22 April 2002, 09:38 OUTLOOK: US economic data to show strong Q1 GDP but key questions remain
WASHINGTON (AFX) - U.S. data to be released in the coming week are
expected to show strong Q1 GDP growth, but key questions are still
unanswered about the medium-term outlook, analysts said.
"Things are improving," said Joshua Shapiro, economist at Maria
Fiorini Ramirez in New York. "Manufacturing is leading the way, the
consumer is hanging in there, housing is at a high plateau," he said.
Economists expect a strong rebound in Q1 GDP growth - to a 4.9 pct
annual rate from a 1.8 pct growth rate in the previous quarter. But
much of the increase will come from a slowdown in inventory
liquidation.
On Wednesday April 17, Fed chairman Alan Greenspan noted that
inventories were likely to boost GDP but said it was too early to say
the economic expansion was sustainable and solid.
"The comfort level is obviously not there at the Fed that the final
demand is sustainable," Shapiro said.
The acceleration in GDP and the low employment cost index should be
good news for corporate profit margins, but "whether that translates
into investment" remains an open question, said Jonathan Basile,
economist at Credit Suisse First Boston.
The March durable goods report may provide some clues in this area,
he said. Economists expect durable goods orders to rise 0.3 pct after
rising 1.8 pct in February.
Two March housing statistics - new home sales and existing home
sales - will show activity remaining at elevated levels, analysts said.
Following are the consensus forecasts of Wall Street economists for
indicators to be released in the coming week:
MARCH DURABLE GOODS, Wednesday (8:30 AM): Economists expect durable
goods to rise 0.3 pct in March after rising 1.8 pct in February.
MARCH NEW HOME SALES, Wednesday (10:00 AM): Analysts expect new
home sales to rise 0.3 pct to 878,000 units after sales rose 5.3 pct in
February to 875,000 units.
Q1 EMPLOYMENT COST INDEX, Thursday (8:30 AM): The employment cost
index is expected to rise 0.9 pct in the first quarter, or 3.8 pct
year-on-year. In the fourth quarter, the ECI rose 0.9 pct and was up
4.1 pct year-on-year. Some analysts said the benefits number would be
closely watched because of anecdotal reports of medical care costs.
WEEKLY JOBLESS CLAIMS, Thursday (8:30 AM) Analysts forecast jobless
claims Jobless claims fell 20,000 to 425,000 in the previous week.
Analysts say jobless claims are still being distorted by applications
for extended benefits.
MARCH EXISTING HOME SALES, Thursday (10:00 AM): Existing home sales
are expected to fall 4.6 pct to 5.61 mln units after sales fell 2.8 pct
in February to 5.88 mln.
Q1 GDP, Friday (8:30 AM): The consensus forecast of Wall Street
economists is for Q1 GDP to rise at a 4.9 pct annual rate. Most of this
increase will come from a slowdown in inventory liquidation, which
could add up to 3.0 pct. The key number will be domestic final demand,
which filters out the impact of inventories and the trade sector. Q4
GDP rose 1.7 pct. Final sales rose 3.8 pct and the GDP price index was
down 0.1 pct.
U OF MICH APRIL CONSUMER SENTIMENT, Friday (9:45 AM): Economists
don't expect much change in the final April reading from the University
of Michigan consumer sentiment index. Analysts expect the index to tick
up to 95.3 from the preliminary estimate of 94.4.
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