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Stephen Dunphy / Times staff columnist
OK, now what?

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But what's really ahead for the economy? There are some economists — and this amateur economist — who believe the economy will not grow as robustly as many expect in the year ahead. Business spending for computers, new plants and, finally, new jobs will help, but the recovery lacks some basic ingredients.

Normally in a recovery there is pent-up demand for housing, cars and other big-ticket items. But the low interest rates of the past four years mean most of that demand has been satisfied. That could mean the economy stalls as soon as consumer spending slows. We'll see.

For now, most fundamentals are in place for continued business spending. If everyone agrees inflation is running about 2 percent annually now, that means real interest rates — adjusted for inflation — are still negative at 1.25 percent.

To track the economy, here are the important dates and data for July:

Friday: The labor market is the key to the recovery these days, so the report on the unemployment rate and the number of new payroll jobs added to the economy is among the most important of any month. The unemployment rate should stick at 5.6 percent and the number of new jobs should hit 200,000 or so, the high-end forecast is for more than 250,000 jobs, but I think that's too high.

July 8: Keep an eye on consumer debt. A monthly report on the amount of debt owed by consumers compiled by the Fed shows the trend. It grew by about $3 billion in April but the experts see a jump of $7.5 billion in May.

July 13: International trade has become another deficit everyone is watching. The difference between imports and exports has widened despite a weak U.S. dollar. The flood of imports from China and other low-cost producers is a big reason.

July 15: A busy day with reports on wholesale prices, industrial production and factory use. Check the Producer Price Index, a report on inflation at the wholesale level, one step removed from the consumer. It should hold steady or start to slip if the Fed is right on its view of inflation.

July 16: Consumer prices and the first look at consumer confidence in a midmonth report from the University of Michigan. Consumer confidence may provide the key to how well the economy performs.

July 20: A report on housing starts, the first of several housing-industry reports, will show the housing sector has held up despite mortgage rates that already are a percentage point or so off lows.

July 28: Durable goods and the Fed's Beige Book report will provide snapshots of the economy. Durable goods are a good proxy for the manufacturing sector while the Beige Book provides region-by-region peeks at the state of the economy.

July 30: First look at second-quarter gross domestic product. Most guesses — and they are just guesses — put growth at 4.4 percent on an annual basis with some less optimistic forecasters seeing growth of only 3.8 percent.

Stephen H. Dunphy's columns appear Tuesdays-Fridays and Sundays. Phone: 206-464-2365. Fax: 206-382-8879. E-mail: sdunphy@seattletimes.com. More columns at www.seattletimes.com/columnists

Copyright © 2004 The Seattle Times Company

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