Inflation Data Expected to Show Down Tick

The economic calendar this week brings a mixed bag of economic data, with industrial production numbers for October likely to paint a dismal picture for the sagging U.S. economy, which many now believe to be in recession.

But a pleasant surprise may unfold from expected tame inflation and solid retail sales data. Last month, Americans snatched up cars and other items at a rapid clip as companies dangled lucrative incentives such as zero-percent financing on new auto purchases.

October retail sales data are slated for release Wednesday. The forecast calls for a rise of 2%, compared with a drop of 2.4% in September. Excluding auto sales, the report is likely to show retail sales gained just 0.1%, reversing September’s decline of 1.6%.

Friday, the October consumer price index measure of inflation at the retail level will be released before the market opening and is expected to show a down tick of 0.1% versus a rise of 0.4% in September. Excluding volatile energy and food prices, the index is seen showing a rise of 0.1%, down from a gain of 0.2% the previous month.

“Even though [retail sales] are incentive related ... they should have a positive impact and an outright decline in CPI might also have some positive impact as well,” Strauss said.

On a less upbeat note, October industrial production data, due before the market opens Friday, are expected to show a decline of 0.8% after a drop of 1% in September. Capacity utilization is forecast at 74.7%, down from 75.5%.

Other economic news expected this week:

* Tuesday, Federal Reserve Chairman Alan Greenspan speaks at the James A. Baker Institute for Public Policy at Rice University.

* Wednesday, Greenspan speaks to the board of directors of the U.S. Chamber of Commerce in Washington.

* Thursday, the Commerce Department will report on business inventories for October.