30 January 2012 at 9:23 GMT
The December figures on US spending and income will be released Monday revealing details about this part of economy not in the GDP report. Before that we get Italian bond auctions
(details) and a bunch of Eurozone confidence numbers. And to round the day off the EU summit will begin at 14:00 GMT in Brussels. Andrew Robinson took a look at the upcoming EU summit in this morning's
FX Update.
US spending growth to ease: Last Friday's GDP report
(review) saw economic growth accelerate in the last quarter of 2011 to 2.8 percent (annualised) from 1.8 percent previously, though this was a bit below expectations of 3 percent. One of the factors contributing to the 'miss
' was personal spending, which only rose 2 percent against 2.4 expected. Hence it comes as no surprise that we follow up with the December report on spending and income expected to show a small gain of just 0.1 percent in the former. Spending was helped by a declining savings rate in the third quarter of 2011 after consumers put less aside for a rainy day as income growth lagged spending. In October and November we saw a steady - albeit rather low - savings rate in the mid-3 percent range, which partly explains the 'miss' in personal consumption in the GDP report. To ensure continued consumption growth we need to see personal income pick up its pace a bit and consensus expects that December was indeed such a month - projecting a gain of 0.4 percent.
Eurozone Business Climate to worsen? The Eurozone is bound to release a 4Q '11 GDP report (15 February) which shows a contracting economy. And judging from the initial reports for January things have not improved in the first quarter so far, though it seems that the rot has been mostly stopped, meaning the decline in economic output is not accelerating. The Business Climate Indicator captures to some extent economic output of the monetary union and is will, according to consensus, move a bit higher this month to -0.25 from -0.31 while various confidence numbers are also expected to move a bit higher or at least not decline outright.
