Econ Data Clouds Crystal Ball - Analyst Blog
30 Agosto 2012 - 11:22AM
Zacks
A mix of inline domestic and weak international data provides
the backdrop for Chairman Bernanke's Jackson Hole speech on Friday.
On the home front, the Personal Income & Spending data for July
was roughly in-line with expectations, while the weekly initial
Jobless Claims data was a tad weaker than expected.
Beyond our shores, weak data out of Japan, Europe and South Korea
this morning again reminded us of the worldwide economic
challenges.
Today's July Personal Income & Outlays report shows that the
U.S. economy started the current quarter on firmer footing than was
the case in the second quarter. Consumer spending increased at a
better-than-expected 0.4% pace in July following the flat reading
in June and a drop in May. This is in-line with what we had seen in
the positive July Retail Sales data and provides some confirmation
of positive momentum on this key front.
Personal Income growth also came in-line with expectations, up 0.3%
in July after the 0.3% gain in June (revised down from up 0.5%
originally reported). On a related note, we got August same-store
sales data this morning, with a number of retailers including
Target (TGT), Gap (GPS),
Macy's (M) and Nordstrom (JWN)
posting better-than-expected numbers.
Consumer spending, the biggest driver of the economy, increased at
a 1.7% pace in the second quarter, revised higher in Wednesday's
second reading from the 1.5% originally reported but below the
first quarter's 2.4% pace. For the economy's growth momentum to
improve in the current quarter and back half of the year, consumer
spending needs to rise from the second quarter's pace. But that
will be possible only once the labor market starts showing
sustainable signs of improvement.
This morning's somewhat disappointing Jobless Claims data indicates
that the modestly improving trend of recent weeks remains in place.
We will get a better picture of the labor market from the August
non-farm payroll numbers coming out next Friday. But a number along
the lines of what we got in July would generally be looked at
favorably.
It is far from clear what all of this means for Fed policy, and the
market's tentativeness of recent days shows exactly that. Many
serious market watchers remain of the opinion that the economy's
condition is not precarious enough to warrant fresh Fed support.
They point to Wednesday's 1.7% GDP growth rate in the second
quarter and expectations of 100K-plus jobs in next Friday's Jobs
report as evidence in support of this claim.
This morning's July Personal income & Outlays reading would
also fall in that category. I am of the view that more Fed action
is largely irrelevant to the issues facing the U.S. economy.
Neither lack of liquidity nor higher interest rates are hurdles for
the economy at present; in fact both of those variables remain
quite supportive already.
Fiscal issues on the home front and a slowing international economy
are the issues holding the economy back and more Fed action will do
little to help out on those fronts.
GAP INC (GPS): Free Stock Analysis Report
NORDSTROM INC (JWN): Free Stock Analysis Report
MACYS INC (M): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
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