Every week seems to be a big week when it comes to economic data and events. However, it is not often we see the triple whammy of events which will occur this week and next. This period typically occurs once or twice per year. What are these events? First, this week we will have the preliminary reading of economic growth for the first quarter of the year (GDP). This is the most important aggregate measure of the health of our economy.
We have previously mentioned that some prognosticators had predicted a recession to start in the first quarter of the year; however, these same analysts are now predicting positive growth in the first quarter. Why? One only needed to look at one data point to reverse those predictions – the growth of jobs. You can be sure that the members of the Federal Reserve’s Open Market Committee will be looking at the GDP report closely when they meet next week. Economic growth, inflation and the banking sector will all be analyzed carefully by the Fed.
To round out this eventful time, a week from Friday we will see the April jobs report. This will be the first economic data of the second quarter. While few are expecting the economy to start losing jobs this quarter, most are expecting the pace of jobs growth to slow down. If we do undergo a mild recession later this year, the pace of adding jobs would theoretically slow even more, which would further ease pressure on inflation. Get ready for a busy two weeks!