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This Week: New retail, consumer confidence numbers bring focus to the American consumer

By Neil Irwin

Important new information is scheduled to come out this week on retail sales, the industrial sector, consumer prices and the direction of Federal Reserve policy.

American consumers are in rough shape, with the job market still weak, their houses and stock portfolios losing value, and a continued overhang of debt -- factors that have driven consumer confidence down sharply in the past two months. The mood is expected to be reflected in June retail sales numbers, which are forecast to have declined 0.3 percent. Part of that is due to the decline in gasoline prices, but more broadly it is clear the American consumer is under stress and not in position to drive economic growth.

Also, the Fed plans to release minutes of its June 22-23 policymaking meeting. The document is worth parsing to gauge just how worried Fed leaders are about the health of the global economy and about signs that the recovery here is losing steam. Also worth watching: Whether any new policy moves to support growth, such as promising to keep rates low for even longer than now envisioned, were discussed.

This release of the minutes will also include the quarterly update of Fed leaders' forecasts for growth, unemployment and inflation. Look for a slight downgrade of their growth and inflation expectations compared with the previous release in the spring.

Analysts expect the producer price index, a measure of wholesale inflation, to have edged down 0.1 percent last month, reflecting falling fuel prices.

Industrial production data, meanwhile, could provide the most definitive evidence yet that the manufacturing recovery has lost momentum as businesses finish rebuilding their inventories. Industrial output is expected to have fallen 0.1 percent last month, which would be the first decline in a year.

By Neil Irwin  |  July 14, 2010; 7:00 AM ET
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