The U.S. economy returns back with more fundamentals this upcoming week, where data from the housing market and growth will dominate this week’s headlines from the world’s largest economy, while investors will be also keeping a close eye on the developments in Libya, also, investors will be watching closely how the situation unfolds in Japan.
The start will be with the housing market, where the existing home sales index will be released for the month of February, and expectations show that existing home sales probably dropped by 4.5 percent, however, the new home sales index is expected to show a rise in February, where this clearly highlights the instability in housing market activities, since the housing market is still struggling to recover from its worst slump in more than seven decades.
The housing market continues to show mixed signals, nevertheless, overall activities in the sector remain weak amid elevated unemployment, tightened credit conditions, and ongoing foreclosures, where all continue to weigh down heavily on housing market activities.
Meanwhile, the durable goods orders are expected to show a rise in February, where durable goods have been also fluctuating over the past period, where although demand levels are improving, yet demand remains relatively weak, and accordingly, durable goods orders continue to show high fluctuations.
The weekly jobless claims are also due on Thursday, where conditions in the labor market seem to have improved over the past few months, nevertheless, unemployment is still elevated, and accordingly, economic activities are still somewhat weak, where elevated unemployment directly affect income levels, and accordingly, spending remains somewhat weak.
Spending has been improving at a moderate pace over the past period, and accordingly, economic growth also improved, since spending accounts for nearly two thirds of economic growth in the United States, nevertheless, the uncertainty surrounding the outlook is forcing consumers to remain cautious, although compared to last year, economic conditions improved noticeably.
The U.S. Commerce Department is expected to release the final estimate for Gross Domestic Product for the fourth and final quarter of 2010, where the Commerce Department is expected to show that the U.S. economy expanded by 3.0 percent in the final three months of 2010, as consumer spending rose by 4.1 percent.
The U.S. economy is still recovering from its worst recession since the Great Depression, where the recovery started last year, nevertheless, the recovery was too gradual and too slow in 2010, and accordingly, several sectors failed to show strong performance, however, the U.S. economy seems to have picked up some pace towards the end of 2010, and this momentum continued throughout the first quarter of 2011, and accordingly, the recovery gained some momentum, and it seems this year is going to be much better than last year.
Meanwhile, the University of Michigan will release its final estimate for consumer confidence for the month of March, where consumer confidence is expected to be revised slightly lower to 68.0 from the prior reported estimate of 68.2.
Investors should keep a close eye on the developments around the globe, where the situation in Libya on one hand continues to dominate investors, especially oil markets, where the U.N. authorized last week a no-fly zone and military attacks on pro-Gaddafi troops, which provided oil prices with some momentum to rise.
On the other hand, the situation in Japan continues to dominate headlines after the 9.0 magnitude earthquake which resulted in a huge tsunami wave, caused huge destruction including damage to nuclear reactors, which ignited a nuclear plant crisis, where investors indulged in a huge selling wave all around the globe, as the crisis continued to escalate amid rising radiation levels released from the damaged reactors.
The crisis forced the G7 to act last week, where the G7 followed the lead of the Bank of Japan and intervened in markets in order to ease fears after the Japanese Yen rose to a record high against the U.S. dollar, however, as the G7 announced their intervention plan, investors were encouraged to invest in risky assets again.
taken from ecpulse
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