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Monday, May 24, 2010

What to Watch for This Week

There is a lot of U.S. economic data coming out this pre-Memorial Day week, but much of it may already be out of date. Most of the data will not reflect the European financial crisis, the resulting fallout on Wall Street, nor the impact on U.S. consumers and investors.

For example, Tuesday morning the Conference Board's consumer confidence index for May will be released and on Friday, so will the Reuters/University of Michigan consumer sentiment index. However, these surveys are unlikely to pick up the most recent economic trends. In sharp contrast, Gallup's Economic Confidence Index was essentially unchanged during the first two weeks of May compared to April, but during the week ending May 23, consumer expectations took a tumble -- getting worse on a daily basis. As Wall Street plunges in response to the European Union financial crisis, consumers have reason to become more concerned about the U.S. economic outlook.

At the same time, Gallup's Consumer Spending measure -- which had been doing well through the first two weeks of May -- also declined in the week ending May 23. It seems like the spending momentum that appeared to be building over the past couple of months could be losing some of that steam.

Finally, while Gallup's Job Creation Index continues to show new jobs are being created, Gallup's underemployment rate, the U.S. Workforce measure, has not been improving. It may be that some U.S. companies, particularly those exporting to Europe, may be getting somewhat hesitant about adding employees, given what has been happening in the global financial markets.

It is far too early to suggest that Gallup's data implies a significant downturn in the U.S. economy in response to the current European financial crisis. However, the data do suggest caution and careful monitoring during the weeks ahead.


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