Econ Edge: The Economic Week

The coming week is chock-a-block full of economic and business news.

Many on Wall Street expect some big merger announcements. If they come, pundits will be lauding a return to the merger mania of the late '90s. Right now, the public sector is on track for a record setting year of M&A activity.

Book-ending the economic week are the personal income and spending numbers and the monthly jobs report for January.

Thanks to Microsoft's multi-billion dollar dividend payout in January, the numbers for personal income will see their biggest one-month decline in the history of the report. If that one-time event is accounted for, analysts expect to see a moderate increase in income growth in February.

On Friday, economists are hoping that the jobs picture for February will show some clear traction. The consensus estimate is betting on a 50 percent increase in addition to the country's non-farm payrolls number.

Also of note, Fed Chairman Alan Greenspan heads back to Capitol Hill to debrief the House Budget Committee on the current fiscal situation. Fed watchers will be combing through Greenspan's testimony looking for hints to the Fed's next interest rate move, scheduled for March 22.

THIS WEEK'S ECONOMIC NEWS CALENDAR

Monday, Feb. 28

  February Personal Income & Spending (8:30 a.m. ET)

[Income: expected: -2.6 percent/prior: +3.7 percent]

[Spending: expected: +0.1 percent/prior: +0.8 percent]

Personal income took a steep one-month dive during January, thanks to Microsoft's $32 billion special dividend issued in December. The government says personal income fell 2.3 percent last month as that one-time cash infusion was missing. Accounting for the special dividend, incomes rose 0.6 percent in January. Personal spending fell 0.2 percent thanks to a reduction in purchases of big-ticket items. The nation's personal savings rate crept up to 1 percent last month.

  February Chicago Purchasing Managers Index (10 a.m. ET)

[expected: 60.0 / prior: 62.4]

A closely watched measure of regional manufacturing health. The survey asks about the general direction of production, orders, inventories, employment and prices. Any number above 50 indicates manufacturing growth. One key component of this report is the closely watched "prices paid" index where inflation at the wholesale level is measured.

  January New Home Sales (10 a.m. ET)

[expected: 1.125 million/prior: 1.098 million]

The number of new single-family homes sold in January fell 9.2 percent, the Commerce Department said. The worse-than-expected performance pushed new home sales down to 1.11 million units at a seasonally adjusted annual rate in January compared to a revised December rate of 1.22 million units.

Measures how many Americans are buying new homes. Sales of new homes for 2004 set a fourth-straight annual record for new home sales, despite an even month in December. Most economists expect to see the red-hot housing market cool during 2005.

Tuesday, March 1

  January Construction Spending (10 a.m. ET)

[expected: 0.6 percent/prior: +1.1 percent

Construction spending rose a strong 0.7 percent in January as low mortgage rates continued to bolster home building and nonresidential construction climbed to the highest level in more than two years. The increase, reported Tuesday by the Commerce Department, pushed total construction activity to a record high of $1.05 trillion at a seasonally adjusted annual rate and followed an even larger 1.2 percent rise in December

  February Institute of Supply Managers Index (10 a.m. ET)

[expected: 57.0/prior: 56.4]

The Institute for Supply Management says its index came in at 55-point-three, with any number above 50 indicating growth. That is slightly weaker-than-expected, and down about a point from January.

Wednesday, March 2

  Greenspan on the Hill (10 a.m. ET)

Federal Reserve Chairman Alan Greenspan testifies in front the House Budget Committee on the economic outlook and current fiscal issues.

  Fed Governor Edward Gramlich Lectures (7:30 p.m. ET)

Gramlich gives a lecture at Dickinson College in Pennsylvania on the nation's savings rate.

Thursday, March 3

  Q4 Productivity Revision (8:30 a.m. ET)

[expected: +1.3 percent/prior: +0.8 percent]

Is the American work force becoming more efficient? This index measures the output per worker. Increasing productivity over the past years has allowed business to expand without adding to payrolls. A smaller increase in productivity is a generally positive sign for hiring. The first report showed productive coming in lower than what economists had expected. This is the second and final report for the fourth quarter of 2004.

  February ISM Services Index (10 a.m. ET)

[expected: 60.0/prior: 59.2]

A measure of health in the service sector, this report measures orders, employment and prices for sectors like finance, communications and construction. Any reading over 50 indicates expansion. January saw the slowest expansion in the service sector since September 2004.

Friday, March 4

  February Jobs Report (8:30 a.m. ET)

[expected: 225,000 new jobs and 5.3 percent unemployment / prior: 146,000 new jobs and 5.2 percent unemployment]

Arguably the most important economic report with significant political and economic implications: Is the economy stalled or not? Last month's tepid performance was enough to push President Bush's first-term performance into positive territory. The economy needs to add 150,000 to 200,000 jobs every month to keep pace with new workers.

  January Factory Orders (10 a.m. ET)

[expected: +0.3 percent / prior: +0.3 percent]

Another measure of manufacturing health, this report measures orders for durable and non-durable goods. After last month's report economists could see that factory orders rose 11.1 percent in 2004; the biggest one-year increase in orders since the reporting was initiated in 1992.

Some information compiled from wire services.