Today's economic data did two things: a) gave us an even higher chance that the FOMC will cut rates on Tuesday b) showed us just how quickly the economy is cooling off and how close we could be to heading toward a major downturn or recession. 
The retail sales number out this morning was especially weak. Excluding the volatile auto sales, retail sales fell by 0.4% in August, versus expectations of a gain of 0.2%. Even with the auto sales factored in retail sales only gained 0.3%, versus economists expectations of 0.5%. The ex-auto number was the weakest retail sales number in the past year.
Industrial production, which measures the physical output of the nation's factories, mines, and utilities, was also weaker than expected. Industrial production came in at 0.2%, less than the 0.3% expected. Factory output declined for the first time since February.
The preliminary consumer sentiment number released this morning for the month of September came in just about where it was expected, at 83.8, slightly above estimates for 83.4. The sentiment number will be important to gauge as it can sometimes be telling of what consumer spending will be like in the coming months.
The news of weakness in the economy could be seen as good for the markets if you want rate cuts, but too much weakness could be the first signs of a recession. The million dollar question right now becomes "Is this going to be a goldilocks economy or an economic recession?" Stay tuned.
» Stocks fluctuate around unchanged after economic data from GrowYourFunds
U.S. equities opened down by a large amount, but have rallied back and are currently trading around the unchanged mark after a series of economic reports out this morning showed the U.S. economy is weaker than most expected. The Dow... [Read More]
Tracked on: September 14, 2007 12:08 PM | Permalink to Trackback