WASHINGTON (AFX) - US indicators to be released this week are expected to show that the economy is in recession, with no sign as to when it might end, economists said.
"The good news is that a V-shaped recovery is likely," said economists at Lehman Brothers.
"The bad news is that the economy is still very much on the downside of the 'V'."
"Recessions usually last about a year. This one probably started in March," said Rus Shelton, economist at Nesbitt Burns in Toronto. "The typical thing about recessions is that the last part looks the worst. We're probably in the last stage of it and it will probably be quite uncomfortable for a while," Shelton said.
Economists said the data will show the short-term negative impact of Sept 11. They said it will take a few months before the data can be relied on for future forecasts.
"This numbers are all sort of the first Sept 11 numbers. This gives you the initial effect. In some cases, the secondary effects will drag the economy down further - in other cases you get a rebound," said Henry Willmore, senior economist for US markets at Barclays Capital.
Third-quarter GDP growth is expected to fall 1.3 pct, with weak business investment "driving the economy into recession," said Ian Morris, economist at HSBC. This will be the first negative quarter of economic growth since the first quarter 1993 and the weakest since the first quarter of 1991. The October unemployment report is expected to be quite weak, with nonfarm payrolls falling 286,000, which would be the largest drop since Aug 1983.
Following are the consensus forecasts of Wall Street economists for data to be released this week.
SEPT FEDERAL BUDGET REPORT, Monday (time - to be announced): The Treasury Department is expected to report the federal government ran a 27.0 bln usd surplus in September, down from the 64.82 bln surplus in the same month last year. This brings the full 2001 fiscal year to a 118.77 bln usd surplus, compared with last year's 236.99 bln usd. This will be the fourth consecutive annual budget surplus, including surpluses of 69 bln usd and 124 bln in 1998 and 1999. Many economists expect the US to return to a deficit in the current 2002 fiscal year due to declining tax revenues, increased spending, and the tax stimulus plan, which is expected to boost the recessionary economy.
Following are the consensus forecasts of Wall Street economists for data to be released this week.
OCT CONSUMER CONFIDENCE, Tuesday (10.00 am): Wall Street economists expect consumer confidence to slip to 95.6 in October from 97.0 in the previous month. In September, consumer confidence plunged to 97 from 114.0, the biggest monthly drop since Oct 1990. Shelton said that confidence surveys may be skewed as respondents express patriotism rather that confidence.
Q3 GDP, Wednesday (8.30 am): The consensus forecast of Wall Street economists is for third-quarter GDP falling 1.3 pct year-on-year. The economy was very sluggish in the second quarter, as GDP rose only 0.3 pct.
CHICAGO OCT PURCHASING MANAGERS SURVEY, Wednesday (10.00 am): The Chicago PMI is expected to fall to 44.1 from 46.6 in September. Last month, the survey rose from 43.6 in August, but most of the surveys were completed before Sept 11. The index has been below the neutral 50 pct level for the past year.
WEEKLY JOBLESS CLAIMS, Thursday (8.30 am): Jobless claims in the week ended Oct 27 are expected to rise by 1,000 to 505,000 after rising 8,000 to 504,000 in the previous week.
SEPT CONSUMER SPENDING, PERSONAL INCOME, Thursday (8.30 am): Economists expect consumer spending to fall 0.9 pct in September after rising 0.2 pct in August. Income is expected to rise 0.1 pct after remaining flat in August - the first time incomes haven't risen since Jan 1994.
SEPT CONSTRUCTION SPENDING, Thursday (10.00 am): Economists expect construction spending to fall 0.9 pct in September after falling 1.1 pct in August, the steepest drop in more than a year.
OCT NAPM MANUFACTURING INDEX, Thursday (10.00 am): The consensus forecast of Wall Street economists is for the October NAPM to fall to 44.3 from 47.0 in September. Last month, the NAPM slipped to 47.0 from 47.9.
OCT NONFARM PAYROLL, Friday (8.30 am): Economists expect a very weak October unemployment report. Nonfarm payroll is expected to fall 286,000 after falling 199,000 in September. The unemployment rate is expected to rise to 5.2 pct after remaining steady at 4.9 pct in the previous month. Hourly earnings are expected to rise 0.2 pct after increasing 0.2 pct in September.
SEPT FACTORY ORDERS, Friday (10.00 am): Wall Street economists expect factory orders to drop a sharp 3.1 pct in September after remaining flat in August. The forecast is based on the September durable goods orders, which fell 8.5 pct in September.