After roaring like a lion last week, the sound of economic data in the week ahead could be more like crickets. You just might need to listen closely to get an updated sense of where the economy is headed.
Last week's report from the Commerce Department's Bureau of Economic Analysis showing a 0.1 percent contraction in the fourth quarter was a shocker. It was immediately shot down by the experts, who blamed the slowdown largely on Superstorm Sandy and the sharp drop in federal defense spending. It was followed Friday by the January jobs report that included upward revisions in the number of jobs added in November and December, although the unemployment rate rose to 7.9 percent.
As for this week, Briefing.com chief economist Jeffrey Rosen says we'll look for confirmation of a slowdown, or more signs indicating it was an aberration. "The important economic releases for the week -- factory orders, trade balance and wholesale inventories -- will provide further evidence on whether the BEA was correct or not in their assessment that (gross domestic product) contracted in Q4 2012," Rosen says. It would be hard to find a well-respected economist forecasting a recession, with most looking for a resumption of growth in the current quarter and beyond.
Reflecting the views of most, Rosen says "positive surprises in these areas will likely lead to an upward revision in the fourth quarter GDP growth rate." As for the current quarter, IHS Global Insight economist Nigel Gault wrote that "the incoming data points to continued growth." He adds: "We expect GDP growth to rebound to around 2 percent in the first quarter."
Today brings the December factory orders report, at 10 a.m. Eastern time. It comes after last week's better-than-expected Institute for Supply Management manufacturing report. The ISM's look at the services sector is released at 10 a.m. Eastern time Tuesday. The previous month's report showed continuing growth in the white-collar sector.
The Federal Reserve continues to encourage spending and borrowing through low interest rates with an eye toward improving the job market. But some prospective borrowers complain that money is hard to get. Kenneth Simonson, chief economist for The Associated General Contractors of America, says the Fed's senior loan officers survey is one indicator that he watches. That report is due Monday. Simonson says he's looking to see if tight lending conditions for commercial real estate have changed.
A report on the nation's December trade gap comes at 8:30 a.m. Eastern time Friday. "If the trade deficit is much wider than forecast, then Q4 GDP will likely be revised even further down from its current contraction," Rosen says.
Beyond all of that, the continuing budget stalemate in Washington, D.C., is one of the biggest unknowns. If mandatory budget cuts or a feared government shutdown occur as threatened in March, the nation's economy faces greater downside risks.