Amid euro turmoil, North America's economy expected to look up

Europe's scramble to prevent a messy Greek debt default will be the main focus this week – yet again. And a slew of indicators in North America could extend or snuff out the cautious optimism spurred last Friday by the latest Canadian and U.S. trade data.

THE HEADLINERS

U.S. retail sales (Tuesday): Consumer spending is the largest part of the U.S. economy and while holiday sales were underwhelming, in January retailers likely benefited from the lowest jobless rate in three years, and rising stock markets. This should mean a 0.7-per-cent gain in retail sales, economists say, led by automobiles.

U.S. industrial output (Wednesday): A spike in car and truck manufacturing helped U.S. factories post at least a 0.6-per-cent increase in production in January, economists say, with higher metal prices and shale-gas drilling also contributing. Meanwhile, warmer temperatures are expected to translate into a sixth consecutive monthly drop for utilities.

Canadian existing-home sales (Wednesday): For now, most economists are sticking to the view that the market is slowing and in little danger of a steep correction. Sales were 3 per cent higher than a year earlier in January, analysts say, compared with a 4.6-per-cent gain in December. Prices, meanwhile, are expected to have dropped by 2 per cent.

Canadian manufacturing shipments (Thursday): Better-than-expected trade figures from Statistics Canada suggest that factories, which export more than half of what they produce, had a decent December despite lower prices for energy products. Look for a gain of 1.2 per cent, economists say, and possibly closer to November's 2-per-cent rise.

WORTH WATCHING

Federal Reserve minutes (Wednesday): The big splash out of the January policy meeting of the U.S. Federal Reserve was a pledge to keep borrowing costs at rock bottom through late 2014. Since then, while the recovery is improving, Fed chairman Ben Bernanke has indicated he is far from declaring it out of the woods. The minutes will give a better sense of whether it's still possible that he may deploy other tools, such as buying mortgage bonds, to speed things along.

U.S. housing starts (Thursday): At long last, house construction is expected to start helping the U.S. recovery, rather than holding it back. Economists estimate builders started work on an annualized 670,000 new homes in January, a 2-per-cent faster pace than in December.

Canadian, U.S. inflation (Friday): Decisions by Bank of Canada Governor Mark Carney and Mr. Bernanke to look past the hotter-than-expected inflation readings of last summer looked better and better the more fragile the global recovery became. Economists see Canadian core inflation for January coming in at a 1.9-per-cent annual pace, the same as in December. In the U.S., it is expected to remain at 2.2 per cent. That's a three-year high, but hardly points to the runaway price increases some feared.