Housing data and Treasury auctions totaling $115 billion dominate the calendar between Monday and Thursday, but the big news this week will be the first official estimate of second-quarter GDP, which comes out Friday. Analysts look for a quarterly drop of 0.7%, a significant improvement following a -5.5% drop in Q1.

In addition to results for the last quarter, the Bureau of Economic Analysis will also release revisions that have the potential to make a major impact on investor sentiment.

“The BEA publishes comprehensive revisions every 5 years, adding and deleting concepts, introducing new methodologies, revising data sometimes as far back as 1929, and, in this release, changing the reference year from 2000 to 2005,” explain analysts at IHS Global Insight. “The revisions will likely show that real GDP dropped more in 2008 than current data show, possibly making this recession the deepest since the 1930's.”

Sunday Headlines: In an interview with Jim Lehrer, to be broadcast later this week, Federal Reserve chairman Ben Bernanke said he was worried that the financial crisis was going to be as bad as the Great Depression. 

"I was not going to be the Federal Reserve chairman who presided over the second Great Depression," he said when speaking about the government bailout of ‘too big to fail’ firms. "I had to hold my nose and stop those firms from failing. I am as disgusted about it as you are."

The interview, which took place at the Kansas Fed, will be shown in three segments from Monday to Wednesday.

Key Data and Other Items of Interest:

Monday:

10:00 — Housing data has been indicating stabilization recently and New Home Sales are expected to show further confirmation. The median forecast looks for the annual pace of sales to come in at 355k in June, moving up from 342k in May. The improvement will be welcome, but that pace is well below historical standards.

“Sales will remain weak as the market faces competition from existing homes, which are currently selling at deep discounts,” said economists from BBVA. “As a result, in order for demand for new homes to strengthen, and hence for new residential construction to pick-up, the price of existing homes will need to stabilize and inventory levels will have to come in closer to the historical average.” 

12:30 - Rep. Barney Frank speaks to National Press Club on "The Future of Financial Regulation"

1:00 - Treasury Department Auctions $6 billion 20 yr Treasury Inflation Protected Securities (TIPS)

Tuesday

9:00 — Markets will get a comprehensive look at whether housing prices are stabilizing in the S&P Case-Shiller index, the most closely-watched tracker of nationwide home prices. The composite of 20 metropolitan areas will fall for their 33rd month in June, but the annual pace of decline is expected to improve slightly to -17.9% from -18.1% in May, continuing the minor improvement seen since February.

10:00 — In tune with the drop in sentiment seen in the Reuters / U of Michigan report last week, the Conference Board measure of consumer confidence is expected to decline in July. The two-week gain in the stock market gives some potential for an upswing, but analysts believe further declines in the labor market will weigh heavily on sentiment. The median forecast looks for a 47.0 reading, down from 49.3 in June.

“Consumers remain on the sidelines, hesitant to spend, eager to save,” said IHS Global Insight. “We expect real consumer spending to grow at a 1-2% rate in the second half, led by a pick-up in auto sales.”

Forecasters from High Frequency Economics point out that an increase in confidence probably wouldn’t translate into a tangible gain for the economy anyway.

“Don’t be seduced by rising consumer confidence,” they wrote in a client note. “People need cash as well as confidence if they are to go shopping, and cash will be in very short supply for much longer than in a normal cyclical rebound.” 

10:00 — Janet Yellen, President of the San Francisco Fed, speaks to the Idaho/Oregon Bankers Association on the economic outlook.   

1:00 - Treasury Department auctions $42 billion 2 Year Notes

Wednesday:

8:30 — Durable Goods were surprisingly upbeat in May but the maxim that one month of data doesn’t make a trend is expected to be given credence when orders fall by 0.5% in June.

Not all analysts are pessimistic though. “The ISM survey suggests core orders will rise, but a pullback in the defense sector means we expect total orders to rise only 0.5%, with orders ex-transport up about 0.7%,” said the forecasting team at HFE, who expect Q2 GDP to have risen by 1.0%. 

8:30 — William Dudley, President of the New York Fed, a position that grants a permanent voting bloc on the FOMC, speaks on growth and inflation before the Association for a Better New York.

1:00 Treasury Department Auctions $39 billion 5 yr Notes

Thursday:

8:30 — Initial filings for Jobless Claims have come in below 600k for the past three weeks, but in the last week’s report first-time claimants rose by 30k to 554k, and in the week ending July 25 analysts believe that figure will rise again, to 585k. Seasonal adjustment issues have distorted the data in recent weeks and analysts have had mixed reactions to the apparent downward trend, but data should be more in line with reality this week so the report could get some extra attention.

“Since April there has  been a clear downtrend in jobless claims, as measured by the 4-week moving average,” note economists from Deutsche Bank. “After peaking at 659k for the week ending April 3, claims have declined over 90k to 566k. Historically, when claims have declined by this much on a 4-week moving average basis, it has always represented a shift in trend.”

1:00 - Treasury Department auctions $28 billion 7 year Notes

3:00 - Federal Reserve announces weekly Agency MBS purchases total

Friday:

8:30 — Gross Domestic Product is expected to fall 1.5% Y/Y in the second quarter, which would give further confirmation that the recession is slowing after the economy shrunk by an annualized 5.5% pace in the first three months of the year.

“The U.S. economy continued to shrink in the second quarter but the advanced data release should show that the pace of decline lessened substantially as the economy finally hit the trough of the business cycle,” said economists at BTMU.