Key U.S. Data Releases and Events

Next week promises somewhat better economic news, as producer prices are projected to decline for the first time since December 2007, setting the stage for a series of better top-level inflation numbers. August retail sales are expected to get a boost from a nice bounce in auto sales, and mid-September consumer sentiment should perk up as households see further relief on gasoline prices.

KEY U.S. DATA RELEASES THIS WEEK

Thursday, September 11 – Trade Balance (Jul.)

Global Insight: -$61.5 Billion
Consensus: -$58.0 Billion
Last Actual: -$56.8 Billion (Jun.)

What to Look For

• Deficit to widen to $61.5 billion, driven by higher imported oil prices.

Implications

We expect the trade deficit to widen to $61.5 billion in July, from $56.8 billion in June, largely on a $3.0-billion increase in the oil import bill, driven by higher crude prices. With oil prices now down sharply from their July peak, the oil bill will fall back in coming months. We also expect to see some widening in the non-oil deficit, which narrowed dramatically in June, helped by surging exports. The improvement in exports is far from over, but we expect a pause in July after June's big gains.

Friday, September 12 – Producer Price Index (Aug.)

Total
Global Insight: -0.5%
Consensus: -0.5%
Last Actual: +1.2% (Jul.)

Core
Global Insight: +0.3%
Consensus: +0.2%
Last Actual: +0.7% (Jul.)

What to Look For

• Overall prices to decline by 0.5%, as energy prices beat a retreat.
• Core prices to rise by 0.3%, as some pass-through of previous energy price rises is expected.

Implications

A collapse in energy prices allows the first monthly decline in producer prices since December 2007. We expect producer prices to fall 0.5% in August, following three consecutive monthly increases in excess of 1.0%. Sharp declines in gasoline and heating oil prices will shove the energy index roughly 2.5% lower. In addition, food prices will not have as much upward force as in recent months.

Excluding food and energy, we expect "core" producer prices to rise 0.3% in August, following the torrid 0.7% pace posted in July. The larger-than-normal August rise will reflect the passing of previous cost pressures through to final goods. However, further global weakness and falling commodity prices will take the heat out of the core index as we enter the final quarter of 2008.

Friday, September 12 – Retail Sales (Aug.)

Total
Global Insight: +0.6%
Consensus: +0.2%
Last Actual: -0.1% (Jul.)

Less Autos
Global Insight: -0.1%
Consensus: -0.2%
Last Actual: +0.4% (Jul.)

What to Look For

• Total retail sales to move up by 0.6%, propelled higher by a bounce in autos.

Implications

Led by a rebound in vehicle purchases, retail sales increased an estimated 0.6% in August, their best gain since May. Unit sales of light vehicles recovered from a dismal 12.5-million annual rate in July to 13.7 million in August. Excluding the automotive group, retail sales probably fell 0.1%, held back by a drop of nearly 4% in gasoline prices. General merchandise stores and other major channels posted modest gains, as consumer spending is being restrained by declining employment, falling home values, and the end of fiscal-stimulus payments.

Friday, September 12 – Michigan Consumer Sentiment Index (PreliminarySep.)

Global Insight: 66.0
Consensus: 64.0
Last Actual: 63.0 (Final Aug.)

What to Look For

• Overall index to bounce up by 3 points, to 66.0.

Implications

The Reuters/University of Michigan consumer sentiment index edged up from 63.0 in August to an estimated 66.0 in early September, continuing the gradual recovery began in June. With falling oil and commodity prices dampening inflation, consumers are feeling more optimistic about the economic outlook. But current finances are squeezed by job losses, the housing market bust, and tightening credit conditions.