1. Employment key to 2008 outlook
As the economy readies to raise the curtain on 2008, the big question on economists’ minds is whether they will need to use the “r” word. Mostly, they have been reluctant to predict a recession during the next 12 months. But a lot depends on consumers retaining their jobs — and paychecks. Clues arrive Friday, with the December employment report. “The labor market has softened, and we expect payroll growth of only 70,000 positions, down from 94,000 in November,” said economist Robert Dederick of RGD Economics. He expects an uptick in joblessness to 4.8 percent, from 4.7 percent. Dederick’s bottom line: “With consumers and businesses feeling the pressure, economic momentum is beginning to melt like snowflakes in March.”
2. Open markets minutes
Investors will carefully parse Wednesday’s minutes from the most recent meeting of the Federal Open Markets Committee. After the gathering, the central bankers reduced their short-term target for interest rates by a mere quarter-point, disappointing Wall Street. The Fed minutes will shed light about the extent to which policymakers are fretting about inflation.
3. Ho-hum holiday sales
The so-so pace of holiday spending will be in the spotlight Thursday, when discount and department stores report their sales figures for December. Most analysts are saying the overall results will be melancholy for the retailers, who were forced to make steep discounts. They are saying the season will turn out to be the weakest in five years despite the effect of sky-high gasoline prices, which some figure into the retail spending figures.
4. Auto sales downshift
The troubled auto industry is on center stage Thursday, with December car and light-truck sales. Economists say Detroit is steering into the slow lane. Even with deep discounts, annual sales rates are expected to drop to around 15.7 million units from 16.2 million a month earlier. Problems include gasoline above $3 a gallon and the lessened ability of consumers to borrow against homes that are sinking in value.
5. ’08 profit outlook weak
As the stock market gets ready to close out the old year, the No. 1 concern of investors is corporate profits. Chicago investment manager William Hummer says earnings in the year ahead “will grow in single digits, about 5 percent if we’re lucky.” Hummer, of Wayne Hummer Investments, said part of the problem is difficult comparisons with the year gone by, as well as rising costs for commodities and labor. The winners, he added, “will be companies that derive their profits from exports.”
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wsluis@tribune.com
