All eyes on the July employment report. Goldman summarizes what to expect below, and while we refuse to predict what the number will be this time, we remind readers that it was the horrible July NFP reported in the first week of August 2010 that set off a chain of events starting with Goldman first downgrading the economy, leading to Hatzius and Dudley holding hushed tete-a-tetes, and ultimately culminating with Jackson Hole three weeks later. If the Fed is truly hell bent on QE3 or bust, expect a very disappointing NFP number this month (and potentially an even worse one next month when the economic data is goalseeked to validate monetary policy which only succeeds in raising the Russell 2000).
8:30: Employment Report (July): Low growth. Goldman forecasts an increase in nonfarm payroll employment of 50k. Available labor market data for the month of July have been mixed. On the one hand, initial jobless claims, the ADP report, and the non-manufacturing ISM employment index were consistent with healthier growth. On the other hand, job advertising volumes, the manufacturing ISM employment index, and layoff announcements signaled a weak result. The firm forecasts that the unemployment rate held at 9.2%. A further increase in the unemployment rate would bring Goldman closer to tripping its recession warning rule of thumb.
Payrolls: GS: +50k; Consensus: +85k; Last +18k. MAP: 5
Unemployment: GS 9.2%; Consensus: 9.2%; Last 9.2%. MAP: 5
Earnings: GS +0.1%; Consensus: +0.2%; Last: flat.
15:00: Consumer credit (June): Likely gains. Consensus forecasts expect that consumer (non-mortgage) credit increased for a ninth consecutive month in June. Recently the trend in “revolving” consumer credit (credit card debt) has turned up. Revolving consumer credit increased by $3.3bn in May—the largest gain since June 2008.
Consensus: +$5.0bn; Last +$5.1bn.
From Goldman Sachs