Last week's highlights: What a difference one month makes. When the Labor Department reported a net job loss for August, alarm bells went off about a brewing recession around the corner. The fear was that the drop in jobs might have been the last straw and the resilient consumer would finally wilt, except, it didn't happen. First, consumer confidence readings reflected a quite restrained response to the labor report, and a quite prescient one.

On revision, almost 90,000 new jobs actually opened up in August, followed by 110,000 jobs in September. If job growth remains on track to increase employment at about 1 percent annual rate, with wages rising by almost 4 percent (nominal), consumer spending may continue to expand by a 2.0-to-2.5 inflation-adjusted annual rate. If two thirds of economic activity is expanding that much, there is no recession around the corner. Nor may there be further interest-rate cuts ahead.

Thursday, October 11

8:30am U.S. International Trade in Goods and Services, August 2007 (Bureau of the Census)

Trade has been a surprising plus for the economy all year. With the dollar edging lower, after the Federal Reserve cut interest rates by a half point, it is likely trade was once more positive for overall economic growth, and likely to remain so at least through the autumn months.

Friday, October 12

8:30am Producer Price Indexes (Bureau of Labor Statistics)

The "core" PPI (which excludes food and energy) has been increasing by 0.1-to-0.2 percent per month. It may have risen by 0.2 percent in September and could continue to raise that much over the next few months — because the economy is slow but not slowing. Still, even with demand holding up, material cost pressure isn't the problem on the inflation front. Labor cost increases are.

8:30am Advance Retail Sales (Bureau of the Census)

Consumers spending power has been holding up and last week's data showed it continued to hold up through September. Also last week, it was learned that auto sales were not weaker in September than in August. The retail sales report is likely to show a healthy pace of consumer spending, especially on nonauto-related items. Moreover, if consumer spending power continues to rise by at least 0.3 percent (inflation adjusted) per month, consumer spending could raise that much or more.

BY THE END OF THE WEEK

The economic data for August do not appear so negative on revision and the data for September are starting to look a little more positive. Regionally, there are problems in the East North Central and Middle Atlantic states. But that isn't new. The strength in the economies in other regions, especially in the Mountain and South Atlantic states, remains sufficient to keep the economy growing (probably by more than 2.5 percent in the just concluded third quarter and perhaps not much slower in the fourth quarter).

Meanwhile economies abroad continue to expand at relatively robust rates, with the exception of Japan. That could be the next trouble spot. Yet another problem on the horizon could be in prices for raw food and industrial materials, perhaps even with some hints in this week's inflation reports. Clearly, the global economy is strong enough to put upward pressure on inflation. To that pressure, add the rise in transportation costs, with crude oil hanging close to $80 a barrel.