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The consumer is the heartbeat of the American economyIt accounts for two-thirds of GDP.
This week will bring two different readings on consumer sentiment, the first from the Conference Board on Tuesday, which will show whether confidence has returned in March. Surprising decline in February, The trade organization attributed that decline to concerns about the labor market and concerns over the political climate in the U.S. On Thursday, the University of Michigan will present its readings on March consumer sentiment.
Whether the fact that Congress blocked another government shutdown late last week brings confidence back — it was at a three-month high before the downgrade in February — that will be a question. The second thing will be how consumers react to it Federal Reserve meeting last week And the forecast for GDP growth this year has been raised to 2.1% from 1.4% earlier.
That higher economic projection also came with the latest approval inflation The reading was somewhat stronger than the Fed expected, making it less likely that the central bank will start cutting interest rates until June at the earliest.
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“I would say the story is really the same, and inflation is on a sometimes bumpy path gradually getting down to 2%,” Powell told reporters after the meeting. Said at the conference. “I think that’s what you still see. We’ve had nine months now of 2 1/2% inflation, and we’ve had two months of kind of hyperinflation.
“Now there are some bumps here, and the question is, are they more than a bump?” He added.
The Michigan consumer sentiment report will be the final reading for March and people will be watching for any changes from earlier estimates, which showed a very modest decline. However, overall, sentiment has improved by about 25% since the end of last year.
“The U.S. economy is extremely strong,” says Ron Dickerman, founder and chairman of global private equity real estate investment firm Madison International Realty. “The Fed is walking a tight rope.”
The twin consumer readings won’t be the only economic report of note this week. There will be a handful of thoughts on the situation of Accommodation The market is released, which includes new home sales in February on Monday, January home prices on Tuesday and then pending home sales in February on Thursday.
“The housing market remains fairly balanced, with low supply held back by low mortgage rates and homeowners’ reluctance to forgo tax deferrals on homes purchased before 2022,” said Bill Adams, chief economist at Comerica Bank, and Varan Bahirethan, senior economist at Comerica Bank. happened.” Wrote on Monday morning. “At the same time, high prices and mortgage rates drive many potential buyers out of the market, reducing demand.
“Home price growth is at the highest level in the 2017 to 2019 range, but is likely to moderate as Americans gradually get used to higher rates and more existing listings come onto the market.”
The final reading on GDP for the fourth quarter will be released on Thursday ahead of Friday’s key inflation update. That’s when the Bureau of Economic Analysis will report the personal consumption price expenditure index for February. A less well-known metric than the Consumer Price Index is one that the Fed watches very closely.
The core PCE index is forecast to rise 0.4% in February after a 0.3% gain in January, bringing the annual rate of inflation to 2.5% from 2.4% a month earlier. The core index, excluding food and energy costs, is expected to rise 0.3%, down one notch from 0.4% in January and at an annual rate of 2.8%, unchanged from January.
Last week showed that the economy is currently performing better than expected, but also that inflation is proving to be somewhat steadier than the Fed and the market expected. This week offers a chance to either confirm that narrative, or perhaps shift it somewhat in either direction.
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