Unwinding the fiscal stimulus could signal rise in interest rates, which have been near zero for quite some time now.
Analyst hoping for positive economic indications
Further, the job report is also expected this week, which, economists are hopeful, will indicate less number of job cuts in the month of October. The nonfarm payrolls data is expected to report that employers laid off 175,000 employees in October compared to 263,000 job cuts in September.
The unemployment rate is expected to rise to 9.9 percent in October from 9.8 percent a month before.
Even the Institute for Supply Management survey on manufacturing and service sector will give a report on how the economy is performing in the fourth quarter.
A report on auto sales is also expected, and analysts are expecting that the report will reveal that the sales have risen from 9.8 million units in October, up from 9.2 million.
Stock markets face uncertain outlook
The stock markets are gearing up for the reports on how the economy is performing and Federal Reserve officials’ decision on fiscal stimulus.
As the markets are already fragile, the stock markets could react dramatically to the economic reports or to the slightest hint that the Fed is raising interest rates.
But most Fed officials believe that since the evident economic recovery is fragile, zero interest rates are likely to continue for longer.
Laurence Meyer, vice chairman of research firm Macroeconomic Advisers LLC and a former Fed governor, was quoted by The Wall Street Journal as saying, "There is so much uncertainty about the first half of next year that until you have a sense about the momentum in the first quarter there will be reluctance to do anything."
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