Tracking the Economy: Further Positive News on Inflation Seen, But Data Also Could Indicate Weakness
NEW YORK -- There may be more good inflation news this week, but it could reflect the price and profit pressures of a weakening economy.</br></br>The November consumer price index, due out tomorrow, is expected to rise only modestly on the heels of last week's report of a drop in the producer price index. Some economists believe that's the silver lining to a darkening manufacturing sector. Further evidence will come from the revised report on third-quarter real gross national product, due Wednesday; November housing starts and permits, due out tomorrow; personal income and consumption, due out Thursday; and durable goods orders on Friday.</br></br>"These reports don't indicate in any sense that the economy is going to be able to hold its own," said Neal Soss, chief economist at First Boston Corp. He says the Federal Reserve Board will "eventually move to shore up the economy" by again easing credit.</br></br>Mr. Soss said that lately, "any good economic news has a `spoiler' built into it." Often, he said, the "bad" news is in the form of revisions of earlier months' data -- as in the recent November retail sales report, released along with revisions of the two previous months' figures that "took the steam out" of the November report.</br></br>One obvious place to look for revision is in the government's second look at third-quarter GNP growth. Although the consensus view calls for the figure to be unchanged at 2.7%, economists point out that there is still one more revision to come. Some analysts, including Gary Ciminero of Fleet/Norstar Financial Group in Providence, R.I., say negative readings on GNP will be staved off until the fourth-quarter tally.