WASHINGTON (AFX) - Economic data to be released this week will continue to show a lackluster U.S. economy as the Federal Open Market Committee (FOMC) meets to discuss its monetary policy strategy for the next two months, economists said.
They are divided on whether the June cut will be 50 basis points or 25 basis points.
Michael Englund, chief economist at Standard & Poors MMS, said he expects consumer confidence in June to drop slightly as the high-tech sector shows no signs of improvement from its abysmal performance over the last several quarters.
"Even though confidence is at high historic levels, generally speaking, it obviously has dropped off over the last six to eight months and we are assuming that weight will remain on the confidence numbers until we see a more decisive turn" in the economy. This would come from individual companies announcing purchase orders or public comments from high-tech CEOs that the slump is over, he added.
"We are assuming that the turning point probably will be either comments from these heads of the high-tech companies that we are at the turning point or an actual orders number that bounces back," Englund said.
Ian Morris of HSBC Securities said the real estate market is expected to remain strong in the short run despite the weak economy, as drops in property prices historically lag behind declines in equity prices.
"I think that's kind of the way the process pans out, but I doubt whether it can continue to keep going up," he said, noting that the U.S. real estate market continued to climb for nearly two years after the stock market crash in 1987 and the Japanese real estate market also rose for more than a year after the Nikkei bubble burst in the late 1980s.
The economists only see a slight downward reduction to 1.2 pct growth for first quarter GDP growth from the previous estimate of a 1.3 pct rise.
Englund said a new classification system implemented by the Commerce Department, known as the North American Industry Classification System, would show upward revisions to consumption and retail inventories that would offset weak export data which would have otherwise caused downward revisions to GDP.
Following are the consensus forecasts of Wall Street economists for data to be released this week.
MAY EXISTING HOME SALES, Monday (10.00 am): Economists expect the sale of existing homes to remain flat after falling 4.2 pct to 5.2 mln units in April.
MAY DURABLE GOODS, Tuesday (8.30 am): Economists expect orders for durable goods to rise by 0.2 pct in May after falling a sharp 5.0 pct in April.
MAY NEW HOME SALES, Tuesday (10.00 am): New home sales are expected to rise 0.8 pct to 901,000 units in May after In April, new home sales fell 9.5 pct to 894,000.
JUNE CONSUMER CONFIDENCE, Tuesday (10.00 am): Economists expect the Conference Board's June index of consumer confidence to drop to 113.8, after reaching 115.5 in May from 109.9 in April.
WEEKLY JOBLESS CLAIMS, Thursday (8.30 am): Weekly jobless claims are expected to rise by 14,000 to 414,000 for the week ending June 23 after claims dropped precipitously by 34,000 to 400,000 in the week ending June 16.
Q1 GDP, FINAL, Friday (8.30 am): Economists expect the third and last estimate of first-quarter GDP, known as the final estimate, to fall to 1.2 pct annualized growth after the second estimate, known as the preliminary estimate, predicted 1.3 pct annualized growth.
JUNE MICHIGAN CONSUMER SENTIMENT, FINAL Friday (10.00 am): Economists expect the University of Michigan's final June consumer sentiment index to rise just slightly to 91.8 from initial estimate of 91.6. In May, the Michigan index was 92.