WASHINGTON (FWN) - US data to be released this week will show the recession continues in the US economy, as recent reports suggesting strength may be overstated, analysts said.
"The economy has an underlying weakness to it," said Robert McGee, chief economist at Tokai Bank Ltd. Talk of a quick recovery was bolstered in recent weeks after jobless claims fell from high levels and consumer confidence and the Nov NAPM indexes were stronger than expected.
These reports generally indicate that "the big hit from Sept 11 was going away faster than expected," McGee said. "But we still don't know how much the strength we're seeing in some of the indicators is just a reversal of that (big hit) or how much it is the beginning of something better," he said.
Joshua Shapiro, economist at Maria Fiorini Ramirez, said the talk of a quick rebound has been "overdone." "We think the economy is going to remain weaker for longer than a lot of people think, and that even when the recovery commences around mid-year, it is going to be a slow one," Shapiro said.
"A lot of the data is in the bounce phase after the huge declines right after Sept 11. Our view is you need to look at it all together as a package deal. When you start doing that, the trends are still very weak," he said. Retail sales are expected to fall in November as car sales were down from a high levels in October that were caused by zero percent financing deals. Rus Shelton, economist at Nesbitt Burns in Toronto, said that recent strength in the economy was "false strength" that was caused by the tax rebate program enacted by Congress last summer.
"I believe that the rebate program was under-appreciated," Shelton said. Most economists viewed the strength as a sign that the rising layoffs were not having an impact on consumer spending.
"I believe the job cuts will have a huge impact. Now that the rebate program is over and the zero rate financing program is over, we're on our own," Shelton said.
Data to be released this week will also show that a big drop in energy prices is holding down inflation again.

The following are the consensus forecasts of WallStreet economists for indicators to be released this week.
OCT WHOLESALE INVENTORIES, Tuesday (8.30 am): Economists expect wholesale inventories to drop 0.5 pct in October after falling 0.1 pct in September. This would be the fifth straight monthly decline.
Q3 CURRENT ACCOUNT DEFICIT, Wednesday (8.30 am): The current account deficit is seen narrowing to 95.0 bln usd in the third quarter from 106.5 bln in the previous quarter. In the second quarter, the current account deficit narrowed to 106.5 bln usd from 111.8 bln in the first quarter.
NOV IMPORT PRICES, Wednesday (8.30 am): Import prices are seen falling 1.0 pct in November after a record 2.4 pct drop in October.
NOV PPI, Thursday (8.30 am): The consensus forecast of Wall Street economists is for the Nov PPI to fall 0.3 pct after a record 1.6 pct drop in the previous month. The core rate is seen rising 0.1 pct after falling 0.5 pct in October.
NOV RETAIL SALES, Thursday (8.30 am): Retail sales are seen falling 2.7 pct in November after rose a record 7.1 pct in October. The record increase in October retail sales was the strongest since Commerce began compiling data on its current basis in 1992. Excluding autos, sales are expected to rise 0.2 pct after increasing 1.0 pct in the previous month.
WEEKLY JOBLESS CLAIMS, Thursday (8.30 am): Jobless claimsin the week ended Dec 1 are seen falling 15,000 to 460,000 in the week ended Dec 8 after claims fell 17,000 to 485,000.
NOV CPI, Friday (8:.0 am): Economists forecast that consumer prices in November will remain unchanged after falling 0.3 pct in October. The core CPI rate is seen rising 0.1 pct after rising 0.2 pct in the previous month.
OCT BUSINESS INVENTORIES, Friday (8.30 am): Inventories are seen falling 0.6 pct in October after falling 0.5 pct in September. This would be the ninth straight monthly decline.
NOV INDUSTRIAL OUTPUT, Friday (9.15 am): Economists expect industrial production to fall 0.8 pct in November after falling 1.2 pct in October. Industrial capacity is seen falling to 73.9 in November from 74.6 pct in October, the lowest level of capacity in use since May 1983.