow-growth groove its been on for awhile. The Federal Reserve, of course, is doing all it can to speed up the economy, but details of the central bank’s latest meeting are likely to underscore their concern about the lackluster pace of growth.
The minutes of the Oct. 29-30 meeting will also become available this week.
marketwatch.com
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