A scary week ahead

“The U.S. economy is really perched on the edge of a cliff right now,” says Bank of Tokyo-Mitsubishi UFJ economist Ellen Zentner, as Marketwatch reports “the markets get ready for a busy week of data, including numbers about the already damaged U.S. housing market, orders for durable goods and personal income and spending.”

There have been anecdotal reports of a better-than-last-year Black Friday (so named for when retailers traditionally see profits move out of the red and into the black on the day after Thanksgiving). But home sales, construction, and October consumer spending numbers are expected to drop. “Federal Reserve officials believe a substantial decline in home prices is a big risk to the economy, according to forecasts released for the first time by the Fed on Tuesday. The Fed’s forecasts, combined with the summary of its October meeting, appeared to show more concern about slower growth than higher inflation.” There are also fears that the labor market is weakening. “‘Recent data on initial jobless claims suggest layoff activity is gradually accelerating as the full effects of the fallout from tighter credit conditions and the housing recession are realized,’ notes [Ryan] Sweet [of Moody’s Economy.com].”

The question to answer, said [Jim] O’Sullivan [of UBS], is what kind of slowdown the economy’s heading for. “Is it a ‘suddenly falling off a cliff’ slowdown…or more of a gradual slowing?” he asked.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.