Housing Starts & Building Permits (September, Tuesday 8:30 ET)

F: 605K, 595K C: 610K, 590K P: 598K, 579K

Residential construction is expected to improve as a result of better affordability conditions and positive readings on home sales. Builders seem to have a more positive view on the market’s future. According to the National Association of Home Builders, confidence improved in September. The NAHB/Wells Fargo Housing Market Index rose to 19, the highest level since May 2008. Despite the improvement, there is still a significant degree of uncertainty surrounding residential construction as the tax credit will expire in November and the economy will likely recover at a slow pace.


Headline Producer Prices Index & Core (September, Tuesday 8:30 ET)

F: -0.1%, 0.2% C: 0.0%, 0.1% P: 1.7%, 0.2%

Producer prices inflation for finished goods most likely slowed down in September as oil and natural gas prices decreased in the month. Meanwhile, core inflation –excluding food and energy- probably remained constant at 0.2%. The large amount of economic slack in the economy has kept producer prices contained despite recent increases in energy prices. Our baseline points to a prolonged period of positive but low inflation.


Beige Book (Wednesday 14.00 ET)

We expect the anecdotal evidence compiled in the Fed’s Beige Book to show a gradual improvement in economic activity. In fact, according to the last FOMC Minutes, the Fed staff revised their GDP forecast upward in light of positive changes in consumer spending and the housing market. Of particular interest will be any information regarding commercial real estate at the district levels. As we have noticed in previous releases, a downward adjustment in this sector constitutes a source of risk to our economic outlook; yet, its impact would be milder than that of the housing downturn.


Leading Economic Index (September, Thursday 10.00 ET)

F: 0.6% C: 0.8% P: 0.6%

The Leading Economic Index (LEI) will continue to increase, reflecting an improvement in overall economic conditions. Indicators conforming the LEI, including but not limited to the stock market, unemployment insurance claims, building permits and consumer confidence, suggest that the revival will occur at a gradual pace.


Existing Home Sales (September, Friday 10:00 ET)

F: 5.13M C: 5.38M P: 5.10M

Better affordability conditions along with tax incentives will support existing home sales in September. The NAHB indicates that 72.3% of homes sold in 2Q09 were affordable to households earning the national median income of $64,000; this is the second highest rate in 18 years. Going forward, affordable mortgage rates and low prices will continue to attract more buyers into the housing market; however, fragile credit conditions and a weak employment situation will limit the pace of recovery.