By Kevin Kastner
WASHINGTON (MaceNews) – After a week that showcased weakness in the U.S. housing market, analysts and financial market participants should prepare themselves for even more disappointing data next week.
The mid-week FOMC meeting gives the Committee an opportunity to offer more consoling words, but any new actions would be even more appreciated. Frankly, though, they may be running out of acronyms.
Fed Chair Powell’s press conference will be the closest watched (virtually at least) event of the week.
The flash estimates from Markit released this past week suggest the weakness in the regional data clearly translated to declines at the national level.
Looking ahead, Monday and Tuesday will offer a wealth of April regional data from the Dallas and Richmond Fed banks. These reports will lead into the Chicago PMI release on Thursday and the national ISM manufacturing reading on Friday.
The University of Michigan’s sentiment measure, released earlier on Friday, fell sharply from March. A bleak assessment of current conditions accounted for most of the headline decline, of course, but there was also a downgrade from March for future expectations.
Consumers are anxious to get back to normal, of course, but concerns about an ill-timed reopening of the economy and the strong possibility of a COVID relapse in the fall are tempering the outlook.
The Conference Board’s April consumer confidence index will be released on Tuesday and should follow the same pattern as the Michigan report. The business and employment conditions data in the release will fall sharply, likely to their lowest point since the Great Recession.
Preceding Wednesday’s FOMC announcement will be the advance look at first quarter GDP. The COVID-related economic shutdown began in mid-March, at the very end of the quarter. However, the impact was very detrimental to the consumption and fixed income components, and some effects from the shutdowns overseas could be seen as early as the February data.
The GDP nowcast estimates released earlier Friday suggest a contraction is likely for Wednesday’s official data.
Thursday morning’s claims release will continue the buildup of those receiving benefits, though the size of the weekly initial claims increase should slow as backlogs get worked down further. Continuing claims should remain elevated for the next several months.
Personal income and consumption data for March released on Thursday will reflect what we already know. Retail sales plunged in the month, except for grocery store sales, so nominal PCE will fall sharply. Even with an adjustment for absent inflation, mostly due to energy prices, real PCE should be negative.
Likewise, the drop in March nonfarm payrolls and the shorter workweek will more than offset a rise in hourly earnings, pulling down wages and salaries.
Government stimulus payments could add to personal income growth in the coming months but will not affect the March data due to the timing of their implementation.
The PCE price data are likely to show a continued inflation slowdown, in line with the PPI and CPI releases earlier in the month. The core measure could see a modest increase, keeping the year/year rate in line with the 1.8% increase registered in March.
Finally, construction spending figures released on Friday will reflect the pullback in home building data seen last week and the sharp drop-off in home sales seen earlier this week, as well as a halt to new nonresidential building as businesses remain cautious about fixed investment in the current environment.
—
Contact this reporter: kevin@macenews.com
Stories may appear first on the Mace News’s premium report. For real-time email delivery contact tony@macenews.com