This week is going to be a really busy one for economic data. I’m not going to be able to do detailed posts on everything. But because in the past couple of months most of the data has gone against my “2019 slowdown” scenario, I thought both in the interests of transparency, and to put down a few benchmarks to anchor my analysis, I’d write down what I am looking for in each release.
Monday – personal income for March; personal spending for February (!) and March. Yes, we’re still playing catch-up in data releases delayed by the government shutdown. Both of these are important to my “mini-recession” hypothesis. The February spending number might still be punk, but I am expecting spending in particular to come roaring back in March, especially after the blowout March retail sales report. Basically, I think the last 45 days of Q1 pulled the economy back from a brief downturn in the first 45 days:
Tuesday – Q1 Employment Cost Index. This is a median measure of wages and benefits. It has been improving for several years now, and I am expecting it to continue. The Case-Shiller house price index also comes out Tuesday. The question will be whether house prices continue to outpace income, which I think is the case, and is one reason why the economy may be slowing, as $$$ paid on the mortgage or rent can’t be spent elsewhere. And finally, I’ll be checking to see if the weekly temporary staffing index continues to be negative.
Wednesday – Construction spending. This is one I am watching closely. It should follow housing permits and starts with a delay of several months. But, oddly, even though starts in particular have continued to languish, spending has come back strongly since last November. I’ll be looking to see if that anomaly continues, or whether construction spending reverts to its historical pattern. The ISM manufacturing index also comes out Wednesday. The Fed regional indexes have turned up in the last couple of months, so I am expecting this to improve as well.
Thursday – jobless claims. Were the two recent sub-200k readings a spasm of unresolved seasonality because Easter came so late this year? Or are they truly telling us that the economy is heating up again? If the former, I would expect another reading like the 230k reading we got last week.
Friday – payrolls. For my 2019 slowdown scenario to be right, the three leading sectors of temporary, manufacturing, and construction jobs ought to continue to decelerate or decline. I will also be looking to see if the YoY comparison in total payrolls weakens or not. Finally, I’ll be interested in whether the unemployment rate follows the downward trajectory of initial jobless claims.
By the end of this week, my December through February “mini-recession” scenario should be finally validated, or not! And there will a lot to chew on as to whether my slowdown scenario is valid, or whether I need to not fight the data and re-evaluate.