Ben Bernanke ready to act if Economy weakens further

This week was full of economic data releases as well as some comments about the economy from the Federal Reserve Chairman, Ben Bernanke. To start the week, we had existing and new home sales fall well short of the 5 million annual run rate that was estimated.  The July 2010 sales came in at a dismal 4.11 million annual run rate, a 26% decline from the month before. Durable goods orders also missed estimates for the month of July.  It had been a bright spot in the economy but only grew 0.3% versus the estimate of 3.0%. Thursday’s initial jobless claims fell to 473k from last week’s revised 504k, although encouraging, the 4-week moving average edged up to 487k, the highest since December 2009.

Last month Q2 2010 GDP was reported at an annualized rate of 2.4%, today it was revised down to 1.6%, beating more recent estimates of 1.4%.  The markets seemed to cheer the beat since all the other economic reports were misses.  At 10:00Am today the Federal Reserve committee met in Jackson Hole, Wyoming to discuss the state of the economy. With growth being too slow and unemployment being too high, Bernanke indicated that they will provide additional monetary accommodations to make sure the economy recovers.  This sent the market up about 1% and is so far holding onto those gains.  We’ll have to wait and see what’s in store next week to determine if the market will continue its brief rally. Next week’s economic indicators include Personal Income and Spending, Chicago Purchasing Manager Index, Vehicle Sales, and the most significant of all, Change in Non-farm payrolls & the August Unemployment rate. Any surprises in the payroll report will surely increase volatility and consumer sentiment.