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MONEYWATCH
Prepared by MCM, Inc.
Previews For The Week Of May 22, 2000
Focus: GDP for Q1, 1st revision, due May 25 at 12.30gmt
q/q ann"l change Q1 e Q1 p Q4 Q3 Q2 GDP 5.0 5.4 7.3 5.7 1.9 y/y 5.0 5.0 4.6 4.3 3.8 Personal Consptn 8.0 8.3 5.9 4.9 5.1 Private Inv 9.0 8.0 10.0 13.6 -2.1 Gov"t Outlays -1.3 -1.1 9.2 4.6 1.3 The data in hand since the preliminary release of Q1 GDP data show somewhat reduced growth is likely to be registered in the first revision. Consumption was about $9-$11 bln less than Commerce assumed. Inventories in total were $5-$6 bln less than assumed. Construction was about $2 bln less than assumed, shipments about $2 bln more. That nets out to a $14-$17 bln smaller rise in output than assumed on the data in hand so far (suggests a revision to 4.7%), but that probably exceeds Commerce estimates for the unknown components.
Focus: Existing Home Sales, due May 25 at 14gmt
$ mln S/A April e Mar Feb Jan Dec Nov Sales 4.85 4.83 4.76 4.45 5.14 5.15 % Change 0.4 1.5 7.0 -13.4 -0.2 5.5 Med Price $137k $136,359 $137,193 $133,042 $134,774 $134,601 Existing home sales have clearly cooled from their Q4 pace, but prices are another matter. Sales have essentially flattened out at a high level. A combination of scarcity of lower priced homes for sale and a willingness to take on greater mortgage debt due to high confidence and rising incomes, are fueling the rise in home prices. The rise in existing home values has been noticed at the Fed, so far as part of the wealth effect, perhaps soon as a more direct inflation concern. For April, mortgage applications offer no reason to expect a slowdown in sales.
Focus, Personal Income and Consumption, due May 26 at 12.30gmt
m/m % April e Mar Feb Jan Dec Income 0.6 0.7 0.4 0.7 0.3 Consumption 0.4 0.5 1.4 0.7 1.1 Savings Rate 0.5 0.4 0.2 1.3 1.1 Average hourly earnings posted another 0.4% rise in April, while the pace of job gain slowed a bit. Meanwhile, March hourly earnings were revised lower, to +0.3% from +0.4%. That suggests another hefty rise in personal income in April, while the +0.7% reading for March may be revised lower. The savings rate is not due for any real pick-up, despite fairly soft consumption spending in April, as the magnitudes of the two series are now sufficiently different that consumption growth must be markedly slower in any given month than income growth in order to push the savings rate very far.
Focus: Durable Goods Orders, due May 26 at 12.30GMT
m/m % chg April e Mar Feb Jan Dec Nov Oct New Orders -0.5 3.5 -2.0 -1.9 6.5 1.2 -0.9 y/y 8.2 8.0 8.3 6.1 11.6 8.2 7.4 Shipments 1.1 1.5 -1.4 1.4 1.0 1.0 0.2 Unf"d Orders 0.8 1.1 0.6 0.9 2.3 0.1 0.0 Orders rose more than expected in March, and then were revised even higher in the Factory Orders report. That suggests some borrowing from April, resulting in a minor drop in orders. That will leave orders very strong on an absolute basis. Shipments rose at a much slower pace in March, so are less prone to slow in April. Some rebound in industrial machinery is due. Strong components orders in March came in anticipation of orders for finished goods in April.
May 19, 2000 MCM, Inc. 294 Washington Street, Ste. 734, Boston, Massachusetts 617-338-9219
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