PPI inflation and retail sales for August could show signs of encouragement, thanks to falling commodity prices and back-to-school demand. Although a welcome relief from the deluge of grim headlines, we’re looking at short-term relief from long-term problems, says Christian Hill at Investor’s Daily Edge

The economic calendar gets off to a slow start this week with only four reports being released from Monday through Wednesday.

The one that will be interesting to watch is the July Consumer Credit figures. The market is expecting a huge drop of approximately $6 billion. With the some of the stimulus checks being used to pay down debt and spending slowing, these are the most likely reasons for the big decline.

The back end of the week is overloaded with reports and will keep us busy starting Thursday morning at 8:30 a.m. The first reports to look at are the PPI and Core PPI figures for August. In what will likely be welcoming news for everyone, the August PPI numbers are actually expected to show a slight decline versus July.

This could be due to the recent drop in oil prices, since the Core PPI figure (which excludes food and energy in the calculation) is still expected to show an ever so slight increase of 0.2 percent for July.

The August Retail Sales figures come out Friday morning at 8:30 a.m. Expectations are for an increase of 0.10 percent versus July.

More than likely this is a short-term boost due to car manufacturers offering zero-percent financing offers and people scrambling to buy more small cars. If you exclude auto sales, the retail report is expected to come in at a negative 0.20 percent even with back-to-school shopping and the final cashing of stimulus checks.

This doesn’t bode well for next month, which won’t be able to count on school shopping or stimulus checks to help the total.

The final report of note this week is the Michigan Sentiment Preliminary report for September. Indications are for a slight increase, which is most likely due to the previously mentioned drop in gas prices over the last 4-6 weeks. Prices have eased a little, and we are through the busy summer driving season, so the pain at the pump may be subsiding.

This of course is one small aspect of consumer sentiment, and all it would take is a direct hit by a hurricane to our Gulf Coast oil-platforms to drive prices back up. But at least for now, consumers seem to be feeling better about things.

Source: A Slow Start Gives Way To A Very Busy End Of The Week