The U.S. reported impressive jobs creation numbers for April, but there's a long way to go to make up for the 8 million positions lost in the financial crisis.Mark Lennihan/The Associated Press
Faced with a natural disaster in Japan, a surge in oil prices, and a renewed debt crisis in Europe, investors are keen for reassurance that the global recovery isn't veering dangerously off track.
One place to look: the world's largest economy. This week, all eyes are on the U.S., which will release a fusillade of data on everything from job growth to consumer spending to housing prices.
So far, at least, most economists don't see cause for alarm. Broadly speaking, the U.S. recovery appears intact, noted economists from IHS Global Insight this past Friday. They estimate that the "twin shocks" from higher oil prices and Japan's disaster will probably "only shave a few tenths of a percentage point" off U.S. economic growth this year.
Although the current quarter is shaping up to be slightly weaker than expected, U.S. economic growth will rev up compared with last year, they believe, hitting about 4 per cent in the three months starting in April. "Better job prospects and improved household finances are having a bigger impact on consumer spending than the headline effects of higher oil prices, stock market jitters, and events in Japan," they wrote.
Of course, the performance of the U.S. economy is always critical to global growth, but that seems particularly true right now. One piece of good news arrived Friday, when revised figures showed that gross domestic product in fact expanded at 3.1 per cent, rather than 2.8 per cent, in the last quarter of 2010. Recent data from the manufacturing sector has also showed output running at a red-hot clip.
This week brings a more up-to-date snapshot of the economy. A key metric will be the figure for job creation in March, which arrives Friday. Economists are looking for employers to keep adding jobs at February's rate - or just under 200,000 a month. That would indicate steady although not spectacular improvement in the job market.
Also on Friday, investors will see new data from the manufacturing sector courtesy of a monthly survey of purchasing managers. In February, that index rose to a level not seen since 2004, so economists are expecting the March figure to decrease slightly.
It's also worth watching Tuesday's figure on consumer confidence to see how large an impact negative headlines from around the world and rising oil prices are having on U.S. shoppers (although it's useful to recall that the index doesn't have much predictive power when it comes to actual spending).
Paul Ashworth, an economist for Capital Economics, wrote in a note Friday that he anticipates some "mixed signals" in the upcoming data. The reports on personal income, spending, and consumer confidence should show the impact of higher prices, he noted. On the other hand, the numbers on job creation and manufacturing are expected to remain encouraging.
As for the housing market, few experts foresee any good news in the imminent round of statistics from that long-suffering corner of the economy. In all likelihood, housing prices are still falling, while demand remains anemic.