Report likely to show lingering chill of winter
Growth in first quarter stunted by weather, labor dispute, oil in turmoil
Last winter’s weather will blow back into the economic news this week, and it’s not going to be a warm memory. The government’s first reading on U.S economic growth in the first quarter arrives Wednesday at 8:30 a.m. ET. The Commerce Department’s gross domestic product report is likely to be a dud.
Recall: The weather was nasty. A labor dispute at West Coast ports — now settled — slowed shipments to factories and retailers. A strong dollar hammered manufacturers’ exports. Low oil
THE WEEK AHEAD
prices led energy companies to cut investments and payrolls.
Economists estimate the economy grew at a seasonally adjusted annual rate of just 1% in the period. That would make the first quarter the weakest since 2014’s winter-damaged first three months when GDP actually shrunk at 2.1% annual rate.
The rest of 2014 was better — the economy expanded at rates of 4.6%, 5% and 2.2% in the next three quarters. Spring’s arrival matched with a financially healthy consumer should push growth for all of 2015 toward 3%, economists say.
Muddy economic data recently will be the backdrop for the twoday Federal Reserve meeting starting Tuesday.
Markets are watching closely for clues to when Fed policymakers plan to hike the Fed’s benchmark rate for the first time since 2006. Some observers once thought it could be at this week’s meeting. All the anticipated dra- ma melted away after the Fed said last month it’s unlikely to boost its benchmark rate in April amid continued low inflation. The central bank could signal that a rate increase in June is a long shot as well after disappointing job gains of 126,000 last month and weak first-quarter economic growth.
Many forecasters say the upcoming meeting may be a nonevent. The Fed’s statement will hit the markets Wednesday at 2 p.m. ET.
As Fed policymakers convene Tuesday, there will be other economic news to watch. At 9 a.m. ET Tuesday, Standard & Poor’s will release the S&P/Case-Shiller home price index for February. Home prices slowed in the middle part of last year, but appreciation is picking up again, say economists at Bank of America Merrill Lynch. They forecast Tuesday’s report will show a 4.8% year-over-year gain in prices.
“Demand for homes is on a steady track higher amid low inventory, leaving home prices to head higher,” they said in their week-ahead report Thursday.
At 10 a.m. ET Tuesday, the Conference Board will publish the April reading on its consumer confidence index. The index slipped in February, then rose a little in March. UBS predicts April’s reading will hit 104 — the highest for any month since 2007 — signaling an upturn in consumer spending.