ISM Manufacturing Index (October, Monday 10:00 ET) 

F: 53.8 C: P: 52.6 

The ISM Manufacturing Index will be one of the first data released for the fourth quarter that provides insight into economic activity. Given increases in most regional manufacturing indices and the pick-up in durable goods orders, the ISM is expected to rise in October, coming in at a level consistent with economic growth for the sixth month in a row. As a result, we can infer that economic expansion will continue into 4Q08 and, furthermore, that industrial production will increase as well. 


FOMC Statement (Wednesday 2:30ET) 

F: 0-0.25% C: 0-0.25% P: 0-0.25% 

The FOMC’s economic outlook is expected to remain positive given GDP growth in 3Q09 and further improvement in many economic indicators. While the exit strategy is anticipated to be a primary discussion topic, the committee is not expected to make any changes to the current policy until it is clear that the recovery is sustainable. As a result, we believe the target interest rate will remain unchanged. 


Productivity and Unit Labor Cost (3Q09, Thursday 8:30 ET) 

F: 6.5%, -2.5% C: P: 6.6%, -5.8% 

Productivity, defined as output per hour, is expected to rise 6.5% in 3Q09 after increasing 6.6% in the second quarter. GDP grew 3.5% this quarter, confirming that output rose. Hours, on the other hand, most likely decreased due to the weak economy and labor market. As a result, productivity will rise, not because workers are becoming more efficient, but due to the fact that fewer workers are absorbing the increase in output. Furthermore, unit labor costs are expected to decline for the third month in a row, reflecting the increase in productivity and downward pressures on compensation. 


Non-Farm Payrolls (October, Friday 8:30 ET) 

F: C: P: 

Non-farm payrolls are expected to decline further in October given ongoing weakness in the labor market. This will mark the 22nd month that payrolls will have declined since the beginning of the recession. Furthermore, the economy has shed more than 7m jobs during that period. The labor market is expected to remain fragile even as the economy begins to recover. As a result, consumers will continue to spend frugally and consumer spending will remain subdued.


Consumer Credit (September, Friday 3:00 ET) 

F: -$9.2B C: P: -$12.0B 

Consumer credit outstanding is expected to decline for the twelfth month in a row in September. Consumers, plagued by ongoing weakness in the labor market, are still in the process of reducing their debt and credit markets remain tight, limiting access for those who seek it. The ongoing reduction in credit outstanding is one of the factors that lead us to believe that consumer spending will remain subdued throughout the recovery process.