No lumps of coal on horizon . . .
Like sparks ascending a chimney, the leading economic indicators have been wafting skyward. For 10 months in a row, the sensitive barometer, which is supposed to peer into the mists a half dozen or more months ahead, has emitted a cheery glow. Although a few analysts sense an occasional chill, most say there is plenty of fire remaining in the economy’s potbelly. Another report is due out Monday; Chicago economist Diane Swonk says it will show a further gain, 0.2 percent. “The housing market is coming back after a lull,” says Swonk, of First Chicago NBD Corp. “Overall, November showed a broad-based gain. Confidence ran high, and financial markets were strong.”
But consumers still wary
On Tuesday, just ahead of New Year’s Eve festivities, the Conference Board reports consumer confidence for December. Recent surveys have found Americans in an upbeat mood, with the group’s overall index for November at 107.3, near a five-year high. But an increasing number expressed doubts about the future, especially about the outlook for jobs.
New Year’s Eve slackers beware
Executives who looked the other way when workers skipped an extra day or two because of last week’s holiday may be a bit more flinty-eyed as the new year arrives. That’s because company policy often is less kind toward the second of these two major holidays. On Tuesday, many employees will be at their posts, as the New York Stock Exchange trades for a full day. Bond and commodity trading will end early. On Wednesday, stock, bond, options and commodity markets and most businesses are closed for football viewing, or more formally, New Year’s Day.
The ghost of retail past?
No sooner will the holiday fade than the nation’s retailers face their day of reckoning: discount and department store sales statistics for December. While the media have portrayed consumer buying as lackluster, economist Swonk says the holiday weeks are turning out about as expected, with overall gains of 4.5 percent to 5 percent. “The store sales figures will be very uneven, but there should be some upside surprises,” she says. On the downside, “many retailers hoping for double-digit gains will be disappointed.”
Manufacturing revs up
The manufacturing sector, which was in a muted slowdown through early autumn, appears to be regaining momentum. Another reading occurs Thursday, with monthly survey results from the National Association of Purchasing Management. In November, the group’s index rose to 52.7, the highest level since June.
A season for dream houses
A white blanket of winter precipitation is supposed to suggest stately silence, but not for home builders: The din of hammers has been unrelenting. A pair of reports, November new-home sales out Tuesday and construction spending on Friday, provide fresh measures of activity. Economists at BA Securities Inc. are looking for a bounceback for sales of housing, but expect construction expenditures to slip slightly, after zooming 1.8 percent in October.
End-of-year reality check
Americans have been building sand castles in the sky, amid fantasies of ever-rising corporate profits. But before such dreams can be realized, there is the small matter of fourth-quarter earnings reports, which may show some disappointments. And for the year ahead, analysts say results will be flat to 5 percent higher, about half the 1996 gains. John Silvia of Zurich Kemper Investments notes, “Profit growth has slowed but still remains positive.” But, he warns in a newsletter, “profits have never slowed without foreshadowing a recession.”
