More evidence of economic recovery

Summary

U.S. Review

Data released this week continue to show that the economic recovery is gaining momentum. The much anticipated consumer boom has arrived, helped by an influx of stimulus in March, and industrial production rebounded from its partly weather-induced February decline. But supply chain constraints are standing in the way of a more robust rebound in the manufacturing sector and are adding to inflationary pressures. The pickup in consumer prices for March suggests inflation is already heating up.

Global Review

Asian Economies Hit by COVID

COVID cases in India have skyrocketed, forcing local governments to impose restrictions on major cities across the country. New restrictions introduce downside risks to our India GDP forecasts and will likely result in downward revisions to our 2021 growth forecast in the coming weeks.

China reported Q1 GDP this week, with data revealing the Chinese economy was affected by an outbreak of COVID early in the year. Restrictions on mobility around Beijing placed pressure on PMIs and other indicators over the first few months of the year, which eventually filtered down to the real economy. These lockdowns resulted in Q1 growth rising over 18% on a year-over-year basis; however, data is heavily skewed by base effects. Quarter-over-quarter data reveal a much sharper slowdown than markets expected.

Interest Rate Watch

Will the ECB Make Any Policy Changes Next Week?

The Governing Council of the European Central Bank holds its next policy meeting on April 22, and one could make a convincing case that it will ease its monetary policy stance further.

Topic of the Week

The Share of First-Time Homebuyers Improved in 2020

Multiple rounds of fiscal stimulus have supported household income, which, alongside historically-low mortgage rates, is helping offset higher home prices for first-time buyers.

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