One of the very heaviest weeks of the year will be
highlighted by what looks to be a certain rate hike at midweek as the
Federal Reserve moves to head off the risk of overheating in the labor
market. The week opens with a summation of August's strength in the
national activity index on Monday followed by what has become the most
robust of any report on the economic calendar -- manufacturing data
from the Dallas Fed which have been boosted by high energy prices. A
contrast to the general strength of economic data has been home prices
which have been slowing noticeably and which will get key updates from
both Case-Shiller and FHFA on Tuesday. Consumer confidence has been on
fire the past two years and hit a peak in the August report and only
very slight slowing is expected for September's report on Tuesday. New
home sales will open Wednesday's session and are expected to offer
another reminder that housing has not been contributing much at all to
2018's economy. FOMC activities follow that afternoon and will include
updated economic forecasts and also Jerome Powell's press conference. A
pop higher for durable goods orders are expected on Thursday along
with data on August international trade which in July opened
third-quarter net exports in disappointment as exports fell sharply.
Third-quarter GDP will again be in focus on Friday as personal income
and more urgently consumer spending will get updates, results that are
expected to be solid to moderate. The week closes out with the always
robust Chicago PMI and recently robust consumer sentiment report.
Monday
National Activity Index for August
Consensus Forecast: 0.20
Consensus Range: 0.10 to 0.20
Strength in employment will be an offset to softness in manufacturing production for the national activity index in August where moderate acceleration is the expectation, to a consensus 0.20 vs 0.13 in July.
Dallas Fed General Activity Index for September
Consensus Forecast: 31.2
Consensus Range: 28.0 to 31.7
Steady and robust have been the results of the
Dallas Fed's manufacturing survey and more of the same is expected.
Econoday's consensus for the September's general activity index is 31.2 vs 30.9 in August.
Tuesday
Case-Shiller, 20-City Adjusted Index for July
Consensus Forecast, Month-to-Month Change: 0.1%
Consensus Range: 0.1% to 0.4%
Case-Shiller, 20-City Unadjusted Index
Consensus Forecast, Month-to-Month Change: 0.5%
Consensus Range: 0.5% to 0.6%
Case-Shiller, 20-City Unadjusted Index
Consensus Forecast, Year-on-Year Change: 6.3%
Consensus Range: 6.2% to 6.5%
Case-Shiller has missed the consensus the last
four reports in a row as home prices have been slowing sharply. Another
month of limited growth is the call for Case-Shiller data in July where the consensus gain for the 20-city adjusted index is only 0.1 percent vs 0.1 percent in June. The unadjusted year-on-year rate, at a consensus 6.3 percent, is seen holding at June's rate. The consensus for unadjusted monthly growth, reflecting the relative price strength of July compared with other months of the year, is 0.5 percent.
FHFA House Price Index for July
Consensus Forecast, Month-to-Month Change: 0.3%
Consensus Range: 0.2% to 0.3%
The FHFA house price index, like Case-Shiller's
20-city index, has missed Econoday's consensus for the past four months
as home-price appreciation has gone south this year. The FHFA house price index
has managed only very small gains the past four reports with a bit
better gain, at 0.3 percent, the consensus for July vs June's 0.2
percent.
Consumer Confidence Index for September
Consensus Forecast: 131.7
Consensus Range: 130.0 to 134.3
Forecasters see slight moderation to 131.7 for the September consumer confidence index
which jumped very sharply to 133.4 in August which was the strongest
reading since October 2000. Jobs-hard-to-get were very low in the
August report and accurately predicted that month's strong employment
report.
Richmond Fed Manufacturing Index for September
Consensus Forecast: 20
Consensus Range: 19 to 25
The Richmond Fed's manufacturing index,
which has beaten the consensus the last four reports in a row, is
expected to come in at 20 in September vs 24 in August. Orders and
backlog growth were unusually rapid in August and point to overall
strength, and perhaps increasing capacity stress, for September.
Wednesday
New Home Sales for August
Consensus Forecast, Annualized Rate: 630,000
Consensus Range: 608,000 to 650,000
New home sales have missed
Econoday's consensus the last two reports and by very large margins. A
630,000 rate is the consensus for August which would be little changed
from 627,000 in July. A positive in the July report was a rise in
supply though a jump in prices may prove a negative for sales in August.
Federal Funds Target for September 25 & 26 Meeting
Consensus Forecast, Midpoint: 2.125%
Consensus Range: 2.00% to 2.25%
A rate hike is the universal expectation among
Econoday's panel for September's FOMC meeting, a hike that would be
tied directly to the strength of the jobs market and risk that lack of
available labor will begin to push inflation higher. The FOMC is
expected to raise its federal funds target range by 25
basis points to a range between 2.00 and 2.25 percent with an implied
target of 2.125 percent. Also released will be quarterly FOMC forecasts, which in the last set had penciled in an additional rate hike before year end. A press conference with Jerome Powell is also scheduled.
