1. Consumers keep on spending
Consumers, beset by sky-high debts, soaring gasoline costs and stagnant home prices, have for months been able to defy predictions that they would stop spending.
Another test of their staying power comes Wednesday, with May retail sales. Economist Brian Wesbury of First Trust Advisors in Lisle expects a jump of 0.7 percent.
His summary: “Spending on gasoline is extremely high, but wages are growing, joblessness is very low, and consumers continue to find money to spend. That means the economy is accelerating.”
2. Black trial nears end
In the long-running trial of newspaper billionaire Conrad Black, this is likely to be the week the defense rests. Lawyers say they will try to begin closing arguments June 18. Black, the former owner of the Chicago Sun-Times, is accused of taking millions of dollars.
3. OPEC’s loosening grip
Strange as it may seem, some analysts believe a spike in long-term interest rates soon will be reflected at the gas pump, with slightly lower prices. Their reasoning: Higher mortgage rates and other rising costs will slow the economy, weakening OPEC’s stranglehold on the world economy.
4. To tighten or not?
Barely more than two weeks remain before members of the Federal Reserve gather for a two-day policy meeting. Chicago economist Diane Swonk says “real growth in gross domestic product appears well on its way to exceed 3 percent in the second quarter.” Swonk, of Mesirow Financial, says to look for policymakers to tighten credit but not until early 2008.
5. Shortfall confessions
With only three weeks remaining before the end of the second quarter, companies are in the midst of confession season, when they own up to revenue and earnings shortfalls. Chicago investment manager Marshall Front of Front Barnett Associates said businesses have reduced their backlogs of unsold goods. His bottom line: “Factory orders for durable goods are rising, while inventories are at low levels and will need to be replenished.”
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wsluis@tribune.com
