Week ahead: Bernanke on Capitol Hill, key housing data released
By Neil Irwin
It will be a big week for Ben S. Bernanke, and the scheduled release of some key June housing data should show the effect of the end of the home buyer tax credit.
The great post-stimulus collapse in housing activity is likely to be on display again. New data are expected to show a second straight month of decline in housing starts, as the end of the home buyer tax credit slowed demand. Analysts expect a 2.2 percent decline in starts in June, after a 10 percent drop in May. Housing permits are projected to be essentially flat, compared with a 5.9 percent May decline.
Federal Reserve Chairman Bernanke shows up at a sensitive time before the Senate Banking Committee for his biannual testimony on monetary policy. The economic recovery has appeared increasingly wobbly, and Fed leaders are starting to consider what they might do if things continue to get worse.
But Bernanke and his colleagues still view a steady recovery as the most likely outcome, and steps they might take to bolster the recovery carry risks of their own.
So expect Bernanke to have a subtle message: cautious optimism about the economy combined with an acknowledgment that risks have risen; and openness to considering new Fed action without any indication that such action is likely to happen.
As he tries to thread those needles, Bernanke will work to avoid getting caught up in debates outside his focus. It's likely, for instance, that some senators will try get him to endorse their preferences on fiscal policy, regulation and any number of other topics.
Have fun, Mr. Chairman.
Bernanke will be on Capitol Hill for a second day, this time before the House Financial Services Committee.
And new data are set to be released on June existing-home sales. Analysts expect those sales to have fallen 9.9 percent in June, after a 2.2 percent drop in May.
The Federal Housing Finance Agency's home-price index, meanwhile, is projected to show an 0.3 percent decline in nationwide prices.
Ariana Eunjung Cha
July 18, 2010; 10:13 PM ET
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