2nd-Qtr. GDP May Signal Growth

Federal Reserve and private economists alike predict that the U.S. economy will slow this year from its highflying growth of the last two years. They, and the rest of us, will find out Thursday if that slowdown began in the second quarter when the government issues its first growth estimate for the April-June period. Gross domestic product--the nation’s total output of goods and services--probably increased at a 3.5% annual rate during the second quarter, down from the first quarter’s 4.3% pace, analysts predict. So far, there are few indications that the economy is slowing significantly.

Several other puzzle pieces will also be released this week to help bring the economic outlook into focus. Perhaps the most important is the employment cost index, the government’s broadest gauge of wage, salary and benefit costs. If the ECI shows signs of accelerating wage gains, it could suggest that inflation is picking up. The Labor Department will issue that report Thursday. The ECI probably increased 0.8% in the second quarter after rising 0.4% in the first quarter, analysts said. An increase under 1% suggests labor costs are “manageable and not inflationary,” said William Sullivan, an economist at Morgan Stanley Dean Witter in New York.

Other major indicators to be released this week:

* Home resales, to be reported today by the National Assn. of Realtors, probably rose 0.6% in June to a seasonally adjusted annual rate of 5.07 million units, analysts said. Sales of previously owned homes account for 85% of houses on the market and are an important gauge of consumer spending. If the forecast holds up, June’s pace would mark the eighth straight month that resales topped 5 million at an annual rate, surpassing last year’s record 4.97 million.

* Orders for durable goods--big-ticket items ranging from autos to home appliances to jet engines--will be reported by the Commerce Department on Wednesday. They probably increased 0.9% in June from the month before, analysts said.

* Federal Reserve Chairman Alan Greenspan will deliver the second part of his twice-yearly Humphrey-Hawkins testimony before the Senate Banking Committee on Wednesday.

* Personal income figures, to be issued by the Commerce Department on Friday, will probably show a 0.5% increase in June from the previous month, analysts said. Personal spending numbers, to be issued at the same time, probably increased 0.4%.

* Sales of new single-family homes, to be published by the Commerce Department on Friday, also probably increased in June, rising 0.7% from the month before to a seasonally adjusted annual rate of 894,000.