THIS WEEK 3.30 - 4.05.09
Economic Data Will Bring a Reality Check
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The economic data lately have offered hopes, hints and insinuations that better times could lie ahead. This week, we start to see whether it's for real.
Analysts have been clinging to a few better-than-expected numbers that suggest the steep slide in the economy is finally decelerating. But the data points they've been pointing to include small-scale surveys and highly tentative turns in the numbers.
This week, big-deal economic data come out, particularly Friday's release of the March jobs report. It is sure to be dismal -- economists expect that another 656,000 jobs were shed, about the same as February, and for the unemployment rate to rise to 8.5 percent, from 8.1 percent.
So what would confirm the theory that things are improving? The key is the pace of the decline. For the past several months, job losses have accelerated rapidly. If the losses don't accelerate further, it would serve as confirmation that while the nation is still in recession, the economy is contracting at a more steady pace. Job losses of under 600,000, while still massive, would even qualify as good news in this environment.
The same could be said of the Institute for Supply Management's surveys of business activity in the manufacturing sector (to be released Wednesday) and service companies (Friday). Economists expect both indexes to still signal a contraction but to rise slightly from February levels. That too would confirm the thesis that the economy is still shrinking, but at a more manageable pace than in the November-through-January period.
Also on the week's economic calendar are Friday speeches by the two top Federal Reserve officials. This time, Vice Chairman Donald L. Kohn may turn out to be more interesting than Chairman Ben S. Bernanke. Bernanke is speaking on how the Fed manages its balance sheet, a crucial issue as it tries to stimulate the economy without stoking inflation in the years ahead. An important topic, but rather technical. Kohn, meanwhile, is speaking on policies to bring the nation out of the financial crisis and recession, and will be taking questions afterward.
-- Neil Irwin
NEIL IRWIN'S MUST-READS
Among his current picks: Felix Salmon's superb, surprisingly readable article on the mathematical models of risk that have torn Wall Street asunder. For more, go http:/
