The conclusion from last week's series of reports is that the economic recovery continues to grind forward, but activity levels remain so far below normal levels that most companies continue to trim hours and workforce levels.

The window on 2010 employment planning for major corporations is quickly drawing to a close. With business confidence about the medium term outlook still weak, the outlook for employment markets through the first half of next year does not look encouraging.

Next week is a relatively light week for economic indicators. The September trade deficit is expected to widen in response to a jump in oil import volumes. Consumer sentiment is expected to move down a couple of points in early November, as employment market conditions remained extremely difficult in October and gasoline prices moved up.

The House of Representatives continues to work feverishly on crafting a healthcare overhaul bill, with the more recent versions of the bill receiving two critical endorsements from the AMA and AARP late last week. Key elements of the bill such as whether to include a public option, credible cost controls, and financing the expensive plan still need to be ironed out. The goal is to have a successful House vote on the bill before the Thanksgiving recess.

KEY U.S. DATA RELEASES THIS WEEK

Friday, November 13 – Trade Balance (Sep.)

• IHS Global Insight: -$33.5 Billion
• Consensus: -$31.6 Billion
• Last Actual: -$30.7 Billion (Aug.)

What to Look For

• We expect the trade deficit to widen to $33.5 billion in September, from $30.7 billion in August, due entirely to an increase in the bill for imported oil.

Implications

The price of oil imports was probably little changed, but oil import volumes likely jumped sharply, reversing a dip in August. More broadly, we expect to see both export and import volumes rising, underlining that the declines in August were a temporary interruption of a new upward trend.

Friday, November 13 – Michigan Consumer Sentiment Index (Preliminary Nov.)

• IHS Global Insight: 68.0
• Consensus: 71.0
• Last Actual: 70.6 (Oct., final)

What to Look For

• The Reuters/University of Michigan’s Index of Consumer Sentiment is expected to decline from 70.6 in October to 68.0 in early November

Implications

Consumers remain concerned about job losses and the continuing rise in the unemployment rate. Recent increases in gasoline prices will not help strained household finances. We expect that real consumer spending growth will subside from an annual rate of 3.4% in the third quarter to 1.1% in the fourth quarter, as a pullback in auto sales offsets gains in most other categories.