Welcome to “The Week Ahead” where each Friday we take a moment to provide our thoughts on what we can expect in markets and the economy for the week ahead.
Remember quarterly report cards back in school, those anxious days waiting by the mailbox to see your results in your various classes? The report card for the upcoming week, however, isn’t English, math, or science. Rather, it’s the health of the U.S. economy.
As you may know, quarterly U.S. Real GDP is reported three times: the first is the advance estimate (45% of which is based on initial or early estimates), followed by a second estimate (more actual data), which is then followed by a more complete third estimate right before the next quarter end.
The third estimate for first quarter Real GDP will be released next week. The second estimate that came in at the end of May saw Real GDP being increased to 1.2% (annual rate), an upward revision of 0.5% from the advance estimate. That revision primarily reflected upward revisions to nonresidential fixed investment, consumer spending on services, and state and local government consumption expenditures and investment. Partly offsetting these upward revisions was a downward revision to private inventory investment. Looking back to 2016, first quarter GDP came in at 0.8% (annual rate) only to see a nice pick up in the second (1.4%) and third quarters (3.5%). Seems 2017 may follow a similar path as early estimates for the second quarter are coming in at 2.1-2.3%.
Durable Goods Orders is another indicator to monitor. The last reading captured a drop of 0.7%, the first decline following four straight increases. Even backing out airplanes and autos (ex. Transportation), orders fell 0.4%. A second weak reading in a row could reflect that business operators are continuing to hold off on larger investments until there is more clarity on corporate tax reform and other administration policies.
Next week’s data should further confirm our view that the U.S. economy continues to trudge along, albeit at a slower pace than most would like, and that a recession will not be in the cards for the remainder of 2017. Risk assets such as equities should continue to be beneficiaries in this type of environment. As noted in our most recent economic commentary, our economy may be merely good, not great, but good is good enough.
Data deck for June 25-July 1:
| Date | Indicator | Period |
| 6/26 | Core Capital Goods Orders | May |
| 6/26 | Core Capital Goods Shipments | May |
| 6/26 | Durable Goods Orders | May |
| 6/26 | Durable Goods Orders Ex. Transport | May |
| 6/26 | S&P Case Shiller Home Price Index | April |
| 6/27 | Consumer Confidence | June |
| 6/27 | Richmond Fed Survey | June |
| 6/28 | Advanced Goods Trade Balance | May |
| 6/28 | Wholesale Trade | May |
| 6/28 | Pending Home Sales | May |
| 6/29 | GDP – Third Estimate | Q1 |
| 6/29 | Initial Jobless Claims | June 24 |
| 6/29 | Personal Consumption (Qtrly) | Q1 |
| 6/30 | PCE Core Price Index | May |
| 6/30 | PCE Price Index | May |
| 6/30 | Personal Consumption | May |
| 6/30 | Personal Income | May |
| 6/30 | Chicago Purchasing Managers Index | June |
| 6/30 | U. of Michigan Consumer Sentiment – Final | June |