@ The White House
In the morning, the President will receive the Presidential Daily Briefing in the Oval Office. In the afternoon, the President will meet with senior advisors in the Oval Office. Later
in the afternoon, the President and the Vice President will meet for
lunch in the Private Dining Room. This lunch is closed press.
@ Wall Street
Fed Chairman Bernanke's speech at Jackson Hole wasn't the blockbuster event that markets had been looking for. The initial equity market reaction to the Fed statement was negative, since there was no mention of new action, but subsequently the market turned around, perhaps in hope that action will still come in September.
Unfortunately, the Fed doesn't have any rabbits to pull out of the hat to magically re-ignite economic growth. It is doing what it can (and that will probably mean more quantitative easing at some point), but its prime ammunition has already been used.
There was nothing to cheer about in the latest economic reports. Housing (a sore subject in Bernanke?s speech) had another bad week. Not only did new home sales slip in July, but mortgage applications to buy homes fell to their lowest level since December 1996, while the number of homeowners falling behind on their mortgage payments rose in the second quarter.
Durable goods orders surged in July, but other than aircraft, primary metals, and motor vehicles, almost everything else was flat. Initial claims were up. Finally, the Reuters/University of Michigan consumer sentiment index fell to its lowest level since November 2008 and now stands at recession levels.
A busy week ahead will start with a damage assessment from Hurricane Irene, due to hit the east coast over the weekend. All normal activities over the weekend will be disrupted, but any longer-lasting economic impact will depend on the magnitude of the damage left in its wake.
On the data front, the August employment report will be the highlight, closely followed by the ISM survey. We expect a small increase in payroll employment, an uptick in the unemployment rate and flat wage growth. The ISM-manufacturing index for August should slip under 50 for the first time since July 2009.
Real consumer spending is expected to have inched up in July, while real personal income probably inched down. The Case-Shiller indexes will show that house price declines were easing in June. The Conference Board's consumer confidence index probably took a major hit in August. Labor productivity is likely to be revised to show a deeper second quarter drop. Construction spending in July should be up on increases in private construction. Finally, August motor vehicle sales are expected to be flat.
