Certain institutional traders fear that a recession has already started in the USA
The first GDP estimate for the first quarter of the year is expected at +0.4 % according to the Bloomberg consensus of economists, therefore in sharp decrease compared to the 4th quarter of 2024 which emerged at +2.4 %. However, some market operators are already afraid of a contraction.
Indeed, if we trust the Atlanta Fed GDP Tracker, growth will be at -2.5 %! or -0.4 % if we consider the alternative calculation model which adjusts imports and exports of gold.
The next estimate of this indicator will be published on April 29, the day before the official publication of GDP.
This is obviously, massive imports before applying customs duties that would be the cause, because the underlying demand should remain solid. This is why, it will be necessary to monitor the actual consumption expenses which will be published at the same time and which could relieve the fear of market operators.
So be careful for the intraday trading, because this figure could move the markets more than usual.
The index of personal consumption expenditure in the USA
The first part of the Fed double mandate will be tested again
The 1st component of the Fed double mandate will be published Thursday, namely the stability of prices via the personal consumer expenditure index excluding food and energy (the Core PCE), the favorite measure of the Fed.
Wednesday, we will have the PCE index for 1st quarter with GDP growth. It is anticipated at + 2.3 % against + 2.4 % in the previous quarter.
The drop in energy prices contributes to the slowdown in this figure, but they remain almost unchanged.
And above all, the Core PCE therefore excluding food & energy is expected at +2.7 % against 2.6 %.
That is to say far above the target of the Fed.
And shortly after at 4 p.m., the monthly version that will more interest traders. It is expected at -0.1% for the overall index (the PCE) and -0.1% for the out -of -power and energy index (the Core PCE).
The US employment report
The second double mandate component of the Fed will be tested again
The 2nd part of the Fed double mandate will be published on Friday, the job report.
Hiring is slowing down because of uncertainty about economic prospects, but there has been officially little layoffs so far.
In any case, this will result in less job creation and an unemployment rate slightly.
But if we look at the Challenger Gray index, the layoffs increased sharply in April and the economists cannot know if they include layoffs due to DOGE, the department ” government efficiency »Directed by Elon Musk. Some people think that this negative effect will be rather felt as summer approaches.
Inflation in the euro zone
The ECB thinks that customs duties could rather have a disinflationist effect than a inflationist
Inflation should slowly slow down from + 2.2 % to + 2.1 %.
Inflation in still very high services should also decrease by 0.1 %, from +3.5 %to +3.4 %.
As with the PCE index in the USA, the drop in energy prices is one of the contributing elements.
The ECB is monitoring this inflation in the services that has been slowing down for several months, as it mentioned during the Council of Governors in April.
Besides, Ms. Lagarde thinks that customs duties could rather have a disinflationist than inflationary effect.
In any case, European growth in slowing down will generate in facta slowdown in inflation.
