Moreover, with leading economic indictors on overseas countries also having a positive spin, the global economy is clearly picking up some momentum.

The general drumbeat of positive news on the U.S. economy is expected to continue next week, as third-quarter real GDP is expected to be revised up. Moreover, in November, real consumer spending will pick up momentum, core durable goods orders should rebound, and home sales will coast a little higher. Finally, consumer sentiment should continue its gradual upward climb.

KEY U.S. DATA RELEASES THIS WEEK

Wednesday, December 22 – Real Gross Domestic Product (Final Q3)

• IHS Global Insight: 2.8%
• Consensus: 2.8%
• Last Actual: 2.5% (Second estimate, Q3)

What to Look For

• We expect third-quarter real GDP growth to be revised up to 2.8%, from 2.5%.

Implications

The upward revision should be more than accounted for by faster inventory accumulation, which should offset a downward revision to consumer spending on services. Sometimes, faster inventory accumulation is a bad signal for future growth, but recent evidence on demand has been coming in strong, suggesting that these inventories are desired, rather than unwanted. At this point, fourth-quarter growth is shaping up at more than 3%, better than the revised third-quarter pace.

Wednesday, December 22 – Existing Home Sales (Nov.)

• IHS Global Insight: 4.66 Mil.
• Consensus: 4.71 Mil.
• Last Actual: 4.43 Mil. (Oct.)

What to Look For

• November sales to be up about 5.2%.

Implications

Existing home sales have made some headway since collapsing in July. For November, we are expecting a pickup to a 4.66-million-unit annual rate, based on October's 10.4% increase in the Pending Home Sales Index and November's 7.7% increase in the MBA's Purchase Index.

Thursday, December 23 – Durable Goods Orders (Nov.)

• IHS Global Insight: -0.8%
• Consensus: -0.6%
• Last Actual: -3.3% (Oct.)

What to Look For

• Durable goods orders should slip 0.8%, as the total is walloped by a plunge in aircraft orders.
• Core capital goods orders, though, should climb 5.0%.

Implications

Orders for nondefense aircraft and parts have been either feast or famine for the past two years—September and October were feasts, while November was a famine. Aircraft orders should slump from about $13 billion per month in September and October to just $5.5 billion November. Even the rebound in machinery orders after a dismal October, which should push core capital goods orders up 5.0%, and a rebound in defense bookings cannot offset the downdraft from aviation on the total.

Thursday, December 23 – Personal Income, Consumption, and Prices (Nov.)

Personal Consumption, Nominal

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

Personal Consumption, Real

• IHS Global Insight: 0.4%
• Last Actual: 0.3% (Oct.)

Core PCE Price Index

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

Personal Income

• IHS Global Insight: 0.4%
• Consensus: 0.3%
• Last Actual: 0.5% (Oct.)

What to Look For

• Real consumer spending to advance by 0.4%.
• Core PCE deflator to edge up only 0.1%.

Implications

Consumer spending is expected to increase 0.5% in nominal terms and 0.4% in real terms; higher than the respective October increases of 0.4% and 0.3%. Some pent-up demand is being unleashed in the first month of the holiday season, as sizable gains in consumer confidence and heavy price discounting by retailers are fueling consumer spending. Overall, real consumer spending is heading for a 3.5% increase in the fourth quarter; significantly better than the third quarter's 2.8% rate, which was the strongest since late 2006 in seasonally adjusted annual rate (SAAR) terms.

The core PCE price index should inch up to 0.1% in November, after being flat in October. The year-on-year rate for November should be 0.9%, still well below the Fed's target range of 1.5–2.0%.

Personal income is expected to rise 0.4% in November, after increasing 0.5% in October. Wages and salaries—the best guide to underlying trends—should still increase, but not at October’s 0.6% rate, due to the poor November jobs numbers.

Thursday, December 23 – Michigan Consumer Sentiment Index (Final Dec.)

• IHS Global Insight: 75.0
• Consensus: 74.5
• Last Actual: 74.2 (Preliminary Dec.)

What to Look For

• The Reuters/Michigan Index of Consumer Sentiment is expected to rise to 75.0, from the mid-December preliminary reading of 74.2.

Implications

Gains in household net worth due to the rising stock market and better employment news should drive consumer sentiment slightly higher than its mid-December level, despite higher gasoline prices and a poor housing market.

Thursday, December 23 – New Home Sales (Nov.)

• IHS Global Insight: 0.298 Mil.
• Consensus: 0.300 Mil.
• Last Actual: 0.283 Mil (Oct.)

What to Look For

• We expect a 5.3% improvement in new home sales.

Implications

After posting their third-lowest reading ever (data start in 1963) in October, new home sales are expected to show a small improvement, based on November's increase in single-family housing permits and an improving job market.