CHICAGO – Economists expect Friday's August retail sales and consumer sentiment data to send mixed signals about the U.S. economy's health, but they said Tuesday's terrible attack on U.S. soil will likely make markets brush aside the data gathered before the devastation.
``In general, the events of Tuesday changed everything going forward,'' said Brian Wesbury, chief economist at Griffin, Kubik, Stephens & Thompson. ``This was going to be a very big data day on Friday, now it's become almost a moot point. We're worried about what's coming in the future.''
The attack leveled the twin towers of the World Trade Center in New York and severely damaged the Pentagon near Washington. Emergency workers continued to search for thousands feared dead on Wednesday.
The nation's financial markets were closed on Wednesday but some were expected to reopen on Thursday.
Economists polled by Reuters forecast retail sales numbers to improve slightly over July, as many Americans have received the income tax rebate checks from the government. Some expected those rebates to help stimulate consumer spending, which drives two-thirds of economic activity in the United States.
August retail sales, scheduled for release at 8:30 a.m. EDT (1230 GMT) Friday, are expected to rise 0.3 percent, and excluding autos they are forecast at up 0.4 percent.
REBATE TO HELP
``The rebate is having a more significant effect on retail sales than most people estimate and realize,'' said Sung Won Sohn, chief economist at Wells Fargo & Co., who expects retail sales to climb more than the consensus estimate.
Sohn's forecast is for sales to rise 0.7 percent, and excluding autos, he estimates sales will be up 0.5 percent.
Also scheduled for release on Friday at 10:00 a.m. EDT (1400 GMT) is the preliminary University of Michigan sentiment index for August. Economists forecast a reading of 90.8, off slightly from 91.5 last month.
Rising unemployment may have dampened consumer sentiment in August, economists said. Last week, the Labor Department said the unemployment rate surged to a four-year high of 4.9 percent in August from 4.5 percent in July.
Economists said once the markets reopen, participants will likely be more focused on data gathered after the attacks.
``Something like this (attack) cannot boost consumer confidence. It has to hurt consumer confidence,'' Sohn said. ''After that, it will depend on a lot of things. How well the stock market does will be important.''
The U.S. stock market is often seen as a harbinger of consumer confidence, and many expect the equity market to decline, at least initially, when it reopens.
Stock markets overseas were mixed on Wednesday. Asia's market's fell across the board, but the Euro Stoxx 50, a benchmark of large European companies, declined early but ended up 1.3 percent on Wednesday.
Uncertainty may convince Americans to tighten their belts, and retail sales also could suffer as a result of a more direct impact from the attack, Wesbury said.
``We didn't have air travel for more than 24 hours in this country,'' Wesbury said. ``Malls were closed across the country. (There is) the physical reaction of literally shutting down business.''