Forecasting the economy is like juggling Jello: It's a difficult thing to do, especially when the signals conflict.
That was the case again this week. The Commerce Department reports the trade gap shrank in June. That's good news for the U.S. gross domestic product, which is the broadest measure of the economy.
But jobless claims last week increased and wholesale prices in July were flat. That was followed by Friday's news that core consumer prices, which measure inflation, rose a bit faster in July. That quieted fears of deflation.
It's a cloudy picture that keeps investors guessing. The same is true with the commodity markets, where traders this week had a lot to digest, including the latest government crop report.
In the corn market, for instance, the trade engineered a big sell-off just ahead of Tuesday's report, which showed a crop of just under 10.1 billion bushels. That number, along with predictions of dwindling world supplies, pushed the market sharply higher. But by mid-week, skepticism over the report's accuracy pumped enough doubt into the trade to push prices lower again.
SLUG; Bean Harvest
In other news, farmers are expected to harvest 2.86-billion bushels of soybeans this fall. That's a 2 percent increase from last year's crop, but a smaller projection than the market anticipated. Ample world stockpiles kept prices pressured.
In wheat, USDA adjusted its harvest forecast to 2.29-billion bushels, down 1 percent from July. Even so, that's a whopping 42 percent more than last year's crop. Despite the larger crop, export demand and the European drought helped prop up prices.