A look forward at the February 25 week presents a packed economic data calendar that may be overshadowed by Fed Chair Jerome Powell’s semiannual monetary policy testimony. He speaks first before the Senate Banking Committee at 10:00 ET on Tuesday, then before the House Financial Services Committee at 10:00 ET on Wednesday.
As far as monetary policy goes, Powell’s prepared remarks should offer no surprises. The FOMC meeting minutes released on February 20 and February 22 speeches by Vice Chair Richard Clarida and Vice Chair for Supervision Randal Quarles have probably covered the essentials in Powell’s statement. Powell is also not going to diverge from his recent assessment of the economy and policy outlook, i.e. the economy is good against a backdrop of some heightened risks, and the Fed can afford to be patient as it allows events to unfold. He will steadily and politely avoid answering any politically-tinged questions and keep to only broad responses regarding fiscal policy and the US debt. Nonetheless, as the Chair, Powell is the only one who speaks for the FOMC as a whole. If there is a signal to send in advance of the March 19-20 FOMC meeting, this will be the place to deliver it before the start of the communications blackout period on March 10.
Markets will be anxious to get a look at the initial data on fourth quarter GDP at 8:30 ET on Thursday. The government shutdown means this is the combined advance and second estimate for growth. With the delays in reporting essential components in the economic data, there is more uncertainty about GDP than usual, but the fourth quarter is expected to show continued moderate growth at year end. Data on personal income and spending at 8:30 ET on Friday will be through January for income, but spending will only run through December.
A few reports could shape some last-minute expectations for the GDP number. The December data on wholesale trade is at 10:00 ET on Monday. The advance report for December on international trade in goods only, and retail and wholesale inventories are at 8:30 ET on Wednesday. The report on factory orders for December is at 10:00 ET on Wednesday and will include nondurables orders in addition to the already reported up 1.2% for durables.
Sales of motor vehicles for February will be reported on Friday. February is typically a slow month for sales and a number of potential purchases were probably moved up late last year when natural disasters forced replacement of destroyed vehicles. Bitter cold weather in late January may have offset that a bit if it motivated consumers to buy rather than repair vehicles that were damaged as a result of the deep freeze.
Consumer confidence was hard-hit during the partial government shutdown in January. Now that that is resolved, some measure of optimism may return. However, it is not expected to fully retrace the decline. It would appear that while consumers and businesses remain confident in the overall historical context, the gloss of the past two years has faded substantially. The Conference Board is scheduled to release its January Consumer Confidence Index at 10:00 ET on Tuesday and the final University of Michigan Consumer Sentiment Index is at 10:00 ET on Friday.
Initial jobless claims for the week ended February 23 at 8:30 on Thursday should remain little changed from the 216,000 in the prior week as the noise from the partial government shutdown is gone from the data.
Data for the housing market will continue to catch up with the release of the December numbers on housing starts and permits issued at 8:30 ET on Tuesday. Starts should still be on the rise as recovery efforts are underway from Hurricanes Florence and Michael, and the California wildfires. Shortly after at 9:00 ET, the S&P CoreLogic Case-Shiller Home Price Index and FHFA House Price Index for December will be reported. Home prices have continued to rise, albeit at a slower pace at year-end along with slower sales. The NAR Pending Home Sales Index for January at 10:00 ET on Wednesday may offer some hope that housing market activity will pick up as mortgage interest rates decline.
In January, the ISM Manufacturing Index contradicted the more downbeat tone of the various Fed District Bank surveys for the factory sector with an increase to 56.6 from 54.3 in December. On balance, the available data does not offer much indication that the ISM reading for February will be more than one of modest expansion when it is released at 10:00 ET on Friday. However, a number of surveys remain on the calendar. The Dallas Fed Texas Manufacturing Outlook is at 10:30 ET on Monday, the Richmond Fed Manufacturing Composite Index is at 10:00 ET on Tuesday, and the Kansas City Fed’s Manufacturing Index is at 11:00 ET on Thursday. The picture could change.
Data for service sector activity in February will be plentiful on Tuesday with the Philadelphia Fed’s Non-Manufacturing Index at 8:30 ET, the Richmond Fed’s Service Sector Activity at 10:00 ET, and the Dallas Fed’s Texas Service Sector Outlook at 10:30 ET. The New York Fed’s Business Leader Survey has already suggested some rebound after the government shutdown that is likely to hear an echo in the other District’s reports.
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