Economy Week Ahead: Economic Growth, Inflation in Focus

THURSDAY

The Bank of Japan is expected to leave its ultralow interest-rate targets unchanged. Japan’s economy remains smaller than its prepandemic level, while “cost-push” inflation is hurting corporate profits as Japanese companies struggle to pass on the higher cost to consumers.

A key measure of U.S. economic growth is expected to have slowed sharply in the opening months of 2022. Gross domestic product is forecast to advance at less than a 1% pace in the first quarter, down from 6.9% quarterly growth at the end of last year. The headline figure, which is adjusted for inflation, will likely reflect surging prices, a growing trade imbalance and slower inventory growth, masking relative strength in consumer spending, business investment and real estate.

FRIDAY

Figures to be released by the European Union’s statistics agency are expected to signal a darkening outlook for the eurozone economy following Russia’s invasion of Ukraine, with growth weakening again in the first quarter, and the annual rate of inflation remaining high in April. Economists expect the inflation rate to hit a record of 7.5%, up from 7.4% in March.

U.S. consumer spending slowed sharply in February as households saw wage gains eroded by rising inflation. Economists forecast a pickup in outlays for March as Covid-19 continued to recede and consumers spent more on services like air travel and dining out. The Federal Reserve’s preferred measure of inflation, due out alongside consumer spending figures, could show underlying price pressures, while easing, are still near a four-decade high.

The U.S. employment-cost index—a measure of wages and benefits paid by employers—for the first quarter is expected to show another stretch of strong wage gains, providing the Fed with more evidence that a tight labor market is contributing to the 40-year high for inflation.