Personal Income & Expenditures (January, Monday 8:30 ET)

Forecast: 0.3%, 0.3% Consensus: 0.4%, 0.4% Previous: 0.4%, 0.2%

Personal income is expected to climb for the seventh month in a row.
However, as in the previous month, growth will be driven by proprietors’ income and government transfers rather than by wages. While employee compensation is no longer declining, the weak labor market will keep wage inflation subdued. PCE is also expected to grow, illustrating strengthening in consumer demand. Nevertheless, uncertainty in the employment situation and household deleveraging could keep consumption growth subdued.


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

Forecast: 59.3 Consensus: 57.8 Previous: 58.4

The manufacturing sector has emerged as one of the leaders of the recovery. The ISM manufacturing index is expected to illustrate expansion in the sector for the seventh consecutive month as presaged by upward trends in durable goods orders. With the increase in manufacturing activity, we anticipate that industrial production and capacity utilization will rise as well. Furthermore, the ISM is a reliable indicator for economic growth and its upward trend illustrates that the U.S. is still on the path of recovery in 1Q10.


Pending Home Sales (January, Thursday 10:00 ET)

Forecast: 1.1% Consensus: 1.5% Previous: 1.0%

Pending home sales are expected to show further stabilization in housing demand by rising for the second month in a row. While pending sales have dropped from the high levels experienced early in the second half of 2009, the level remains above that of a year ago. Existing home sales have slipped in winter months, but another modest rise in pending sales could indicate that the recent data is not a trend.


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

Forecast: -30K Consensus: -50K Previous: -20K

Lay-offs in the labor market have stabilized, but the employment situation still remains weak. This point will be illustrated by the non-farm payroll data.
While job losses have slowed significantly from 2009’s average of 398K, they will continue in February. The transition to net job creation will be slow because businesses are currently increasing productivity of existing employees in order to meet new demand. The labor market could remain one of the main challenges to recovery in 2010.


Consumer Credit (January, Friday 10:00 ET)

Forecast: -$4.6B Consensus: -$3.8B Previous: -$1.7B

Consumer credit outstanding is expected to shrink for the eighteenth consecutive month as consumers continue to whittle down their debt and lenders maintain tighter credit standards than before the crisis. Non-revolving credit has begun to stabilize, but the ongoing decline in revolving credit indicates that households are limiting the use of credit cards. Household deleveraging could be one of the primary drivers behind the slow recovery of PCE in 2010.