Economic gloom reigns

The week ahead

September 10, 1990|By Chicago Tribune

Good economic news has been greeted with the Bronx cheer lately, because of an overriding belief that zooming oil prices will spell recessionary trouble for an economy that has stalled. Gloom reigned last month, even in the face of a slight decline in wholesale prices for July.

Economists said the numbers had been overtaken by events in the Persian Gulf and that inflation was, in fact, much more worrisome. Just how much the higher petroleum bill is chewing into the economy will become clearer Friday, with the Labor Department's report on the producer price index for August.

Watch for: A 0.5 percent jump in wholesale prices for the month. If the price jump is 0.7 percent or more, the dialogue over inflation will heat up. A rise of 0.4 percent or less will be seen as a signal that the Federal Reserve can allow interest rates to creep lower.

NEXT UP

The nation's automakers report 10-day auto sales for early September Thursday. The Labor Department reports on the nation's retail sales for August on Friday, when the Fed reports on industrial production for August.

MARKETS

The stock market spent last week treading water, with the Dow Jones industrial average gaining 5.19 points to 2619.55.

TROUBLE AHEAD

More and more analysts see bad times looming on Wall Street, in the form of a bear market. There will be "rallies within the downtrend, but with lower highs and lower lows," said Ken Spence, technical analyst for Salomon Brothers Inc. His firm sees the slide pulling the Dow as low as 2100 before a meaningful uptrend is re-established.

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