What to Watch in Economics for the Week Ahead

Economics

This Week
Compared to last week, things will be relatively quiet on the economics front this week. The most important domestic report will be retail sales on Friday. Given the payroll tax hikes, increased healthcare costs and sequester, markets are concerned whether or not the consumer can hold up. So far, the data has shown the consumer is still spending, but the employment report has people nervous, especially after the retail industry dropped 24k jobs in March.

Second in importance this week will be the Fed Minutes from the most recent meeting. The market will be looking for more clarity regarding when QE purchases will be scaled back, although given that the last meeting was an extended one with a press conference and growth projections, I’m not sure there will be much gleaned from the minutes that we don’t already know.

Finally, jobless claims will be watched Thursday, specifically to see if that big Easter-related jump in claims is revised down. Given the soft monthly jobs report last Friday, this will take on even greater significance.

Looking Internationally, by far the most important report this week will be Chinese CPI (released tonight). The main concern in China remains rising inflation, in that it could continue to force additional fiscal tightening from Beijing. Given the stagnation in Europe, the global economy needs China to continue to see growth accelerate, and that will be hard to accomplish if inflation is running too hot.

Things quiet down in Europe this week, as there isn’t a lot of economic data. EMU Industrial Production (Friday) is the highlight, and German IP (today) will also be watched—but those reports, even if they are better than expectations, won’t be enough to stem the growing concern that the EU economy is once again contracting.