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Look forward at March 23, 2020 week: The immediate economic picture starting to come into focus

A look forward at the March 23 week continues to build on available economic data for March and file away numbers compiled before the pandemic response took a chunk out of activity. What central bankers will do or say in response to fresh market developments is as yet unknown, except that whatever it is, they will continue to ensure that credit markets get all the liquidity that might be needed to see individuals and businesses through the COVID-19 crisis. Fiscal authorities will probably expand the measures taken to ease the burden of shutdowns and shortages.

Of particular interest in the week will be initial jobless claims for the week ended March 21 at 8:30 ET on Thursday. The claims data is timely and represents a hard count of layoff actions for workers eligible for unemployment benefits. This is the week in which the magnitude of shuttering workplaces will start to be clearly known. It could be a huge jump even in comparison with the sharp increase in the prior week. It will be most obviously among service workers. Doubtless the intention is that furloughs will be temporary. But when activity starts to resume, it may take a while to gear back up. The rolls of continuing claims may not come down as quickly as could be wished. Additionally, the claims data won’t reflect idled workers in jobs that are not eligible for unemployment benefits.

The regional surveys of manufacturing for March from the Richmond Fed at 10:00 ET on Tuesday and the Kansas City Fed at 11:00 ET on Thursday will probably be of a piece with the data out of New York and Richmond. New orders and production are expected to slow abruptly. Delivery times will narrow and inventories tightly controlled in anticipation of low demand outside of a few select sectors like medical supplies.

The regional surveys of the service sector for March from the Richmond Fed at 10:00 ET on Tuesday and Kansas City Fed at 11:00 ET on Friday are expected to show the plunge in activity across the hospitality sector and into education and then into business services.

The final reading of the University of Michigan Consumer Sentiment Index for March at 10:00 ET on Friday could well see a downward revision from the 95.9 in the preliminary report. Both current conditions and six-month expectations are likely to feel the weight of spreading impacts from the COVID-19 pandemic. In any case, the number will be substantially below the 101.0 of February.

The remaining data in the week will be for the period before the efforts to stem the spread of the novel coronavirus brought much activity to a standstill.

The FHFA House Price Index for January 15 9:00 ET on Wednesday will capture some of the upward pressure on home prices when consumers were anxious to lock in low mortgage rates and competition for available units was stiff.

Sales of new single-family homes were probably brisk in February and the data at 10:00 ET on Tuesday should reflect strong buying of homes not-yet-started and under construction. Consumers are opting for new building where supplies of existing units are limited.

New orders for durable goods in February at 8:30 ET on Wednesday might not look bad outside of the transportation sector but that was before orders started to disappear in early March. Transportation orders will get a boost from aircraft as Boeing booked 18 orders, up from 0 in January.

Personal income should look improved in February with the numbers at 8:30 ET on Friday. Wages and salaries were still on the rise. Personal spending may be lackluster due to the nondurables component where gasoline price decreases will reduce the dollar value of spending. The PCE deflator for February should put year-over-year prices closer to the Fed’s 2% symmetric objective, at least at the core.

The third and final estimate of fourth quarter GDP at 8:30 ET on Thursday will get scant attention. There are hints of some upward revisions, but even strong ones will not improve the outlook. At this stage the focus on the first quarter 2020 and just how much the efforts to combat the pandemic will impact overall growth. Some analysts are already calling it a recession. The earliest of the GDP Nowcasts from the New York Fed suggest growth at around 0.13%.

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