The look ahead: Will US consumer data hint at optimism?

Consumer credit data due out in the week ahead could shed light on the economic picture in the US, where a slowing rate of growth is playing a key role in the approaching US presidential election.

The US Federal Reserve will release consumer credit data for June on Aug. 7th. Consumer spending makes up a major part of the US economy, and economists will be watching for changes in borrowing habits.

Consumers have provided mixed signals lately. Despite signs of continued shakiness, low interest rates and pent-up demand have encouraged more consumers to make long-delayed purchases of goods such as automobiles.

Overall, consumer credit has expanded in recent months, as increases in student loans boosted non-revolving credit. Revolving credit was about flat. Delinquency rates for consumer credit remained low, partly reflecting a shift in the composition of borrowers towards those with higher credit scores, the Federal Open Market Committee reported in June.

But a month later, Fed Chairman Ben Bernanke told lawmakers: “Households remain concerned about their employment and income prospects, and their overall level of confidence remains relatively low.”

Olympic clock is ticking

The Olympics are in full swing in London. And no matter how Great Britain finishes in the medal standings, analysts agree that the event can give the home country an economic boost after the Aug. 12th closing ceremony – and beyond the UK’s borders.

Publicity about the Olympics can have a positive effect on customers’ attitudes, according to a Deloitte report. “London 2012 is the biggest single showcase for British business in decades,” Deloitte Chief Executive David Sproul said in a statement. “A successful event will be noticed.”

The window to take advantage of those good feelings will not be open long, however. The world’s focus, according to the report, will shift to emerging markets such as Brazil, which hosts the 2014 World Cup and 2016 Olympics.

UK industrial, inflation and producer data

Reports on three economic indicators this week will provide the Bank of England’s Monetary Policy Committee with data on industrial production, inflation and producer prices, but the reports may not make the committee’s job easier.

On Aug. 7th, the Office for National Statistics (ONS) releases UK industrial production figures for June. A 1.2% increase in manufacturing output helped raise industrial production 1% in May compared with April. Analysts had expected month-over-month declines. But the surprise increase was mostly due to an extra working day in May.

In June, the British worked two days less than during a normal year because of the Queen’s Diamond Jubilee celebration. The run-up to the Olympic Games in London is expected to have further distorted industrial production figures for June.

Monetary policymakers will also get the inflation report for the third quarter, which the Bank of England releases Aug. 8th, and a July report on producer prices, which the ONS releases Aug. 10th.

At their July meeting, policymakers debated whether to pump more monetary stimulus into the ailing British economy with inflation on the decline.

Busy agenda for FASB

Four projects are on the agenda of the US Financial Accounting Standards Board (FASB) for its meeting on Aug. 8th.

FASB is scheduled to discuss projects on investment properties, investment companies and insurance contracts. The board also will continue its work on classification and measurement in the accounting for financial instruments project it is jointly undertaking with the International Accounting Standards Board (IASB), which is not expected to meet during August.

The FASB meeting is available via webcast on FASB’s site.

—From CGMA Magazine staff reports.