Weekly economic review & outlook Strong demand but supply constraints across the economy
You Need to Know
Week in review
Core inflation spikes to nearly a 30-year high
The 12-month change in the core PCE price index jumped to 3.1 percent for April, although the Fed expects this stronger pace of price gains will be transitory with little impact on monetary policy decisions.
New home sales fall, although they are still elevated
Sales dropped by 5.9 percent for April as lack of labor, higher input costs, and land constraints are delaying construction and incenting builders to put off new home contracts.
Week Ahead
Forecasts
ISM surveys expected to rise
Both the manufacturing and services ISM survey indices are expected to rise, benefiting from overall economic growth and increasingly fewer restrictions on business activity.
Nonfarm payrolls likely to rebound
With labor demand very high (job openings at record highs), payroll gains are expected to rebound after April’s disappointing increase.
High frequency economic data continue to suggest an upcoming surge in consumer activity as the economy nears a full reopening. Initial jobless claims fell sharply for the week ending May 22, the sixth decline in seven weeks. While claims are still about double the pre-COVID trend, layoffs have fallen sharply over the past month as businesses find it increasingly difficult to find qualified workers for an increasing number of open positions. Other recent data show restaurant capacity nearly at pre-pandemic levels and a sharp increase in air passenger traffic, signals that in-person activities are primed for a summer explosion.
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