As 2022 enters its last month, the end of year state of America’s economy will come into clearer focus with a variety of game-changing reports on the nation’s gross domestic product, inflation, labor market and consumer confidence on tap this week.
First up on Tuesday will be the monthly home price index from S&P Corelogic Case-Shiller for September. Also on Tuesday, the Conference Board’s consumer index for November will be released. Although consumers have been reporting a gloomy mood, they have continued to spend. A record $9.12 billion was spent on Black Friday, according to Adobe Analytics, with Cyber Monday also offering a chance for more spending.
“As Black Friday hit record spending online, we’re also seeing more prominent signs of a budget-conscious consumer this year,” said Vivek Pandya, lead analyst, Adobe Digital Insights. “Shoppers are embracing the Buy Now Pay Later payment method more this year to be able to buy desired gifts for family and friends.”
Wednesday will bring the first of several takes on the job market with the November monthly report from private payroll firm ADP. Last month, there were 239,000 new jobs created but analysts will be looking for a pullback as the economy slows. Then, later Wednesday, the Labor Department issues the job openings numbers for October. Last month saw a sharp drop in the number, but it was still nearly two jobs for every available worker.
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In between, the Bureau of Economic Analysis has its second estimate of the gross domestic product for the third quarter. The advance estimate was 2.6%, and economists expect something close to that for this week’s update.
All will be factors for the Federal Reserve to consider ahead of its December 13-14 meeting. Fed Chairman Jerome Powell is scheduled to speak Wednesday afternoon at the Brookings Institution. As he speaks, the Fed will release its so-called beige book, a survey of the 12 regional banks that make up the Fed that measures how economies are doing around the country.
Thursday gives another read on the labor market with the weekly report on first-time filings for unemployment claims. Those have been creeping up, with 240,000 reported last week. Also, the Commerce Department will issue its report on October inflation, as measured by the personal consumption expenditures index, known to be the favorite inflation indicator followed by the Fed. Economists are looking for a slight dip in the core index, stripping out energy and food costs, to a 5% annual rate from its most recent 5.1% level.
The week ends with the monthly jobs report from the Labor Department. While several areas of the economy have slowed in recent months, notably housing, the labor market has proven remarkably strong. But there is some evidence that it has receded from its red-hot pace. Last month, 261,000 new jobs were created, above estimates, but forecasts call for a number around 200,000 to 220,000.
“We look for November nonfarm payrolls to add 205K, down materially from October’s 261K pace,” wrote Sam Bullard, senior economist and managing director at Wells Fargo’s corporate and investment banking group. “The pace of payrolls has slowed over the course of the year, trending down from February’s high of 602K to 289K in October. A prominent driver has been a reduced contribution from leisure & hospitality, where jobs in the sectors were adding nearly 200K per month in 2021, and are now adding 78K in 2022.”
“Secondary employment indicators, like initial jobless claims and business sentiment employment indices, also show signs of moderation, yet continue to point to ongoing payroll growth,” Bullard added.
One potential fly in the ointment is the situation in China, where the country’s “zero COVID” policy has drawn unusual public protests. China is a key exporter and player in the global economy, and the way it has dealt with COVID-19 since the virus was first discovered there in late 2019 has had major repercussions for the world.
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