GDP Vs Inflation:
Recent developments in the US economy are cause for concern. Throughout this year, inflation expectations have hovered around 0.3% per month or 3.6% annually. However, the Consumer Price Index (CPI) for March exceeded these expectations, registering a 0.4% increase during most of Q1. The Gross Domestic Product (GDP) growth for the same period, Fiscal Year 2024 Quarter 1, fell short of projections at 1.6%, which is significantly lower than the anticipated 2.3%. This decline indicates a weakening economy, evidenced by a slow down to the previous quarter's GDP growth of 3.4% (Oct to Dec 2023) and the first quarter of the preceding year, which stood at 2.2% (Jan to Mar 2023). Having a weaker growth with higher inflation can suggest that economy is in or leading to stagflation. With the current statistics the likelihood of a rate cut in May and June appears highly an impossible event.
PCE, household spending and income:
March's Personal Consumption Expenditure (PCE) aligns with expectations, reflecting a 0.3% increase from the previous month. Personal income saw a modest rise of 0.5%, slightly surpassing the projected 0.4% growth. However, personal spending surged from 0.6% in February to 0.8% in March, outpacing market estimates of a 0.5% increase for the same period. Despite this increase in consumption, the discrepancy between personal income and spending suggests mixed signals with a unclear trajectory.
Upcoming week Labor market:
Looking ahead, the focus shifts to labor market data for April. The Job Openings and Labor Turnover Survey (JOLTS) data, scheduled for release on Wednesday, May 1st, is anticipated to reveal approximately 8.7 million job openings. Similarly, Non-Farm Payrolls (NFP) figures, also due on Friday, May 3rd, are forecasted to show 190,000 new jobs—a figure markedly lower than the previous count of 303,000. The unemployment rate is expected to remain steady at 3.8%, consistent with previous results.
Indian Economy:
Meanwhile, in the Indian economy, there were no significant economic releases last week, nor are any anticipated for the upcoming week.
Date : 28th Apr '24; Source - Trading Economics, Forbes
LR