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Of all the economic reports coming out this week, I’m most closely watching for the latest US weekly jobless claim numbers and the new leading indicators data, due out Thursday.

Why am I most focused on these reports? Both will give further confirmation on the near-term state of the economy. As I’ve mentioned before, I expect that the US economy is most likely going to experience an anemic expansion, rather than another recession. Recent economic reports have so far confirmed my view. I believe the new data this week will similarly show that the while the US economic recovery has stalled, the economy is not contracting.

As of Tuesday, economists expected new claims for jobless benefits for the week of September 17th to come in at 420,000, better than the previous week’s 428,000 level. If the final number is inline with expectations, it would confirm my view. However, investors should be wary of a big spike in initial jobless claims, which would be a sign of an economic contraction.

As for the Conference Board’s index of U.S. leading indicators, this economic outlook gauge has improved on a monthly basis in 11 out of the past 12 months (including the past three). Economists, as of Tuesday, expected the index for August to come in at 0.1%. While 0.1% would be lower than the prior period’s reading of 0.5%, it would still be consistent with economic expansion and would indicate that the economy should continue to expand, albeit at a slow pace.

To be sure, while I expect the economy to muddle through, the chances of a double-dip recession are not trivial. Currently, I’d put the chances at about one in three. If the data this week confirms what I expect, however, there is likely to be a continuation of the current market volatility for the remainder of the year with an upward trend for equities.

Source: Bloomberg

Source: Jobless Claims, Leading Indicators Could Show U.S. Economy Is Not Contracting