The domestic economy remains weak heading into summer, with consumers bracing to pay even more for gas to drive to the beach or the mountain lakes. And they are likely to be as shocked at how much it costs to run the air conditioner. Meanwhile, the cost of filling up the grocery cart continues to rise. Midwest flooding could send prices for wheat, corn, and some other products up by 10 percent.

There is some good news nonetheless. The housing slump appears to be bottoming out. Credit is beginning to flow more freely. Stock prices rose on average in April and May. Thus, there is a glimmer that the economy could start to regain a little momentum before the second half is over. Getting through this summer and autumn will be tough, for consumers and businesses. But the news is not getting worse, may not get worse, and could start finally turning a little better. That's a brighter prospect than one could have hoped for even three months ago.

Tuesday, June 24

10:00 am Consumer Confidence (The Conference Board)

Consumer expectations have dropped dramatically, and jobs continue to shrink. Did confidence sink further or rebound a little?

Wednesday, June 25

8:30am Orders for Durable Goods (Bureau of the Census)

The ordering rate has surprisingly held up. This has raised the question of whether foreign operations of domestic companies are doing the ordering, because the dollar is so weak. This probably continued in May - with an increase of 0.3-to-0.5 percent.

Thursday, June 26

8:30am Gross Domestic Product & Corporate Profits (1Q - 2008) (Bureau of Economic Analysis)

Hours worked declined by about 1 percent (annualized). But productivity growth was surprisingly strong. The preliminary 0.6 percent rise in GDP in the first quarter was revised to 1 percent, largely on the strength of more complete information about inventories and international trade. Growth in the current quarter may not be quite as strong. Also pay a lot of attention to the first estimate of profits. It is very likely that total profits fell for the third straight quarter, and are probably down again in the current quarter. These weak trends could be suggesting that after seeing jobs fall slightly in each of the past four months, there could well be another four months of job losses ahead.

10:00am Help-Wanted Advertising print (The Conference Board)

The forward indicators of labor market activity have been pointing to continued small declines in employment right through the summer. Did this change in the latest report?

Friday, June 27

8:30am Personal Income and Outlays (Bureau of Economic Analysis)

Personal income has been rising by 0.2-to-0.3 percent per month, or about the same as the rise in spending. Keep in mind the spending numbers include spending at the gas station and supermarket. What is subject to constraint right now is consumer discretionary spending & because consumers are so nervous about what could be coming next. Still the numbers (income and spending) were a little higher in May, due to rebate checks.

The domestic economy is weak, with GDP growth not stronger in the second quarter than in the first, and probably not much different in the third quarter. Job losses are not intensifying but they are mounting. Moreover, gas prices usually start to come down a little after Labor Day. Not this year. That $130/bbl crude oil is still on the tanker. It hasn't been delivered to the corner gas station yet.

Those Europeans not transfixed by the soccer matches are worrying about interest rates heading higher. Everyone is concerned about not just the price of crude but the price of food as well. Corn prices reached a record recently and rice prices remain high. Typhoons have hurt rice production. Flooding in the Midwest region of the United States will impact corn prices. In sum, the prospect of weaker economic growth (weakened by rising global inflation) remains a concern. The concern is redoubled by trends that may send inflation a little higher this summer and autumn.