The most closely watched economic information next week kicks off Tuesday with the release of the minutes of the Federal Open Market Committee's (FOMC) Sept. 18 meeting, when it lowered the target Fed Funds rate (the rate banks charge each other and the basis for the prime interest rate) by half a percentage point. That action of course was the first rate cut in over four years and came in response to a credit crunch facing financial institutions.
After a strong end to last week – at least in terms of market reaction to what was considered a positive employment report on last Friday – the upcoming week again postpones most of its potent data until Friday, with reports that day on retail sales, wholesale inflation and the first look at consumer attitudes since the FOMC cut rates.
General sentiment is the September data for both wholesale inflation and retail sales will be an improvement over the August numbers. But before we get into those, it's worth another look at last Friday's employment report. While the absolute numbers looked good: a gain of 110,000 payroll jobs in September compared with a gain of 89,000 in August (revised), the numbers are disappointing historically.
With the September data, payrolls grew by 97,000 per month in the third quarter, the weakest quarter since 3Q 2003, when growth averaged just 16,000 per month. Year to date, the economy has added just 112,000 jobs per month compared with a monthly gain of 187,000 in 2006.
Friday's retail sales report will be influenced – as it usually is – by both gasoline prices, which ticked up in September (thus reducing the cash available for consumers to spend at other stores) and home sales, which affect sales at home furnishing and building and garden supply stores. The other influencing factor will be weekly earnings, which ticked up in September.