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Stephen Dunphy / Times staff columnist
Growth rate of economy slows

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Is the economy in trouble? Not really. "The economic baton has passed from consumers to businesses and net exports," said Sung Won Sohn, economist at Wells Fargo. "Expenditures on business equipment and software accelerated to a 10 percent annual rate from 8 percent during the first quarter. Business confidence is trending up."

Economists forecast that the economy will continue to grow in the second half, driven mostly by business spending. Low interest rates, low inventories, good cash positions and a tax break on depreciation that expires in January should combine to push business spending.

Politics will dominate discussion of the economy. That makes the statistics all the more important. Here's a look at some key economic reports in August:

Friday: The Street is looking for the unemployment rate to remain at 5.6 percent and for about 256,000 new payroll jobs, according to Mike Alfstad of RW Smith Fixed Income in Bellevue. Those are strong numbers and would set the stage for growth in the second half. But first-time claims for unemployment insurance have been up and down in recent weeks, leading me to believe it will be hard to gain 256,000 positions. Maybe half that?

Aug. 10: The Federal Reserve Board's Open Market Committee meets to review short-term interest rates and the state of the economy. The weaker-than-expected GDP figures and some increases in inflation will be hot topics for debate. If the Street is right and there is a big increase in jobs, look for another quarter percentage point increase. If the jobs report is weaker, the Fed likely will hold off on increases until a Sept. 21 meeting.

Aug. 12: Retail sales will get some attention given the fact that the second-quarter slowdown was attributed to weak consumer spending. Retail sales were down 1.1 percent in June compared with May — a stronger report for the July period is needed to restore confidence in growth estimates for the second half of the year.

Aug. 13: Wholesale-price increases are expected to remain low, although the spurt in gas prices eventually will be felt. Prices one step removed from the consumer were down 0.3 percent in June.

Aug. 17: Same tale for consumer prices and the same worry about rising energy prices, too. Housing starts remain strong although a bit lower at 1.8 million starts on an annual basis. The state unemployment rate for July also will be released; it could come down a bit from the 6.1 percent rate in June.
 
Aug. 19: Check leading indicators after last month's 0.2 percent drop. They had been up for more than a year before that decline. Also a reminder to check first-time claims for unemployment insurance, a report released every Thursday. Rising or falling claims can be a good leading indicator of the job market.

Aug. 25: Durable goods, stuff designed to last more than three years, were up 0.7 percent in June, but down 0.6 percent if transportation — companies such as Boeing — was not counted. It's a good proxy for the manufacturing industry.

Aug. 27: Gross domestic product for the second quarter will be revised for the first of two times. Annual benchmark changes pushed GDP growth up to 4.5 percent in the first quarter after the Commerce Department initially reported a 3.9 percent rate.

Aug. 31: Consumer confidence will also get a close look — the consumer represents two-thirds of the economy, so confidence is an important piece of information about what might lie ahead.

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