WASHINGTON (AFX) - U.S. economic indicators to be released this week will show a further weakening of the U.S. economy, keeping pressure on the Federal Reserve to cut interest rates for a sixth time in as many months when it meets in late June, economists said. The first quarter GDP is expected to be revised downward to 1.4 pct growth from the initial estimate of 2.0 pct growth.
"It now appears that the widely heralded first-quarter GDP result will be revised significantly lower from its initial 2 percent reading, and growth is expected to deteriorate in the second quarter. With growth still weak, and core inflation remaining at bay -- up just 0.2 percent in April -- the Fed is likely to chop rates again at the end of June," said economists from Toronto's BMO Nesbitt Burns.
The April durable goods figures set to be released Friday are expected to fall 2.5 pct after dropping 3.0 pct the previous month. "Durable goods will give us a feel of whether the declining trend in busines s investment is still continuing, and we expect that it probably is," said Ian Morris of HSBC Securities.
James O'Sullivan of UBS Warburg echoed that sentiment. "I think the capital goods part of the durable goods report in particular is interesting," he said, adding that its drop would be "largely a reversal of last month's spike in aircraft and defense, and another decline in non-defense capital goods ex-aircraft."
The relative lack of indicators to be released next week would prompt economists to watch closely what Federal Reserve Chairman Alan Greenspan says Thursday night at the The Economic Club of New York. "Greenspan's speech on Thursday night is probably going to be the most important thing in the sense that the last couple of (Federal Open Market Committee) statements suggest the Fed is doubting the ability of the economy to rebound in the second half, and Greenspan hasn't really talked about that, so he may decide to develop these thoughts further. "So that'll be interesting because that's different from the market, which is increasingly getting set for the end of Fed easing," Morris said.
Deutsche Banc/Alex Brown's Cary Leahey said economists will be closely watching the consumer sentiment report from the University of Michigan to see whether the onslaught of gloomy news has taken hold in the public's attitude about the economy.
"If sentiment goes against our forecast, and goes up another 2 points, then people will start to shut the door on another Fed ease," Leahey said, adding that he does not believe Greenspan will use the black tie function on Thursday to elucidate his views on the second half of the year.
"He's not going to say much of anything, he's a master at that, and I don't expect anything different," Leahey said.
While signals of weakness are reverberating throughout the economy, economists are predicting the real estate market to remain strong. "Home purchase mortgage applications are very solid, even the latest homebuilders survey was actually pretty decent," said Brian Jones of Salomon Smith Barney.

Following are the consensus forecasts of Wall Street economists for data to be released this week.

WEEKLY JOBLESS CLAIMS, Thursday (8.30 am): Weekly jobless claims are expected to rise by 13,000 to 393,000 for the week ending May 19 after claims fell unexpectedly by 8,000 to 380,000 in the week ending May 12.
APRIL NEW HOME SALES, Thursday (10.00 am): April new home sales are expected to fall to 986,000 units, after reaching 1.02 mln units the previous month.
APRIL DURABLE GOODS, Friday (8.30 am): Economists expect orders for durable goods to fall by 2.7 pct after rising 3.0 pct in March.
REVISED Q1 GDP, Friday (8.30 am): Economists expect the second estimate of first-quarter GDP, known as the preliminary estimate, to fall to 1.4 pct annualized growth after the first estimate, known as the advanced estimate, predicted 2.0 pct annualized growth.
MICHIGAN CONSUMER SENTIMENT, Friday (9.45 am): Economists expect the University of Michigan's final consumer sentiment index to drop just slightly to 92.5 from initial estimate of 92.6.
APRIL EXISTING HOME SALES, Friday (10.00 am): Economists expect the sale of existing homes to reach 5.3 mln units, after hitting 5.44 mln units in March.