Since last autumn, 2.5 million have joined the ranks of the unemployed, household wealth has dropped dramatically, confidence hit an all-time low, and GDP fell more sharply than in any two-quarter period in several decades. Will it keep getting worse?

Not if the banking system is starting to right itself, with lots of help from the Federal Reserve and the Treasury Department. That doesn't mean the economy is going to turn around quickly. But it could be the first steps on what is likely to be a long road to recovery.

Tuesday, March 17

8:30am Housing Starts and Building Permits (Bureau of the Census)

In the past three years, home building has downsized from a 2 million annual rate to a little bit over one-half million in January. With home prices declining, relatively high default rates, a resultant huge overhang of unoccupied homes, plus continued problems obtaining new mortgage approval, the pace of homebuilding is very unlikely to pick up at all perhaps for the rest of this year. And that means housing remains a significant (direct and indirect) drag on the overall economy.

8:30am Producer Price Indexes (Bureau of Labor Statistics)

Despite a very sharp economic contraction, material costs continue to rise, albeit very slowly. "Core" wholesale prices (which exclude food and energy) probably rose by only 0.1-to-0.2 percent in February. With crude oil prices starting to rise (at least temporarily), the increase in the overall Producer Price Index could be as high as 0.4 percent or perhaps even a little higher. These numbers underscore the fact that while the big concern is economic slowing, inflation is a problem that is not going away.

Wednesday, March 18

8:30am Consumer Price Indexes (Bureau of Labor Statistics)

Energy prices resulted in another drop in top line inflation in December, but then helped produce a 0.3 percent rise in the overall CPI in January, and probably again in February. "Core" prices (which exclude food and energy) continue to rise by 0.1-to-0.2 percent per month despite very weak consumer spending. That range of "core" price increases is likely to continue this spring and even into the summer months. In fact, especially if the intensity of the recession lets up a little, there is even a chance that "core" retail inflation might edge a little higher.

Thursday, March 19

10:00am The Conference Board Leading Economic Index™ for the U.S and related composite Economic indexes

The Coincident Economic Index, which tells us where we are right now, reflects the ongoing intense recession. The Leading Economic Indicators edged higher in December and January, in part as money supply growth has been sharply stepped up. Did these trends weaken in February?

BY THE END OF THE WEEK

The global recession is intense and global efforts to turn it around have generally been quite sizable, exceptions noted. Global growth is certainly weak and might even have stopped altogether. Global trade has slowed even faster than global GDP, one consequence of restricted credit flows. Clearly the most important development to get to recovery is to unblock the credit flow. How long that takes will determine how long the road is to full global economic recovery.