Indicators next week will simply build further on this positive story of a low-inflation, relatively high-productivity recovery. Consumer prices are expected to have edged up only 0.1% in March, while production likely accelerated to 0.6% growth and retail sales advanced an even stronger 1.2%.

In March, housing starts probably bounced back from February’s weather-induced slump, while consumer confidence is expected to reach its highest level in over a year in early April.

KEY U.S. DATA RELEASES THIS WEEK

Tuesday, April 13 – Trade Balance (Feb.)

• IHS Global Insight: -$38.0 Bil.
• Consensus: -$39.0 Bil.
• Last Actual: -$37.3 Bil. (Jan.)

What to Look For

• We expect the trade deficit to widen to $38.0 billion in February, from $37.3 billion in January.

Implications

The services surplus should narrow to reflect the $820-million fee paid by NBC for the broadcasting rights to the Winter Olympics. On the merchandise side, we expect both export and import volumes to rebound after a temporary setback in January, but we see little change in the overall goods deficit.

Wednesday, April 14 – Consumer Price Index (Mar.)

Total

• IHS Global Insight: 0.1%
• Consensus: 0.1%
• Last Actual: 0.0% (Feb.)

Core

• IHS Global Insight: 0.1%
• Consensus: 0.1%
• Last Actual: 0.1% (Feb.)

What to Look For

• The headline and core CPI inflation rates to come in at 0.1%.

Implications

Core inflation has been close to zero in recent months (it was even below zero in January). Rents have been declining, and upward pressure on other prices has been very muted, with so much slack in product and labor markets. Food prices are expected to accelerate this month, but energy prices should be led slightly lower by gasoline. Food and energy prices should roughly offset each other, leaving the headline rate the same as the core.

Wednesday, April 14 – Retail Sales (Mar.)

Total

• IHS Global Insight: 1.2%
• Consensus: 1.1%
• Last Actual: 0.3% (Feb.)

Less Autos

• IHS Global Insight: 0.3%
• Consensus: 0.5%
• Last Actual: 0.8% (Feb.)

What to Look For

• Retail and food service sales rose an estimated 1.2% in March.

Implications

Retail and food service sales rose an estimated 1.2% in March, lifting year-on-year growth to 6.0%. Automotive sales led the advance, as unit sales of light vehicles climbed from an annual rate of 10.3 million in February to 11.8 million in March. Excluding motor vehicle dealers, we expect that sales increased 0.3% in March. Chain stores reported strong sales of apparel and luxury goods. Households are spending more and saving less in anticipation of an improving economy. Despite no growth in real disposable income, real consumer spending increased at an estimated 3.1% annual rate in the first quarter, nearly double the 1.6% pace of the previous quarter.

Thursday, April 15 – Industrial Production (Mar.)

• IHS Global Insight: 0.6%
• Consensus: 0.7%
• Last Actual: 0.1% (Feb.)

What to Look For

• Industrial production is expected to accelerate to a 0.6% gain.

Implications

Industrial production should post solid 0.6% growth, despite a severe headwind from a 5% plunge in utility output due to much warmer temperatures. In contrast, manufacturing output was held back by bad weather in February, and we expect it to rebound more than 1% in March. The manufacturing recovery rolls on, as the solid ISM-manufacturing survey indicated.

Friday, April 16 – Housing Starts and Building Permits (Mar.)

Housing Starts

• IHS Global Insight: 0.620 Mil.
• Consensus: 0.610 Mil.
• Last Actual: 0.575 Mil. (Feb.)

Building Permits

• IHS Global Insight: 0.624 Mil.
• Consensus: 0.626 Mil.
• Last Actual: 0.637 Mil. (Feb.)

What to Look For

• Housing starts to snap back by 7.8%.
• Building permits expected to decline about 2%.

Implications

We expect housing starts to bounce back on a vast improvement in weather conditions. Housing starts tumbled in February across the Northeast and South because of snowstorms in the eastern half of the country and colder-than-normal temperatures in the South. Housing permits, however, will probably slip in response to new home sales sinking to record lows. Builders are being ultra-cautious not to oversupply the market.

Friday, April 16 – Michigan Consumer Sentiment Index (Preliminary Apr.)

• IHS Global Insight: 75.5
• Consensus: 75.0
• Last Actual: 73.6 (Final Mar.)

What to Look For

• Reuters/University of Michigan Index of Consumer Sentiment is expected to increase from 73.6 in February and March to 75.5 in early April, its highest level since January 2008.

Implications

News of an employment upturn in March should boost confidence in the economic recovery and expectations for income growth in the year ahead. The recovery in the expectations component of the sentiment index has been lagging. A rising stock market and stabilizing home prices should also strengthen ratings of personal finances.