Saturday, April 26, 2008

Economic excitement this coming week

This will be a very exciting week coming up on the economic front. Monday the initial batch of economic stimulus checks will be "in the mail." Wednesday we get the first, "advance" report on Q1 GDP, and the Federal Reserve FOMC is expected to make no more than a quarter-point cut in its federal funds target rate. Thursday we get the ISM Manufacturing report, personal income and spending for March, and construction spending for March. Friday we get the employment report for March. That is a lot of information for March, so this is a rear-view look at the economy and will not tell us a lot about April, let alone the outlook for May and beyond. The ISM report is for April, but more about early April.

The most recent forecast from Macroeconomic Advisers (MA) is for Q1 real GDP growth of +0.4%. The actual "advance" official report could be somewhat above or below that forecast simply because we do not have all of the economic data for March yet. this "advance" report will be refined into a "preliminary" report at the end of May and then at the end of June we will finally get the "final" report for Q1 GDP. Macroeconomic Advisers has issued their estimate for monthly GDP in February, but they won't have an estimate for March until the middle of May.

If we really are in a recession, the employment report on Friday would show a payroll job loss north of 200,000. If we get a loss less than 150,000, I would conclude that we are still in a "slowdown" and near the "edge" of a recession rather than being in the middle of an outright recession.

I will offer no forecast of the actual economic impact of these stimulus checks, but I think they will have some (positive) psychological effect. We will simply have to wait and see if the economic numbers in late June start to show a pop for spending in May.

-- Jack Krupansky

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