The upcoming week promises a flurry of economic updates, with inflation, consumer confidence, and corporate earnings taking center stage. The Conference Board's consumer confidence survey, due on Tuesday, is expected to show further erosion in October, following a sharp decline in September to the lowest level in over a decade. Rising prices for essentials like gas and groceries are squeezing household budgets, compounded by stagnant wages and global trade tensions.
The Federal Reserve will conclude its two-day meeting on Wednesday, with expectations that it will maintain the benchmark interest rate after a September hike. While the Fed remains concerned about inflation, Wall Street anticipates one more rate increase in December. Higher interest rates aim to curb inflation but risk slowing economic growth and job creation, as the employment market already shows signs of strain.
On Thursday, the U.S. Department of Commerce will release its initial report on third-quarter GDP growth, with economists forecasting a modest 1.7% increase. This marks a slowdown from the 2.2% growth in the second quarter, attributed to higher oil prices and persistent inflation. Despite sluggish growth, the stock market and AI investments have provided some economic support.
The personal consumption expenditures (PCE) report, also due Thursday, is expected to show inflation accelerated to a 3.7% rate in September, up from 3.4% in August. The PCE is the Fed's preferred inflation gauge, with the central bank targeting a 2% rate. The U.S. war with Iran, which began in February, has exacerbated inflation by disrupting global oil supplies and driving up gasoline and shipping costs.
Earnings season continues with major tech companies reporting this week. Alphabet, Intel, and Amazon are expected to announce profit gains on Wednesday and Thursday, respectively, as investors assess the impact of AI investments on future growth. Other notable reports include UPS and Coca-Cola on Tuesday, Starbucks on Thursday, and Exxon Mobil and Chevron on Friday.