May 19, 2022

Economy Week Ahead: The Fed, Factories and Consumers

The Federal Reserve building in Washington on June 2.



Photo:

Liu Jie/Zuma Press

The Federal Reserve’s policy meeting highlights this week’s slate of economic news.

Tuesday

U.S. retail sales are expected to fall in May as auto sales decline, fiscal support for consumers fades and Americans shift their spending toward services and away from goods while vaccine campaigns advance and more businesses reopen.

U.S. industrial production is forecast to rise in May, led by a pickup in manufacturing. Factory activity around the world has faced similar opportunities and challenges: Red-hot demand, rising costs, supply-chain bottlenecks and trouble hiring workers.

Wednesday

China’s economic indicators for May are likely to show another month of slowing growth, as the base effect of a pandemic year eases and production is suspended in the manufacturing and export hub of Guangdong province to control recent Covid-19 outbreaks. Economists polled by The Wall Street Journal are forecasting industrial output increased 8.8% from a year earlier in May, decelerating from 9.8% for the prior month. Retail sales are expected to rise 13.6% versus April’s lower-than-expected 17.7% increase. And nonrural fixed-asset investment likely rose 16.6% in the January to May period, compared with 19.9% in the first four months of the year.

U.S. housing starts are expected to rise in May as builders confront strong demand alongside rising costs for materials and difficulty finding workers. One side effect: Prices for new and previously owned U.S. homes are surging.

The Federal Reserve releases a policy statement and new economic projections at the end of a two-day meeting. No major policy shifts are expected, but a recent inflation surge gives Fed more reason to begin discussing an eventual wind-down of their pandemic-driven easy-money policies.

Friday

The

Bank of Japan’s

policy board is expected to maintain its easy monetary policy at Friday’s meeting but may discuss an extension of its special lending program designed to support companies affected by the pandemic.

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