Look Both Ways: Economic Indicators

Facts and figures for the week just past and the week ahead.

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Market professionals can now look forward to that directionless period that comes once every four years. Between the start of the Jewish New Year last week and the presidential election on November 2, look for “a lot of uncertainty,” said David Wyss, chief economist at Standard & Poor’s, in an interview with CFO.com.

The headline economic news of the week will undoubtedly be tomorrow’s meeting of the Federal Open Market Committee, the last to precede the November vote. Nearly all observers believe that the committee, which last month raised the federal funds rate 25 basis points to 1.5 percent, will again raise rates only incrementally — another 25 basis points, according to Wyss. That modest, expected hike will undoubtedly be followed by intense scrutiny of the statement that the FOMC will release on Tuesday afternoon.

“It’s much like medieval scholasticism,” said Wyss, “with everybody asking what did they mean by this word ‘change’ when the answer is probably ‘nothing.’ “

Wyss also said he will focus his attention on Friday’s durable-goods report; last week, he noted, reports by the Federal Reserve banks in Philadelphia and New York offered contradictory signals on the state of manufacturing. In the Philadelphia report, the index of manufacturing activity fell about 15 points from the mark of 28.5 recorded in early August; the New York index rose 15 points to 28.3 during the same period.

“We’re looking at durable orders coming in at around a 0.4 percent increase,” said Wyss, which would represent a slower but continuing rise, he added, after the prior month’s 1.6 percent. According to Briefing.com, the consensus for this figure is a decrease of 0.3 percent.

Other updates in the week ahead:

• Tuesday’s reports on housing starts and building permits releases, and Friday’s report on existing-home sales. “The sector continues to come in much stronger than expected,” said Wyss. “Housing starts and building permits are more leading indicators,” and the report on existing-home sales will provide more insight into the health of the real-estate market. In the face of “all of this talk about a real-estate bubble,” Wyss said he expects that prices will “slow down but continue to rise, consistent with this stage of a recovery.”

• Thursday’s report on initial unemployment claims. According to a consensus forecast by Briefing.com, new jobless claims for the week ending September 18 should come in at about 338,000, up from the prior week’s 333,000. Although week-by-week numbers don’t show direction,” wrote Kamalesh Rao of Moody’s Investors Service, “there is at least some reason to believe that new claims are trending downwards.”

“Over the past two weeks, claims have fallen behind their four-week moving averages,” he noted, “and the latest four-week moving average, 338,000 is somewhat of an improvement over the 340,000 average of last month. Added Rao, “Given that claims have averaged around 341,000 for the past six months, a significant shift may take a while to materialize.”

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