Four Key Economic Reports This Week
- Retail Sales for April – 2022-05-17
- Industrial Production for April – 2022-05-17
- Housing Starts and Permits for April – 2022-05-18
- Existing Home Sales for April – 2022-06-19
After those four economic reports we will have a better look at where recession stands.
The following charts are all courtesy of Bloomberg Econoday.
Retail Sales Projections
Industrial Production Projections
Housing Starts and Permits Projections
That’s a projected 1.5% decline on housing starts and 2.9% decline on permits.
I’ll take the under on both (report weaker than consensus).
Existing Home Sales
That’s a 2.0% decline on existing home sales.
I’ll take the under.
Second Quarter Outlook
Those four reports will set the tone for second-quarter GDP. Retail sales is likely the most important and housing starts the least.
I’ll take the under on all of the reports. But a small miss to the downside on retail sales might not be enough to put GDP forecasts for the quarter in negative territory.
Retail sales of 0.8% is a pretty strong forecast. Even factoring in the CPI (up 0.3% month-over-month) those are strong numbers.
The retail sales consensus range is huge this month: 0.4% to 2.0%. Retail sales numbers under 0.4% will have a stagflation context.
If we see an upside surprise like 2.0% or even 1.0%, bond yields will soar and so will rate hike expectations.
Powell is probably hoping for weak numbers across the board. There’s a very good chance he gets them.
Will April Seal the Fate?
If the numbers are small misses to the downside, probably not.
Upside surprises may postpone a recession until later this year. A negative retail sales print with falling industrial production and a big miss on existing home sales will mean a recession may have already started.
I expect significant weakness and a recession sometime this year, not next. The May reports will tell us more.
Finally, it’s not nominal retail sales that matter, but real (inflation adjusted sales).
For a look at April CPI numbers, please see CPI Year-Over-Year Drops a Bit, But Is it Believable?
This post originated at MishTalk.Com.
Thanks for Tuning In!
Please Subscribe to MishTalk Email Alerts.
Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.
If you have subscribed and do not get email alerts, please check your spam folder.
Mish
A recession is likely this year or next? Okay. I think that is entirely possible. Assuming that comes true, the next question is: how long and how deep a recession?
Followed by: how strong will the next recovery be?
I will start with a prediction (which is a wild guess of course). Anyone who wants to add in their wild guess?
A two quarter recession will begin in October 22. It will drop GDP by 3% total in those two quarters. It will be followed by 7 years of slow growth of 1-2% per year.
month in the next two years, economist at Jefferies LLC say, down from
80,000 before the pandemic and 200,000 in the late 1990s.
“Population
growth will not be a solution the current labor shortage,” said chief
economist Aneta Markowska of Jefferies. “In fact, it is part of the
problem.”