Health of several key sectors, including the U.S. consumer, plus an outlook from Fed's Powell on radar this coming week

By Greg Robb

Core PCE inflation forecast to fall to lowest level since April 2021

Recession fears are rising. Nothing beats fear better than good information and that's what we will get this week. Investors and economists will get good insight into the mood of U.S. consumers and hear the last words of Federal Reserve Chair Jerome Powell ahead of the central bank's next interest-rate meeting on Dec. 12-13.

November consumer confidence

Tuesday, 10:00 a.m. Eastern

Economists surveyed by the Wall Street Journal expect that consumer's view on the outlook have soured over the past few weeks. Geopolitical event have dampened the mood, economists said. Economists expect the index of consumer confidence to tick down to 101 in November from 102.6 in October. Last month, the Conference Board said consumer fears of an impending recession "remain elevated," consistent with the short and shallow economic contraction the research firm anticipates for the first half of 2024. Does this concern translate into less spending? The National Retail Federation will hold a media call on Tuesday before noon to analyze the shopping results of the five-day Thanksgiving holiday weekend.

Fed's Beige Book

Wednesday, 2:00 p.m. Eastern

Over the past few months, several regional Fed presidents have said that anecdotal information from business clients is now as important as economic reports and survey data in assessing the health of the economy. The Beige Book is the Fed's collection of anecdotes on business conditions. The first sentence of the report, which summarizes the report, gets a lot of attention. The key first sentence of the last Beige Book in mid-October was downgraded to "little to no change in economic activity" from "economic growth was modest" in the previous version.

Fed's favorite inflation indicator for October

Thursday, 8:30 a.m. Eastern

The personal consumption expenditure price index plays third fiddle to other inflation reports in the markets because it is released last on the data calendar, but it is the Fed's favorite measure and will garner attention. Economists expect the downward progress on core inflation to continue with core PCE prices rising 0.2%, softer than the 0.3% reading in September. That will bring the year-over-year gain down to 3.5% from 3.7% in the prior month. That would be the lowest annual rate since April 2021. There will also be updates on income, consumer spending, and the savings rate.

OPEC+ decision on whether to extend production cuts

Expected some time Thursday

OPEC+ -- a combination of the Organization of the Petroleum Exporting Countries and its allies -- meets Thursday in a gathering that had initially been slated to take place on Nov. 26. The announcement of the four-day delay briefly sent crude prices tumbling, with global benchmark Brent dipping below $80 a barrel, on fears of a rift between Saudi Arabia and other major producers. Subsequent reports indicate the hang-up has more to do with production levels by small African producers. Traders largely expect OPEC+ to agree to extend production cuts into the new year. The recent market volatility, however, underscores what's at stake should the talks run into trouble.

ISM factory index for November

Friday, 10:00 a.m. Eastern

Economists are watching the national ISM factory index to see if there is any expansion after 12 straight months in contraction. There have been glimmers in the data that the factory sector was stabilizing but economists are forecasting a contraction for the 13th straight month, with the index only rising to 47.6 in November from 46.7 in the prior month.

Fed Chair Jerome Powell in moderated discussion

Friday, 11:00 a.m. Eastern

Powell will be making a trip to Spelman College, a leading school in the education of women of African descent in Atlanta. Powell will visit with Fed Governor Lisa Cook, a Spellman graduate who the first Black woman on the Fed's board of governors.

Powell will have the opportunity to set expectations in the market about the Fed's next interest-rate committee meeting on Dec. 12-13. Traders in derivatives markets think the Fed will sit on its hands, awaiting more clarity about the health of the economy and the persistence of inflation.

In a nutshell, Powell's message has been that he likes the progress that has been made on inflation but isn't sure yet that the Fed is done raising interest rates. The market thinks the Fed is done and that rates cuts are coming before June.

Car sales for November

Late Friday

Auto sales are often overlooked, but this year have played a critical role in understanding the health of the consumer. Month after month this year, economists were expecting consumer spending to fall out of bed. They were often forced to rewrite their forecasts when car sales routinely came in stronger-than-expected. Economists expect light vehicle sales to slow in November from 15.5 million units in October. They point to recent data from the New York Fed found that a record share of people applying for auto loans were rejected this year. The private sector reports their estimates of sales on Friday and the government posts the final data within a few days.

William Watts contributed to this report.

-Greg Robb

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11-25-23 0901ET

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