On the U.S. economic calendar this week we’ll get updated readings on new home sales, consumer confidence, initial unemployment claims, durable goods orders, GDP, and personal income & spending. The consensus forecast is that personal spending plunged 15% lower in April (following a 7.5% contraction in March), while personal income declined 6.5% last month.
Durable goods orders are forecast to have dropped 17% in April while initial unemployment claims for the week ending May 23rd are projected at 1.95 million. The level of unemployment claims remains hard to fathom. Back in mid-March, the expectation from a number of economic forecasters was that weekly claims would peak above 3.3 million and would subsequently decline to one million or less by late April:
It reminds us of the J.K. Galbraith quote that economic forecasts were created to make astrology look respectable. Initial claims peaked at more than 6.8 million in late March and have not declined anywhere near expectations since then, including the most recent report of more than 2.4 million initial claims:
Over in Europe this week, we’ll get a number of inflation reports, while the Financial Times reports “The European Commission is this week preparing to table detailed plans for a €500bn recovery fund and upcoming multiannual financial framework (MFF), which runs from 2021-27. All 27 EU member states will need to be on board before any recovery fund plan sees the light of day.” In Asia, Japan reports this week on industrial production, retail sales, and the unemployment rate. We hope you have a great week.