1. GDP growth rate losing headway
The economy grew less in the last three months of 2006 than the government previously estimated, as companies redoubled efforts to curb inventories, the Commerce Department is expected to report Wednesday when it issues its revised look at fourth-quarter gross domestic product. Economists think the GDP growth rate will be ratcheted down to 2.3 percent from the 3.5 percent pace the government reported last month. But, says Carl Tannenbaum, chief economist at LaSalle Bank in Chicago, “The ability of producers to liquidate excess inventories augers well for a more rapid return to more normal levels of production.”
2. Manufacturing malaise
Two key manufacturing reports scheduled to be released this week–Chicago-area activity on Wednesday and national manufacturing the following day–will be anxiously awaited by economists after both unexpectedly contracted in January. The Chicago purchasing managers index slid to 48.8 last month, the lowest reading since April 2003. The national index registered a reading of 49.3. Ian Shepherdson of High Frequency Economics predicts a decline in manufacturing for the first quarter. “The sector is in recession,” he said.
3. Retail earnings alert
The earnings season is winding down, but not all the big boppers have reported. Several will check in with their latest results this week, led by some of the nation’s prominent retailers and Dell Inc., which is scheduled to report Thursday. Upscale retailer Nordstrom Inc. is due to announce results Monday, followed by discounter Target Corp. and Federated Department Stores Inc. on Tuesday, and by Kohl’s Corp. and Gap Inc. on Wednesday.
4. No salve for home sales
Reports on home sales this week are expected to show that builder incentives, lower prices and cheaper borrowing costs are merely stabilizing demand. Economists forecast that the National Association of Realtors will report Tuesday that sales of previously owned homes in February edged up 0.3 percent. The next day, the Commerce Department is expected to report that sales of new homes declined 3.6 percent.
5. Big Three sales slump?
This could be another tough month for Detroit’s automakers, with several analysts predicting year-over-year declines for the Big Three when the companies announce February sales figures Thursday. Analysts are at odds about whether Chrysler will take a hit because of reports that it is up for sale. Tom Libby of J.D. Power and Associates said that “any type of adverse publicity really carries a lot of risk because there are so many other dealers [that buyers] can go to.”
