The U.S. economy returns back with more important data this upcoming
week, where the main focus will be the advanced GDP estimate for the
fourth quarter and the FOMC rate decision, since expectations suggest
economic activities picked up during the final three months of 2010
amid the improvement in overall economic conditions, while the FOMC
will probably maintain its current monetary policy, since it seems
that the world's largest economy is still on its way to recover from
the worst recession since WWII.
The start this upcoming week will be with the housing market, where
the S&P/CaseShiller home price index will be released for the month of
November, where expectations show that home prices continued to
decline, as activities in the housing market are still somewhat
depressed.
The new home sales index will be also released for the month of
December, where median estimates signal new home sales increased by
3.5% to an annual rate of 300,000 units, this could prove to be true
since we witnessed a strong rise in existing home sales last week for
the same month, nevertheless, that doesn't mean that the housing
market has reached stability, since challenges including elevated
unemployment, tightened credit conditions, and record foreclosures
continue to weigh down on housing activities.
The pending home sales index is also set to be released for the month
of December and analysts predict rising sales in line with the rise in
existing home sales as well.
The Conference Board will release its consumer confidence index for
the month of January, where expectations signal rising confidence
levels among Americans amid the recent improvement in overall economic
conditions. The University of Michigan is also expected to show that
confidence levels improved in January, as they are set to release the
final estimate for consumer confidence.
The durable goods orders for December are expected to rise , where
this rise is mainly due to the holiday season, although conditions are
still challenging, but that didn't stop Americans from spending
their money during the holiday season.
Investors worldwide will be focusing on the FOMC rate decision, as new
members joined the voting committee and will be casting their votes
for the first time this year, where it's widely accepted that at
least two of the new members are considered as "Hawkish", and
there's a very good chance that those members will continue the
legacy left by former member Thomas Hoeing in dissenting the Fed's
commitment to keep interest rates at low levels for an extended
period.
The FOMC won't change anything during this meeting, although some
expect the FOMC to scale back on QE2, but I think this is highly
unlikely, since the economy is still weak and it needs more momentum
to be able to grow over a faster rate, especially since unemployment
is still stuck above 9 percent.
The advanced GDP estimate for the fourth quarter will also be
released, where expectations signal that the U.S. economy expanded by
3.5%, compared with the prior reported growth of 2.6% in the third
quarter, as economic activities accelerated during the fourth quarter
amid the overall improvement in economic conditions, and rising
consumer spending due to the holiday season.
The U.S. economy though is still far from prosperity, since elevated
unemployment continue to weigh down on overall economic activities,
nevertheless, the U.S. economy is on its way to full recovery, and
although it might take a long time to reach that point, but the
economy seems to be on the right path, as chances of a double dip
recession seem to have vanished now, and it seems that we are
approaching the light at the end of the tunnel.
Source: Fxstreet.com
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