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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

This Week: Consumer Confidence, Fed Meeting

There will be a stream of major economic news coming out this week, which should shed new light on how bad things were at the start of the year, what further steps the government may take, and whether things are poised to get better.

How bad was the first quarter? We find out Wednesday, when the Commerce Department reports on gross domestic product, which economists think shrunk at about a 5 percent annual rate. Combined with the 6.3 percent drop in the fourth quarter, the nation appears set to have one of its worst six-month periods in the 60 years that quarterly GDP data have been calculated.

The GDP numbers are likely to be dragged down in particular by businesses slashing their inventories. Paradoxically, that could be good news, because the leaner inventories are, the more goods businesses will have to order in the months ahead.

How is the government responding? The Federal Reserve's policymaking committee meets tomorrow and Wednesday, and should release a statement announcing any actions in the afternoon. At its March meeting, the Federal Open Market Committee dramatically expanded by $850 billion its purchases of mortgage-related securities and said it would buy $300 billion in Treasury bonds, unconventional steps meant to lower interest rates.

There probably won't be the same kinds of policy fireworks this time, given that even those unconventional steps may be at the point of diminishing returns and considering that the economy has shown signs of stabilizing lately. But the language in the statement could give a hint on whether Fed leaders are feeling any greater optimism.

Are things getting better? Tomorrow, the Conference Board's April consumer confidence survey comes out, giving a hint of whether Americans are feeling better about the future. And Thursday, March personal income and consumption data will be released. Pay particular attention to the consumer spending number. Analysts expect it to drop 0.1 percent; if it is flat or rises a bit, that would be a sign that American consumers could be coming out of their shells.

--Neil Irwin

By Sara Goo  |  April 27, 2009; 6:36 AM ET
Categories:  The Ticker  
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