Thursday
Durable Goods Orders for August
Consensus Forecast, Month-to-Month Change: 2.0%
Consensus Range: 1.0% to 3.5%
Durable Goods Orders, Ex-Transportation
Consensus Forecast: 0.5%
Consensus Range: 0.3% to 1.0%
Durable Goods Orders, Core Capital Goods (Nondefense Ex-Aircraft)
Consensus Forecast: 0.4%
Consensus Range: 0.3% to 0.4%
At plus 2.0 percent, bounce-back strength is the consensus for August durable goods orders which fell back in July on a decline in commercial aircraft. The decline masked what, however, was powerful strength in core capital goods orders
where only limited give back is the expectation for August, at a
consensus gain of 0.4 percent vs a 1.6 percent jump in July (revised
from an initial 1.4 percent). Ex-transportation orders are expected to rise 0.5 percent.
Real GDP: 2nd Quarter, 3rd Estimate, Annualized Rate
Consensus Forecast: 4.3%
Consensus Range: 4.0% to 4.5%
Real Consumer Spending, Annualized Rate
Consensus Forecast: 3.8%
Consensus Range: 3.7% to 4.0%
GDP Price Index
Consensus Forecast: 3.0%
Consensus Range: 3.0% to 3.0%
The third estimate for second-quarter GDP is expected to come in at a 4.3 percent annualized rate vs 4.2 percent in the second estimate. Consumer spending is expected to come in unchanged at a 3.8 percent rate. The GDP price index is also seen unchanged at 3.0 percent.
International Trade In Goods for August
Consensus Forecast, Month-to-Month Change: -$70.8 billion
Consensus Range: -$72.2 to -$69.0 billion
The goods deficit is expected to
narrow to a consensus $70.8 billion in August vs $72.1 billion in July
(revised from an initial $72.2 billion). The results will update
progress on third-quarter net exports which were very favorable in the
second quarter.
Advance Wholesale Inventories for August
Consensus Forecast, Month-to-Month Change: 0.2%
Consensus Range: 0.2% to 0.3%
Wholesale inventories are expected
to rise 0.2 percent in August following a 0.6 percent build in July
(revised from 0.7 percent in the advance reading). Despite the spike in
July, inventories relative to sales at the wholesale level have been
lean.
Initial Jobless Claims for September 22 week
Consensus Forecast: 210,000
Consensus Range: 210,000 to 222,000
Initial jobless claims are
expected to come in at 210,000 in the September 22 week with data out
of hurricane-hit North Carolina a wild card. In the prior report,
initial claims and the 4-week average were at 50-year lows and
continuing claims and 4-week average were at 46-year lows.
Pending Home Sales Index for August
Consensus Forecast, Month-to-Month Change: 0.2%
Consensus Range: -0.5% to 2.0%
Pending home sales are expected to
increase 0.2 percent in August after falling 0.7 percent in July.
Sales of existing homes have been very soft and are perhaps the biggest
disappointment of the 2018 economy.
Friday
Personal Income for August
Consensus Forecast, Month-to-Month Change: 0.4%
Consensus Range: 0.3% to 0.5%
Consumer Spending
Consensus Forecast, Month-to-Month Change: 0.3%
Consensus Range: 0.2% to 0.4%
PCE Price Index
Consensus Forecast, Month-to-Month Change: 0.2%
Consensus Range: 0.1% to 0.2%
PCE Price Index
Consensus Forecast, Year-on-Year Change: 2.3%
Consensus Range: 2.2% to 2.3%
Core PCE Price Index
Consensus Forecast, Month-to-Month Change: 0.1%
Consensus Range: 0.0% to 0.2%
Core PCE Price Index
Consensus Forecast, Year-on-Year Change: 2.0%
Consensus Range: 1.9% to 2.1%
Personal income is seen rising a solid 0.4 percent in August while consumer spending is expected to increase a moderate 0.3 percent. The core PCE price index,
which excludes both food and energy, is seen posting a 0.1 percent
monthly rise for a year-on-year gain of 2.0 percent that would be right
at the Federal Reserve's policy target. The core, which is the most
closely watched of all inflation readings, first hit the Fed's 2
percent goal in March before edging to 1.9 percent in subsequent
reports and then returning to 2.0 percent in July. The consensus for
the overall PCE price index is 0.2 percent for a year-on-year rate of 2.3 percent.
Chicago PMI for September
Consensus Forecast: 62.0
Consensus Range: 59.0 to 64.5
Steady strength at a very high level is the call for the Chicago PMI
with the September consensus at 62.0 vs 63.6 in an August report that
showed welcome easing in both delivery and employment pressures. Input
costs, however, remained highly elevated with 60 percent of the sample
reporting pass-through to customers.
Consumer Sentiment Index, Final September
Consensus Forecast: 100.8
Consensus Range: 96.0 to 101.0
Expected to hold at the preliminary score, Econoday's consensus for the final consumer sentiment index for September
is expected to come in at 100.8. The preliminary report proved the
strongest since March, reversing softening in prior months on rising
assessments of both current conditions and expectations.
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