Economic indicators next week should also be slightly positive on balance, with third-quarter real GDP expected to be revised up, real consumption spending expected to pick up in October, and consumer sentiment slated to improve in November. Updates on the housing market will continue to be mixed, though, with an October drop in existing homes sales that will only be partially offset by an increase in new home sales.

KEY U.S. DATA RELEASES THIS WEEK

Tuesday, November 23 – Real Gross Domestic Product (Second estimate, Q3)

• IHS Global Insight: 2.2%
• Consensus: 2.4%
• Last Actual: 2.0% (Advance estimate, Q4)

What to Look For

• We expect real GDP growth for the third quarter to be revised up to 2.2%, from 2.0%.

Implications

A smaller drag from foreign trade and a bigger boost from inventory accumulation should be the key drivers, offsetting a big downward revision to private nonresidential construction and a small downward revision to consumer spending. The economy looks set for a slightly faster growth rate in the fourth quarter, at about 2.5%.

Tuesday, November 23 – Existing Home Sales (Oct.)

• IHS Global Insight: 4.25 Mil.
• Consensus: 4.48 Mil.
• Last Actual: 4.53 Mil. (Sep.)

What to Look For

• We expect existing home sales to tumble about 6% in October.

Implications

The Pending Home Sales Index slipped 1.8% in September, and mortgage applications to buy homes fell during October, according to the Mortgage Bankers Association. The foreclosures mess that led to halts in foreclosures from some mortgage lenders contributed to the expected decline in sales.

Wednesday, November 24 – Durable Goods Orders (Oct.)

• IHS Global Insight: 0.5%
• Consensus: 0.0%
• Last Actual: 3.3% (Sep.)

What to Look For

• Overall durable goods orders should be up by 0.5% in October, driven mainly by another solid gain in aircraft orders.

Implications

Durable goods orders should climb 0.5% in October, despite a sharp reversal in machinery orders, as the aircraft sector is expected to report a second consecutive solid gain. The machinery sector has developed an odd pattern of two good months followed by a large drop, and we expect that October will see a pullback. Orders are typically quite noisy, but we expect October to be a mildly positive month on net, with the underlying trend in orders still in an upward direction.

Wednesday, November 24 – Personal Income, Consumption, and Prices (Oct.)

Personal Consumption, Nominal

• IHS Global Insight: 0.4%
• Consensus: 0.5%
• Last Actual: 0.2% (Sep.)

Personal Consumption, Real

• IHS Global Insight: 0.2%
• Last Actual: 0.1% (Sep.)

Core PCE Price Index

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

Personal Income

• IHS Global Insight: 0.4%
• Consensus: 0.4%
• Last Actual: -0.1% (Sep.)

What to Look For

• Personal income to bounce back nicely for a solid gain.
• Real consumer spending to advance by 0.2%, a modest pickup from September.
• Core PCE deflator should be effectively flat.

Implications

We expect personal income to rise 0.4% in October, after declining 0.1% in September. Wages and salaries—the best guide to underlying trends—should rise 0.5% in October, after no change in September. Higher employment, a longer working week, and increased hourly earnings all drove wages and salaries higher in October.

Relatively strong growth in durables and nondurables, plus modest growth in services, should pull October consumer spending up to 0.4% in nominal terms and 0.2% adjusted for inflation—double the increases in September. There is pent-up demand for durable items, prices are relatively low, consumer confidence and sentiment are inching up, and increases in income are helping drive consumer spending. Overall, consumer spending is heading for about a 2.5% increase in the fourth quarter, roughly the same as the third quarter. Holiday sales (November plus December retail sales less autos, less non-store, less gas, less food services) are expected to be up about 4.5% in nominal terms over last year.

The Core PCE Price Index should be flat in October, with the year-on-year rate falling to 1.0%. The reading will give further ammunition to the Federal Reserve's defense of QE II, since inflation is running too low for comfort.

Wednesday, November 24 – Michigan Consumer Sentiment Index (Final Nov.)

• IHS Global Insight: 70.4
• Consensus: 69.3
• Last Actual: 69.3 (Preliminary Nov.)

What to Look For

• The Reuters/Michigan Consumer Sentiment Index is expected to reach 70.4, up from the mid-November preliminary reading of 69.3.

Implications

Gains in household net worth, due to the rising stock market in the first half of the month and relatively good news on the employment front, should drive consumer sentiment higher. Indeed, the pace of consumer spending picked up a little in October, and retailers seem to be positive about potential developments for the critical seasonal upswing.

Wednesday, November 24 – New Home Sales (Oct.)

• IHS Global Insight: 0.316 Mil.
• Consensus: 0.315 Mil.
• Last Actual: 0.307 Mil (Sep.)

What to Look For

• We expect a modest 3.0% increase in home sales during October.

Implications

With the labor market slowly improving, and mortgage rates at all-time lows, demand for homes is slowly picking up. This should show up as a small (3%) increase in new home sales during October.