1. Rate cut’s effect on spending eyed
Now that the Federal Reserve has slathered on a double layer of lower interest rates, thanks to a half-point reduction in the cost of overnight lending, it’s time for consumers to do their part. Whether they are eager to ratchet up spending may become clearer Tuesday, with September’s survey of consumer confidence from the Conference Board. Last month, the indicator sank to 105 from the prior month’s 111.9, as worries about the stock market rippled through the economy.
2. Small hope for housing
The housing industry may be trapped in a subbasement, but last week’s interest rate cut amounted to extending a ladder. Watch for few hopeful signs in the August existing-home sales report Wednesday or new-home sales Thursday. Housing fundamentals will remain negative for months, most economists believe.
3. The greenback blues
With gold pushing $750 an ounce, oil touching $83 a barrel and the global economy zooming ahead, the dollar has dropped to the status of an also-ran among world currencies. Following the Fed’s rate cut, the greenback slipped to another all-time low against the euro, surpassing $1.40. It also fell to parity with the Canadian loonie.
4. GDP revision possible
A final look at second-quarter gross domestic product on Thursday may face a small downward revision, from a relatively robust 4 percent. “The economy is running significantly below its potential,” although there are no clear signs of a recession, said economist Michael Swanson of Wells Fargo & Co. in Minneapolis.
5. Builder earnings slump
With third-quarter corporate profit reports still about three weeks away, Wall Street is keeping an eye out for warnings about any shortfalls. In the meantime, the list of companies reporting has slowed to a trickle. But bad news may await: Tuesday brings home builder Lennar Corp., expected to show a loss of 55 cents a share. And Thursday brings results from KB Home, forecast for a 67-cent-a-share loss.
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wsluis@tribune.com
