Transcripts

The Last Trading Day of 2007 Proves to be a Real Downer

SUSIE GHARIB: No champagne rally on Wall Street on this last trading day of 2007. The Dow lost 101 points but rose 7% for the year. The NASDAQ fell 22 points but jumped 9 ½ percent in 2007. Now investors are wondering what lies ahead in 2008. Well they’ll get some clues this week. After the holiday tomorrow, there will be a whole new batch of economic reports. But as Erika Miller explains experts say there won’t be much to celebrate.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: As the nation gets ready to ring in 08 many Americans are anxious about the outlook for the economy. Wall Street will be paying close attention to a slew of fresh data later in the week, for any sign recession odds are rising. The biggest report is Friday’s employment data for December. Economists are forecasting gains of just 50,000 jobs. After a 94,000 jump the prior month. The unemployment rate is expected to increase slightly to 4.8%. But economist Michele Gambera, warns temporary hires in the retail and hospitalities industries may distort the December data.

MICHELE GAMBERA, CHIEF ECONOMIST, IBBOTSON ASSOCIATES: It is difficult by household survey or by establishment survey to know which employment gains have been seasonal and which employment gains actually took place and will stick.

MILLER: Ahead of that report there will be other key signals about the health of the economy. On Wednesday the Institute for Supply Management will release its manufacturing index. Citi Economist Steven Weiting, isn’t expecting much of a change despite strong foreign demand for U.S. products.

STEVEN WEITING, SR. ECONOMIST, CITI: We think manufacturing is near the break even point of 50 reading, based on the surveys that we’ve seen on the regional level. Manufacturing is growing but is not particularly robust. Consumer demand is moderating.

MILLER: Also out on Wednesday, construction spending. It is expected to post a decline due to a sharp drop in residential projects. On Wednesday at 2:00 the Fed will release minutes from its December 11th meeting which could provide a clue about the outlook for interest rates. On Thursday, auto sales. They are expected to show a decline potentially raising concern about the strength of consumer spending. Economists will also be watching the weekly jobless claims that day for any hints about Friday’s employment report.

WEITING: The weekly initial unemployment claims data are complete census of every individual in the country. We’ve now seen some meaningful rise... we’re very deep into this housing downturn. And that’s weekly data but its high quality data.

MILLER: There will also be weekly energy inventory data from the energy department on Thursday. If there is a big drop in supplies, traders predict crude could make another run at the $100 a barrel mark. Investors are hoping for a prosperous new year. But if predictions about this week’s data are any indication, the economy may not get off on strong footing in 2008. ERIKA MILLER, NIGHTLY BUSINESS REPORT, New York.