This week, market watchers, consumers, and traders alike may want to keep an eye out for the upcoming data releases in the world’s biggest economy. From Tuesday’s US consumer confidence release to Thursday’s US GDP figures, here are this week’s major economic events:
US Consumer Confidence: Is a Recession Still on the Horizon?
Today, Tuesday, April 25th, US Consumer Confidence Index (CCI) figures will be released. As the name entails, this index reveals the level of confidence consumers possess regarding the economy, which eventually affects their spending patterns.
Therefore, the CCI is considered an important indicator that might reveal a lot about the state of the global economy, in general, and the US economy in particular. As such, it may be interesting to see whether or not consumer confidence has improved, especially in light of the fact that recent CCI releases have indicated that fears of a recession loomed larger. This less-than-rosy outlook is believed to be mainly due to the latest banking sector crisis which further increased market jitters and recession fears.
Despite this dreary outlook, today’s April CCI figures are expected to hold steady at 104.1 compared to March’s CCI of 104.2. However, traders may want to focus on the Expectations Index subcategory, which if it is reported below 80 levels, will induce recession fears. To put this into perspective, February’s and March’s Expectations Index subcategories stood at 73.0 and 70.4 respectively. This, according to the report, heightened the chances of a possible recession in the next year.
Q1 GDP: Is the US Economy on a Healthy Track?
While today’s CCI figures may be significant to the US economy and the overall markets, Thursday’s upcoming US Q1 GDP estimates can have an even more substantial impact.
Many analysts predict cooler GDP figures in Q1 followed by a steeper fall in the quarters to come. This may not come as a surprise given the ostensible inflationary pressures, recession worries, the latest banking sector crisis, and other economic turbulences that pressured the economy. Accordingly, first estimates of Q1 US GDP stand at about 2% q/q which is below Q4 2022’s 2.6%. On the other hand, the Atalanta Fed’s GDPNow real GDP seems to point at 2.5% in Q1 which might indicate a more solid outlook.
However, it seems that the overall consensus is that whether or not Q1 GDP will be solid, the upcoming quarters will likely yield a slowdown in economic growth. In any way, the GDP figures can unveil a lot about inflation, which can eventually affect central banks’ decision-making policies.
How Are the Markets Reacting?
With a mixture of upcoming earnings releases from various market sectors and this week’s scheduled economic releases, the markets seem to be mixed. Wall Street indices, Dow Jones Industrial Average (USA 30) closed Monday higher by 0.20% while the S&P 500 (USA 500) edged a tad higher by 0.09% and the Nasdaq (US-TECH 100) dropped by 0.29%. (Source:Yahoo Finance)
As for the Forex market, ahead of the CCI and GDP releases, as of the time of the writing, the EUR/USD (EURUSD), one of the most traded Forex pairs, is also ticking upwards by 0.02%. The US dollar weakened, according to analysts, as risk appetite increased ahead of the releases.
All in all, given the fact that the Federal Reserve is expected to hold its interest rate meetings on May 2-3,2023, it might be worth seeing if the Fed will adopt a hawkish or dovish stance following the upcoming CCI and GDP releases. It is also worth noting that Q1 GDP data will also be released in the Eurozone this week on Friday.
As it stands for now, while some believe that the Fed will pause rate hikes, the consensus indicates that the central bank is likely to keep hiking interest rates in order to tame inflation further. But this can also change in light of the upcoming economic releases and the overall possible market volatility.