Last week:The irony is that the biggest domestic business story this week was the consequence of the run-up in borrowing rates on Italian debt. The size of this debt dwarfs that of troubled Greece. Therefore, the interlocked tentacles of global finance implies that any potential haircut on Italian debt could have a huge potential impact on banks and lending institutions on this side of the Atlantic. The question is how much impact will there be on credit availability? In fact, with an economy growing at stall speed, a little less credit, if that develops, isn’t likely to prove a major obstacle to growth.

Monday, November 14

5:00am Euro-zone Industrial Production (Eurostat)

The Leading Economic Indexes for the euro economies have been pointing to slower growth in industrial output. That is also the signal from the latest Purchasing Managers’ Index. Total euro production unexpectedly rose by 1 percent in July but likely went back to slight declines in August. Output is slowing across the zone, not just in the periphery countries. And with it, trade, especially within the zone, is also cooling off. Nor are these conditions likely to turn around soon. Austerity programs and fiscal restraint are not conducive for expanding industrial output.

Tuesday, November 15

8:30am Retail Sales(Bureau of the Census)

Consumer sentiment is very weak. Job growth is minimal, as has been wage growth. Consumers are spending cautiously on everything except new vehicles. And vehicle sales have been so slow for so long that some replacements simply cannot be delayed much longer. All this has forced consumers to dip into savings. The upscale market is doing better though it too has cooled. Mid-range and discount retailing is weak and unlikely to pick up this coming holiday season. After a rise of 0.6 percent, retail sales excluding vehicles likely only rose by 0.2 to 0.3 percent in October, and will be unlikely to rise any faster in the holiday period.

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

Price increases on energy, but not food, have moderated. Slowed industrial output across the globe is easing pressure on metal, energy, and other commodity prices. The PPI excluding food and energy likely only edged up by 0.1 to 0.2 percent again in October. Nor is this relatively weak trend in wholesale inflation likely to change much over this winter.

Wednesday, November 16

5:00am Euro-zone Consumer Price Index(Eurostat)

Industrial conditions have slowed in the eurozone and wholesale inflation declined in each of the past two months. But retail pricing has been and could remain in a range of 0.2 to 0.3 percent per month. This translates to something close to a 3 percent inflation rate, annualized. And if that is the rate of retail inflation, can the European Central Bank lower interest rates further? Debt and austerity are not the only economic concerns on the continent.

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

“Core” wholesale inflation (which excludes food and energy) has been and is likely to remain at a 0.1 to 0.2 percent pace per month. Retail inflation is also likely to stay in a similar range, in a weak economic environment. Food prices are generally rising, especially for milk and meat. But overall the inflation stor,y while not getting worse, isn’t likely to be improving. The good news is that inflation is not stretching household budgets. The bad news is that the lack of higher wages is not widening that budget.

9:15am Industrial Production(Federal Reserve Board)

Industrial production edged a little higher in August and September. Both domestic sales and exports are rising slowly. There is no need to step up production to keep pace with sales, and certainly no immediate need to increase inventory. Production schedules are light, keeping industrial output on the slow burner — 0.3 to 0.4 percent per month, perhaps right through to the new year.

Thursday, November 17

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

Home building continues to bounce along a bottom. The annualized construction rate has remained close to 600,000 this autumn. The biggest change in the housing market is the drop in mortgage rates, as bond yields have fallen sharply. Home prices continue to dip, albeit slowly. Still, with foreclosures continuing, income growth very low, and confidence rock bottom, home-buying will not pick up until spring at the earliest.

Friday, November 18

10:00am The Conference Board Leading Economic Index^®, Coincident Economic Index^®, and Lagging Economic Indexes^®for the U.S.

The Coincident Economic Index, which tells us where the economy is right now, continued to rise slowly through summer, reflecting the very soft pace of overall economic activity. The Leading Economic Index for the United States has been suggesting more of the same going forward. Was that still the signal through October?

THE SITUATION ABROAD

The latest round of purchasing manager survey data suggests a general slowing in industrial activity and trade across the globe. There are exceptions, of course. Industrial activity is expanding in Turkey and India, according to the latest PMI data. Ireland and Japan are recovering from earlier industrial slowdowns. The U.S. and China are expanding slowly. But South Korea, the U.K., and much of the eurozone is contracting now.

FACT OF THE WEEK I

5.5 percent.Global food prices fell by 4 percent in October, according to the UN Food and Agriculture Organization (FAO). But they are still 5.5 percent higher than one year earlier. Thus, they remain high, and given drought in some areas, flooding in others, and still other weather problems elsewhere, food prices are likely to remain volatile going into 2012.

FACT OF THE WEEK II

48 percent.In early 2010, three out of four of the unemployed were receiving unemployment checks. Every week from then till now, about 400,000 or more signed up for their unemployment checks. A few found work. More received their last check and are still jobless. As a result, only 45 percent of the unemployed are currently receiving checks. Normally, one receives unemployment for 26 weeks but that was stretched to as much as 99 weeks as an emergency extension. The extension will soon end, unless Congress acts. Even so, there are some who have received checks for 99 weeks and are still looking for a job. And with the economy struggling to even add as many as 130,000 net new jobs per month, the number out of work, the number receiving help, and the number who have run out of benefit will all remain elevated.

QUESTION OF THE WEEK

Why is China’s economy expected to slow to not more than 8 percent in 2012 from about 9 percent at mid-year 2011?

As stated above, industrial activity and trade are slowing across the globe late in 2011. Assuming no quick turnaround, these global conditions are likely to cool off some export-driven activity. But that’s not China’s only problem. Years of rapid economic growth plus migration from the countryside to the cities has pushed up home building, home-buying, and home prices. Real estate is also a primary investment tool. After all, the stock market in China covers only about 70 percent of the economy, compared with roughly 100 percent in the United States. As such, the money invested in residences is a fiscal tool for use by the government to keep its economy growing and generating new jobs. Any slowdown in overall Chinese growth is likely to expose overbuilding as well as the run-up in price of real estate assets.

The accompanying chart shows that without that support, China might have experienced much slower growth in 2008 and 2009. The possibility of a similar downturn exists in 2012. The difference this time around could be Chinese resolve to offset the negative drag from residential building and buying or let the housing market cool off. While the world is focused on developments in Greece and Italy, what happens in real estate in China and what monetary and/or fiscal response develops could well be a major headline next year, and not just in China.