1. Spending growth to slow gradually
Those who say the economy is headed toward a steep drop cite the consumer, who is weighed down with mountains of debt. Economists are looking for Friday’s report of August retail sales to show a gain of 0.5 percent, on top of the 0.3 percent advance a month earlier. According to economist Nigel Gault of Global Insight in Lexington, Mass., there will be a gradual slippage of consumer spending growth over the next three quarters, to an average 2.3 percent. “But we have not assumed a worst-case outcome, in which the saving rate climbs sharply amid a severe consumer retrenchment.” Gault said savings rates will rise, but only gradually.
2. OPEC considers quotas
In the category of just what we don’t need, the Organization of Petroleum Exporting Countries meets Tuesday to consider output quotas. Analysts expect it will keep production levels unchanged, for now, as it awaits evidence about any slowdown of the global economy.
3. Fed’s recession watch
With only about eight days remaining before members of the Federal Reserve make a decision on monetary policy, demands are growing that the central bank reduce its overnight lending barometer, currently 5.25 percent. Chicago economist Carl Tannenbaum of LaSalle Bank offers a warning: “The risk of a recession is rising, and the central bank needs to get in front of it.”
4. Dollar and the deficit
That sinking feeling has begun to afflict the dollar against world currencies, but some economists see it as good news. Items made on this side of the ocean become relatively cheaper as the greenback declines. Tuesday’s July trade deficit is expected to widen slightly from $58.1 billion in June.
5. Utilities firmly bearish
Right now, the weak point for Wall Street is utility stocks, which have fallen about 10 percent from a peak in May, said Flossmoor investment manager Richard Evans. His bottom line: “Utilities are in a firm bear market, and that eliminates a previous strong pillar for Wall Street.”
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wsluis@tribune.com
