Economy Week Ahead: Inflation, Retail Sales, Industrial Production

Wednesday

The U.K. economy likely contracted in the first quarter after the government in December responded to rising Covid-19 cases with fresh restrictions on social and economic activity. But a strong vaccination campaign and steady reopening of the economy suggest the downturn was short lived. Economists expect growth to return in the second quarter and the Bank of England is forecasting U.K. gross domestic product will grow by 7.25% in 2021.

U.S. consumer prices in April are expected to post their largest annual increase in nearly a decade. Costs are rising for goods and services in high demand and short supply, but the figures will also be amplified by the comparison to prices from a year earlier—when the economy was in a pandemic-induced tailspin. Federal Reserve officials are forecasting only temporary inflation pressures, though not all economists agree with the Fed’s benign outlook.

Friday

U.S. consumer spending jumped in March as federal-stimulus checks sent household incomes soaring. Economists are forecasting more gains in April, albeit at a slower pace than the previous month. Retail sales—a measure of purchases at stores, at restaurants and online—will likely be helped along as Covid-19 related restrictions are relaxed, vaccination campaigns advance and the broader economy expands.

U.S. industrial production—a measure of factory, mining and utility output—is expected to advance in April as factories look to keep up with strong demand for autos, appliances and other goods. Supply-chain disruptions, rising raw-material costs, semiconductor shortages and transportation bottlenecks have been the biggest obstacles for manufacturers in recent months.