The end of the week brings potentially market-moving economic news from the U.S. on jobs and growth

05/29/2012 12:39 pm EST


Jim Jubak

Founder and Editor,

We interrupt our programming from the Spanish bank crisis to remind you that there is other economic news in the world today and on into this week.

Today, Wall Street was cheered (it doesn’t take much to qualify as good news right now) when the S&P/Case-Shiller index of home prices showed that prices fell at a 2.6% annual rate in March. That was an improvement from the 3.5% annual rate of decline recorded in February. (The lag on this data is that large, folks.) Investors found that comforting since it indicates that the rate of decline is slowing and they bid up the share price of Lennar (LEN) by 0.3%, DR Horton (DHI) by 0.94%, and Toll Brothers (TOL) by 0.71%.

The current week ends with a big bang of U.S. economic news. On Thursday we get the second read on first quarter U.S. GDP growth.  The consensus among economist surveyed by is that the 2.2% growth in the first read will be revised down to 2.0% growth. Thursday also brings data on initial claims for unemployment with economists projecting 368,000 new claims, a very slight drop from the prior week’s 370,000. If the data comes in where economists now expect, I’d call it a mild negative for the financial markets. Investors have already pretty much decided that U.S. growth is going to be relatively week in the first half of 2012 and are hoping for a pick up in the second half. The consensus numbers just support that view.

Friday’s monthly jobs numbers are a different matter. Economists are looking for payrolls to grow by 150,000 for May, up from the 115,000 net new jobs in April. The economy has disappointed on job creation in both April (115,000) and March (154,000) with a big decline from what had been growth of better than 250,000 a month in February and January. I think the markets, as reflected in the consensus forecast for 150,000 net new jobs in May, are looking for evidence that the U.S. economy has stabilized near that 150,000 net new jobs level. A drop back to 115,000 or so would be a significant disappointment.

And investors don’t need more of those.

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