Consumer spending may still be on upswing

American consumers have been caught in the middle of several crosscurrents this year. Lower taxes but higher gasoline prices. Solid job growth but delayed tax refunds. Higher pay, but not by all that much. Retail sales figures in April should provide a good gauge of whether a rebound the prior month signaled a sustained upswing in consumer spending after a lackluster start to the year. The week also brings reports on housing starts and industrial production.

Retail sales jumped 0.6% in March after dips the previous two months. And a core reading that excludes volatile categories such as autos and gasoline climbed a healthy 0.4%. The soft numbers early in the year were blamed partly on chilly weather and delays in tax refunds that should have arrived by February.

Meanwhile, the tax cut Congress passed late last year is leaving Americans with more money in their paychecks, though that has been partly offset by higher gas prices. Still, monthly job growth has averaged a sturdy 200,000 this year. And wages are up 2.6% from a year ago, according to the monthly jobs report. That’s respectable, but it marks a slowdown from prior months. Overall, consumption is likely to accelerate as pay increases pick up in a tight labor market. Economists expect the Commerce Department on Tuesday to report a solid 0.3% gain in retail sales for April. Nomura economist Lewis Alexander estimates the core reading also rose 0.3%.

On Wednesday, Commerce releases housing start numbers. Groundbreaking on new homes has been volatile this year. A strong labor market and meager housing supplies have driven demand, but construction worker shortages and colder weather have tempered building activity. Housing starts increased 1.9% in March. Economists estimate housing starts were flat last month at a seasonally adjusted annual rate of 1.3 million.

Industrial production generally has trended higher amid a pickup in oil drilling and healthy overseas demand. Business investment also has been solid, fueled partly by the tax cut. All told, economists figure the Federal Reserve will announce that industrial production rose 0.6% last month.