The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.By John Canally NEW YORK ( TheStreet) -- The February employment report and the economic data for February in China are the highlights on this week's economic and policy calendar. In addition, the February data on ADP employment, layoff announcements, and merchandise trade for January are due out in the United States. The week will likely be quiet for the Fed, as Fed officials observe the unofficial "quiet period" ahead of the next Federal Open Market Committee (FOMC) meeting on March 13. However, central banks outside the United States will be busy this week, with rate setting meetings in Brazil, Australia, New Zealand, Russia, South Korea, the Eurozone, the UK, Peru, Canada, Poland, Indonesia, and Malaysia. Of these, only Brazil is expected to cut rates. The rest of these central banks are on hold, for now. There are bond auctions in Austria, the Netherlands, Germany and Belgium, as investors await the March 8 deadline to swap out existing Greek debt for newly issued debt as part of the latest bailout. The Chinese authorities will begin to release China's economic data for February later this week, with the key report being the Consumer Price Index (CPI) report. A deceleration in the CPI in February could pave the way for the China central bank to continue to ease monetary policy in the coming weeks and months. All of the Chinese economic reports for February will be impacted by the shift in the Lunar New Year to January this year versus February in 2011. On balance, the vast majority of the economic data in the United States released since early October 2011 has exceeded expectations. This trend reflects underlying improvement in the overall economy due to:
Mean Temperature in January/February is 33.1 Degrees
On the price side, warmer-than-usual weather at this time of year can also increase the supply (and perhaps lower the cost) of fruits, vegetables, plants, and flowers. These products are also at risk of a late frost, which could reduce supply and cause rising prices later in the spring. Warmer weather can mean lower feed costs for dairy, cattle, and hog producers. Inventories can be altered as well, as too much winter clothing piles up on stores' shelves, but not enough lumber or building materials are produced, leaving inventories lower than they would normally be.Although warm weather this time of the year does not impact every area of the economy or even every area of the country, generally, the warmer weather can "pull forward" some purchases (like sporting goods, gardening supplies, spring clothing, and even autos and houses). These purchases may inflate the economic data in January, February, and March and depress activity in the spring if the weather returns to normal. So here in March, we get reports mainly for February, which should be stronger than otherwise due to weather. Note that for retailers, March will likely be much stronger this year versus last year due to the earlier Easter holiday (April 8 versus April 24). March data gets reported in April. But looking further out into the year, if we have a return to "normal weather," the data reported in April and May for March and April could look weak and cause markets to get concerned about another double-dip scare. Our view remains that the underlying pace of economic growth is around 2.5% here in the first quarter of the year, but that growth for the full year will be closer to 2%. At least some of the strength in the first quarter is likely related to warmer-than-usual weather. LPL Financial Research 2012 Forecasts GDP 2%*
Federal Funds Rate 0%**
Private Payrolls +200K/mo.*** John Canally is Vice President, Investment Strategist and Economist at LPL Financial. In this role, Mr. Canally plays an integral role in the development and articulation of LPL Financial's economic, market and investment strategies.