1. Capital spending finally on rise
Talk of an economic slowdown has been in the air for weeks, with complaints usually centered on the struggling housing industry and lackluster manufacturing. But the concerns about the factory sector are letting up. Watch for more news Thursday, with April orders for durable goods. Chicago economist Carl Tannenbaum expects a jump of 1 to 1 1/2 percent, on top of the 4.3 percent gain a month earlier. “The trend has been disappointingly slow to develop, but businesses finally are starting to plow money into new equipment,” said Tannenbaum, of LaSalle Bank. He says rising corporate profits are providing the money for companies to boost capital spending.
2. New turn in Black trial
The fraud trial of newspaper tycoon Conrad Black is about to enter a new phase, with jurors listening to tapes of two annual meetings of Hollinger International. Government prosecutors will try to show that Black, former owner of the Chicago Sun-Times, made misleading statements to investors.
3. Housing still in slump
Two gauges of the housing market come out Thursday and Friday, with April new-home and existing-home sales, respectively. Last week’s gain in housing starts was overshadowed by the weakest permit requests in more than 17 years. Economist Ian Shepherdson says there “still is no sign of an imminent end to the downward trend” for real estate. Shepherdson, of High Frequency Economics, says “inventories of unsold homes remain at extremely high levels.”
4. Gas demand curbing
Just in time for the summer driving season, motorists are hitting the brakes. Analysts say gasoline demand is slowing, at least slightly, in no small part because of prices exceeding $3.50 in many markets, and near $5 in parts of California. The price bubble has prompted oil companies to rev up their rusting refineries, helping to rebuild stocks of unsold fuel. The pain at the gas pump already hurt retailers, as evidenced by last week’s punk profit reports from Wal-Mart Stores and others.
5. Inflation woes persist
With first-quarter earnings reports largely out of the way, Wall Street is wondering what happens next. Chicago investment manager Marshall Front says one objective dear to economists’ hearts will take a while. “Inflation remains stubbornly above the Federal Reserve’s preferable range of 1 to 2 percent,” says Front, of Front Barnett Associates. The slow economy suggests that price pressures are abating, he says, but don’t look for any move by the Fed before autumn.
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wsluis@tribune.com
