Business Inventories (July, Tuesday 10:00 ET)

F: -1.0% C: -0.8% P: -1.1%

The inventory adjustment processes is not yet over for businesses as they continue to shed stock at an accelerating pace. However, the inventory to sales ratio is declining, which could indicate that the adjustment is nearing bottom. Although a slower rate of decline in inventories could result in a positive effect on GDP, businesses are expected to hold inventories at low levels until demand is restored.


Consumer Price Index (headline, core) (August, Wednesday 8:30 ET)

F: 0.2%, 0.1% C: 0.3%, 0.1% P: 0.0%, 0.1%

Increases in August energy prices are expected to result in a monthly rise in headline inflation, slowing the index’s decline on a year-over-year basis. Meanwhile, core inflation will remain low but positive; however, ongoing economic slack, which can be seen in the form of the high unemployment rate, low capacity utilization and declining wages, will continue to emit downward pressure on prices. As a result, we continue to believe that the Fed will hold the target interest rate low for a prolonged period of time.


Industrial Production (August, Wednesday 9:15 ET)

F: 0.6% C: 0.7% P: 0.5%

Industrial production is expected to rise for the second month in a row in August, driven by an increase in manufacturing activity as indicated by the ISM and other regional manufacturing indices. Furthermore, the spike in auto sales driven by the Cash for Clunkers program could result in an increase in production of motor vehicles. Although industrial production could show further stabilization on a year-over-year basis, it is expected to remain low in response to feeble demand.


Retail Sales, excluding Autos (August, Thursday 8:30 ET)

F: 1.2%, 0.3% C: 1.7%, 0.4% P: -0.1%, -0.6%

Retail sales are expected to receive a boost from the Cash for Clunkers program, which pushed auto sales up to 14 million in August. While auto sales have experienced significant stabilization, the other components of retail sales remain extremely weak as consumers continue to spend cautiously. As a result, consumption is forecasted to be positive in 3Q09, but its growth progression will be slow.


Housing Starts (August, Thursday 8:30 ET)

F: 596K C: 595K P: 581K

Housing starts are expected to rise in August in response to increasing builders’ confidence. In recent months, housing starts have begun to stabilize, but levels still remain more than 35% below those of last year. Looking forward, starts could show further stabilization, but they will be slow to recover due to the high inventory levels of existing homes.