Econ Edge: The Economic Week

If weeks had themes, the week of March 20, 2005, would be known as "Inflation Week."

A quick, decisive run-up in the price of oil has many economists wondering when energy will begin taking a lot of heat out of the U.S. economy. If the price of a barrel tops $60 in the coming days, expect many analysts to begin sounding the alarms. Crude will likely be a hot topic at the Fed's interest rate meeting.

This week will also see both the producer and consumer price indices for February made public. Consensus estimates for both are averaging around +0.3 percent, but there is a lot of talk that both PPI and CPI could top expectations by significant margins.

Wall Street will be watching to see if Tuesday's Fed interest rate decision is swayed by any of this inflation data. If there's a change in the pace of rate hikes or in the post-meeting statement from the Fed, markets will likely drop.

Housing will also be front and center as existing and new home sales data are released. Real estate analysts are anticipating a dropoff in sales this year as mortgage rates begin their march up from historic lows.

THIS WEEK'S ECONOMIC NEWS CALENDAR

Monday, March 21

  EIA Weekly Gas Price Survey (4:30 p.m. ET)

Retail gasoline prices are out from the Energy Information Agency. National average price for a gallon of gas rose by $0.053 last week to $2.109. That's the highest (nominal) price on record. The previous record was set during the week of May 24, 2004 when the average price was $2.064.

Tuesday, March 22

  February Producer Price Index (8:30 a.m. ET)

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

The Labor Department reports today the producer price index rose in February by 0.4 percent. This increase follows January's increase 0.3 percent. Analysts had predicted an increase of 0.3 percent, so this number is in line with expectations. The biggest increases came in energy and consumer goods, up 1.4 percent and 0.8 percent respectively. Prices for other goods stayed about even, while auto prices dropped.

  Federal Reserve Interest Rate Decision (2:15 p.m. ET)

[Rate at 2.5 percent / expect a 0.25 percent increase]

The Fed's Open Market Committee (FOMC) announced a 0.25 percent increase in a key interest rate this afternoon. With today's move, the Fed funds rate stands at 2.75 percent. This is the seventh rate hike since the Fed started "tightening" monetary policy in June 2004. At the time, the rate was at its record low point of 1 percent. Today's decision was widely expected, but a handful of analysts thought the Fed might hike rates by a more aggressive 0.5 percent.

Wednesday, March 23

  February Consumer Price Index (8:30 a.m. ET)

[expected: +0.3 percent/ prior: +0.1percent]

The monthly government report on consumer prices shows inflation pressures are picking up. The Bureau of Labor Statistics says prices at the retail level were up 0.4 percent in February. That's above the consensus forecast of a 0.3 percent increase and is the largest one-month gain since last October. Excluding volatile food and energy prices -- the so-called core rate -- prices increased 0.3 percent, significantly outpacing the expected 0.1 percent price hike.

  February Existing Home Sales (10 a.m. ET)

[expected: 6.65 million / prior: 6.80 million]

A report from the nation's realtors shows the housing market cooled last month – but less than expected. The National Association of Realtors says that pre-owned houses sold at an annual rate of 6.79 million units last month, down 0.4 percent. Analysts estimated that the rate would slip to 6.65 million during the month. The median home price jumped 11 percent last month to $191,000.

Thursday, March 24

  February Durable Goods Orders (8:30 a.m. ET)

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

Are America's factories getting more orders for big-ticket items? Orders fell unexpectedly last month after two months of solid gains. Slower sales of aircraft contributed to the decline. This report is potentially market moving.

  February New Home Sales (10 a.m. ET)

[expected: 1.140 million/prior: 1.106 million]

Measures how many Americans are buying new homes. January saw a 9.2 percent drop in the annual sales rate and the median price of new homes fell to its lowest level in more than a year.

Friday, March 25

  No significant releases scheduled.

Some information compiled from wire services.