Four Key Economic Reports This Week

• Retail Sales for April - 2022-05-17
• Industrial Production for April - 2022-05-17
• Housing Starts and Permits for April - 2022-05-18
• Existing Home Sales for April - 2022-06-19

After those four economic reports we will have a better look at where recession stands. 

The following charts are all courtesy of Bloomberg Econoday.

Retail Sales Projections 

Industrial Production Projections

Housing Starts and Permits Projections

That's a projected 1.5% decline on housing starts and 2.9% decline on permits. 

I'll take the under on both (report weaker than consensus). 

Existing Home Sales

That's a 2.0% decline on existing home sales.

I'll take the under.

Second Quarter Outlook

Those four reports will set the tone for second-quarter GDP. Retail sales is likely the most important and housing starts the least.

I'll take the under on all of the reports. But a small miss to the downside on retail sales might not be enough to put GDP forecasts for the quarter in negative territory. 

Retail sales of 0.8% is a pretty strong forecast. Even factoring in the CPI (up 0.3% month-over-month) those are strong numbers. 

The retail sales consensus range is huge this month: 0.4% to 2.0%. Retail sales numbers under 0.4% will have a stagflation context.

If we see an upside surprise like 2.0% or even 1.0%, bond yields will soar and so will rate hike expectations. 

Powell is probably hoping for weak numbers across the board. There's a very good chance he gets them. 

Will April Seal the Fate?

If the numbers are small misses to the downside, probably not. 

Upside surprises may postpone a recession until later this year. A negative retail sales print with falling industrial production and a big miss on existing home sales will mean a recession may have already started. 

I expect significant weakness and a recession sometime this year, not next. The May reports will tell us more.

Finally, it's not nominal retail sales that matter, but real (inflation adjusted sales).

For a look at April CPI numbers, please see CPI Year-Over-Year Drops a Bit, But Is it Believable?