Indicators next week are expected to continue to support the slow growth story, as import growth is expected to decelerate, propping up the trade deficit; core consumer and producer prices are expected to edge up only slightly; and consumer sentiment is expected to remain in the tank in the first two weeks of October.

The one bright spot is that retail sales are expected to perk up a little in September, as auto sales were a little stronger and chain stores also reported a modest advance. Consumer spending is actually holding up reasonably well when viewed in the context of very weak consumer sentiment and the persistence of weak employment market conditions.

KEY U.S. DATA RELEASES THIS WEEK

Thursday, October 14 – Trade Balance (Aug.)

• IHS Global Insight: -40.8 billion
• Consensus: -43.4 billion
• Last Actual: -42.8 billion (Jul.)

What to Look For

• We expect the trade deficit to narrow to $40.8 billion in August, from $42.8 billion in July.

Implications

The import surge that occurred in May and June continues to unwind. We expect lower imports of autos and consumer goods in both value and volume. Imports of petroleum products should decline in value, as lower volumes will outweigh higher prices. We expect little change in exports in value terms, but a decline in export volumes. Higher food and raw material prices will prop up export values. We expect volumes to be hurt by a sharp drop in aircraft exports, which spiked higher in July. Overall, we expect trade to be a small drag on third-quarter growth, after being a huge drag in the second quarter.

Thursday, October 14 – Producer Price Index (Sep.)

Total:

• IHS Global Insight: 0.0%
• Consensus: 0.2%
• Last Actual: 0.4% (Aug.)

Core:

• IHS Global Insight: 0.1%
• Consensus: 0.1%
• Last Actual: 0.1% (Aug.)

What to Look For

• We expect September producer prices to be flat overall, with a token advance (0.1%) in the core.

Implications

Food prices likely climbed, but energy prices backtracked from a spurt upwards in August. Vehicle prices are a wild card for the core PPI this month, as always at the close-out of the model year.

Friday, October 15 – Consumer Price Index (Sep.)

Total:

• IHS Global Insight: 0.2%
• Consensus: 0.2%
• Last Actual: 0.3% (Aug.)

Core:

• IHS Global Insight: 0.1%
• Consensus: 0.1%
• Last Actual: 0.0% (Aug.)

What to Look For

• The CPI is expected to rise 0.2% for the headline, and only 0.1% for the core.

Implications

Gasoline prices crept higher after seasonal adjustment, even though raw pump prices dipped a tad. Core inflation remains close to zero, too low for the Fed's comfort.

Friday, October 15 – Retail Sales (Sep.)

Total:

• IHS Global Insight: 0.5%
• Consensus: 0.4%
• Last Actual: 0.4% (Aug.)

Less Autos:

• IHS Global Insight: 0.4%
• Consensus: 0.3%
• Last Actual: 0.6% (Aug.)

What to Look For

• Retail sales are expected to increase 0.5% in September overall, and by 0.4% excluding autos.

Implications

Auto sales increased due to some release of pent-up demand. Sales at gasoline stations will probably be pushed up again by higher prices. Building material outlet sales were probably little changed, and other retail channels are expected to exhibit modest growth in September after a relatively strong August. Consumers are still cautious, and consumer confidence is at low levels.

Friday, October 15 – Michigan Consumer Sentiment Index, preliminary (Oct.)

• IHS Global Insight: 67.5
• Consensus: 69.0
• Last Actual: 68.2 (Sep., final)

What to Look For

• Consumer sentiment on the Reuters/Michigan measure for October is expected to dip to 67.5 from 68.2 despite recent gains in the stock market.

Implications

The main driver of the persistence of low consumer sentiment is expectations, since consumers do not have hope for a robust.