Traders stuck at their desks this week will have to pay attention as some important economic releases are scheduled.

In Canada, the first couple of days of the week are clear, but the last three are packed with some important releases, including corporate profits and the international travel account on Wednesday, the current account and industrial prices on Thursday, and the second quarter GDP on Friday.

RBC Financial says that second quarter real GDP is expected to be quite soft, with little to no growth expected during the period. “Beneath the headline number, we expect a firm 2% increase in consumer spending during the quarter, pointing to at least some underlying firmness in this component. However the drag on growth will likely be exerted once again by the net export component, albeit we do see some improvement in this area relative to the previous two quarters,” it says. “Meanwhile, shedding of the bloated inventories accumulated during the previous quarter is also likely to exert a substantial drag on growth as well.”

CIBC World Markets agrees that Q2 real GDP results will be ugly, “with the growth tally at risk of sporting a negative sign”.

TD Bank agrees that a small contraction in GDP cannot be ruled out. “Aside from the impact of SARS and mad-cow disease, the appreciation of the Canadian dollar has been weighing heavily on Canadian exports — and correspondingly, on Canada’s heavily-export-oriented manufacturing sector.”

BMO Nesbitt Burns also says that GDP is expected to be flat in the quarter, and it suggests that Canada’s current account surplus is expected to be sliced in half in Q2 after a surprisingly robust reading in Q1. “While still quite healthy, the surplus is expected to fade further in the second half as the full impact of the jump in the loonie weighs in.”

However, CIBC downplays all the data, saying that second quarter results are really old news for the market. “Attention has shifted to Q3 and beyond, where even before the blackout, the likelihood of lackluster near-term economic growth, together with rapidly cooling core inflation, had opened the door for additional Bank of Canada rate relief.”

“Looking ahead, there are enough dents in the economic outlook for the third quarter to expect growth to remain below potential — but still positive,” says TD. It believes that the combination of mounting economic slack and a rate of inflation already below the Bank of Canada’s target virtually locks in a rate cut in September.

RBC also anticipates a rate cut, saying that it expects that the Bank of Canada will want to keep interest rates low in an effort to support the domestic demand environment. “And with more slack in the Canadian economy than originally thought, we expect that the Bank will not begin to lift its key policy rate until the fourth quarter of 2004,” it says.

“Bank officials are probably already eyeing the string of reports coming out of the U.S., which on balance have been outperforming market expectations,” TD says. “However, whether the burst of growth will be sustained remains an issue. Fit-and-start type growth has been a hallmark of this recovery, and although the recent broad-based strength has all the makings of the real thing, the notable absence of job creation and the resulting strain on consumer confidence remains a critical source of vulnerability.”

In the U.S. this week’s data schedule is heavy. And, CIBC predicts that the markets will be paying closer attention to economic reports, with earnings season complete.

“Key reports include July existing and new home sales on Monday and Tuesday along with July durable goods orders and August consumer confidence,” says RBC. “Despite the rise in confidence, home-buying activity will be a better indicator of how confident consumers really are in the outlook.”

“Thursday brings preliminary Q2 GDP growth, expected to be revised up a bit from the 2.4% advance release on higher trade numbers,” RBC notes. “Also on Thursday, corporate profits for Q2 and weekly unemployment claims will be released. The week ends with August personal income and spending, August consumer sentiment and the August Chicago PMI indicator of regional activity.”

CIBC predicts a substantial upward revision to Q2 GDP growth to close to 3%, “will confirm that the economy is showing more resilience than in the first quarter”.