“Veritable blizzard” is Deutsche Bank’s term to explain what’s coming todayHere’s their preview:
Despite the SIFMA recommended early close for the bond market today, there is an extremely full data docket to digest. In particular, we will be focusing on durable goods orders, personal income & spending and the weekly jobless claims statistics. Earlier in the week we learned that Q3 GDP was revised higher by just one tenth (to 2.6%). The smaller-than-expected upward revision was due to slower consumer spending and less inventory accumulation. Capex was also lowered modestly. Nevertheless, consumer spending on durables (7.6%) and business spending on equipment and software (15.4%) both rose at robust paces last quarter, and we expect this to continue in the current quarter.
As such, we will be watching today’s durable goods orders and personal consumption expenditures data for confirmation that momentum is being maintained. We expect November durable goods orders to snap back from an unusually soft October print (+1.0% vs. -3.4% previously). November personal income gains are likely to be softer than in October (+0.3% vs. +0.5%), based on what we already know from the employment report—modest payroll gains, flat average hourly earnings and unchanged average weekly hours.
However, over the broader term we expect further acceleration of employment income growth. As we highlight in the accompanying chart, the trend in jobless claims is meaningfully correlated (56%) with wage & salary (W&S) growth. In fact, after adjusting for a 4-to-6 month lead on claims over W&S the correlation rises to roughly 80% over the past decade. The claims data suggest that W&S income should top 4% sometime in the next couple of months; such a development would provide important support to our forecast of faster household spending in 2011.
Barring anything shocking, it will probably be a seriously slow day like today.
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