Today's economic calendar is bare, and for the U.S. at least, it remains that way until Wednesday.
Below is Nomura's preview for U.S. data due on Wednesday and Thursday.
Q3 GDP, third estimate (Wednesday): The BEA will likely report a modest 0.1pp upward revision to Q3 real GDP growth in the final estimate to 2.2% q-o-q saar, driven by upward revisions to business fixed investment, residential investment and changes in inventories.
Consumer confidence (Wednesday): Based on the improvement in the University of Michigan’s preliminary December survey, driven by business conditions, we expect the Conference Board’s consumer confidence index to improve 3.0pp to 112.5 in December. That said, growing news coverage of the Omicron variant, and still-high inflationary pressures, pose downside risk.
Existing home sales (Wednesday): We forecast a 2.8% m-o-m rise in November existing home sales to an annualized pace of 6.52mn, consistent with the strong 7.5% rise in October pending home sales. While consumer demand for housing has been strong, low inventory has been limiting growth in sales.
Jobless claims (Thursday): Initial jobless claims will likely remain volatile over the holiday period, but low levels are consistent with tight labor market conditions and firms that are reluctant to let go of their workers.
Personal income and spending (Thursday): Personal income growth likely accelerated to 0.6% m-o-m in November after rising 0.5% in October. Continued increases in employee compensation likely led the rise in income while the drag from falling government social benefits likely waned. Based on the November retail sales report, we think consumer spending increased 0.5% m-o-m after rising 1.3% in October. Consumer spending on goods jumped sharply in October, likely due to an earlier start of holiday shopping. We expect spending growth to return to a more gradual pace in November. In addition, the retail sales report showed that the receipts at restaurant and bars rose solidly despite reacceleration in new COVID-19 cases as the Delta variant continued to spread. The resilience in in-person service spending suggests the recovery in consumer service spending likely remained healthy.
PCE deflators (Thursday): Based on PPI and CPI data, we estimate m-o-m core PCE inflation will accelerate further to 0.462% in November, from 0.425% in October, raising the y-o-y rate 0.5pp to 4.6%. Beyond November, we expect another strong reading of mo-m core PCE inflation in December, partly led by higher vehicle prices. Starting in January 2022, we expect m-o-m core PCE inflation to moderate substantially. Note that the scheduled cut of 0.75% in Medicare physicians’ fees in January will reduce monthly core PCE inflation by a couple of tenths of a percent that month.
Durable goods orders (Thursday): We expect a strong 2.5% m-o-m rise in durable goods orders in November, led by a sharp jump in orders for civilian aircraft and a healthy increase in orders for autos and auto parts. Excluding transportation components, which tend to be volatile, orders for durable goods likely rose 0.6%. The industrial production report for November indicated broad-based increases in durable goods manufacturing output, consistent with robust domestic demand.
University of Michigan consumer survey (Thursday): The preliminary December University of Michigan consumer survey showed a 3pp improvement in topline sentiment to 70.4, driven by business conditions. Inflation expectations across both year-ahead (4.9%) and 5-10 year measures (3.0%) held steady in early December, indicating consumers continue to believe recent upward pressure on prices will ease.
New home sales (Thursday): We forecast a 2.5% m-o-m increase in November new home sales to an annualized pace of 764k. Mortgage purchase applications rose firmly in November and the NAHB’s single-family sales index improved. While concerns over rising home prices remain elevated, consumer demand has remained resilient.
