Next Week's Important US Economic Data

The advance report on Q316 Real GDP, due this coming Friday, could be important.  Consensus is for 2.5% (q/q, saar), which would be a pickup from 1.4% in Q216 and 1.1% on average in H116.  It also would be well above the 1.7% pace viewed by many, including Fed staff, as trend. 

Some Street Economists, like those at Goldman Sachs, base their expectation of a December Fed rate hike at least in part on such a strong Q3 GDP print.  Goldman Sachs' estimate, the last I saw, was at 2.7%.  So, a near-consensus print could solidify these expectations.  But, if Q3 Real GDP comes in at the Atlanta and NY Fed's nowcast model projections of 2.0-2.2%, the market probability of a December hike could be dampened.

All these forecasts could change significantly ahead of Friday's report, however.  This is because the Commerce Department will release September data for inventories, trade deficit, new home sales, and durable goods shipments between Tuesday and Thursday.  In July, when Commerce began releasing the data for the third month of a quarter ahead of the advance GDP report, forecasts of the latter were marked down. 

     a.  Note that this earlier release of what had been "missing data" in the advance GDP report aims at reducing the size of the subsequent GDP revision.  So, the advance print now should be viewed as more reliable than it had been before the change in procedure.

Another interesting report this week will be the October Conference Board Consumer Confidence Index, due Tuesday.  The jobs components of this report have a tendency not to move intuitively with the Unemployment Rate.  For example, in September the jobs components improved, but the Unemployment Rate rose.  It is possible that a better view of the job market brings people back into the labor force (and vice versa), boosting labor supply more than employment. 

      a.   Consensus is looking for the Confidence Index to fall to 101.5 from 104.1 in September.  A decline in Confidence would raise the risk of a decline in the October Unemployment Rate from 5.0% in September.