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It’s a big day for economic news, starting with first-quarter GDP in the U.S., heading to the Fed’s policy statement and press conference, and wrapping up with China’s official manufacturing index. Jeff Sparshott here to help get you ready.
Decline and Fall
The coronavirus pandemic’s spread in the U.S. likely triggered the biggest quarterly economic contraction in over a decade. Economists expect first quarter gross domestic product, the broadest measure of goods and services produced across the economy, contracted at a seasonally adjusted annual rate of 3.5% in the first three months of the year. That would be the steepest dropoff since the depths of the last recession—but it’s only the start of what forecasters expect is a much more severe decline in the second quarter, Harriet Torry reports.
The Commerce Department releases its advance report for first quarter GDP at 8:30 a.m. ET. We’ll have a special edition of the newsletter with highlights and insights later today.
WHAT TO WATCH TODAY
U.S. gross domestic product is expected to contract at a 3.5% pace in the first quarter. (8:30 a.m. ET)
U.S. pending-home sales for March are expected to fall 13.5% from the prior month. (10 a.m. ET)
The Federal Reserve releases a policy statement at 2 p.m. ET and Chairman Jerome Powell holds a press conference at 2:30 p.m. ET.
Japan’s industrial production for March is out at 7:50 p.m. ET.
China’s official manufacturing index for April is out at 9 p.m. ET.
Note: This is a partial list of events and subject to change.
Walk the Line
Federal Reserve officials will update their assessment of the contracting U.S. economy Wednesday and could spell out how their policies will support an eventual recovery. Few new policy announcements are expected after the conclusion of their policy meeting Wednesday, putting attention on Chairman Jerome Powell’s subsequent news conference. With the prospect of a sharp economic rebound fading, Mr. Powell has to walk a line between shoring up confidence in policy makers’ response to the crisis without sounding unduly optimistic, Nick Timiraos reports.
Ask WSJ: Join three of The Wall Street Journal’s top economics writers for a conversation on the Fed and its historic actions in the wake of the coronavirus pandemic. Begins Friday at 12 p.m. ET.
The coronavirus crisis may upend a nearly four-decade long run for the Kansas City Fed’s annual conference in Jackson Hole, Wyo. The bank said Tuesday that it had been informed that the Jackson Lake Lodge conference center, with the Grand Teton mountains looming just off in the distance, would not open this year, Michael S. Derby reports.
Major U.S. manufacturers said some closed plants may never reopen and new product introductions could be delayed after the coronavirus pandemic slashed demand for everything from motorcycles to industrial paint. Caterpillar said its first-quarter revenue fell by a fifth, and Harley-Davidson said retail sales of its motorcycles slumped around the world during the quarter, Austen Hufford and Bob Tita report.
Even for companies with business from the coronavirus, the picture is mixed. 3M said it would furlough workers and idle some factory lines apart from its booming N95 mask business. United Parcel Service is logging higher revenue as homebound Americans shop online, but its more profitable business of delivering big shipments to offices and stores has dried up.
President Trump invoked the Defense Production Act to keep meat-production facilities running. Meatpacking plants across the country have become hot spots for the coronavirus, cutting production of chicken, beef and pork, and sparking concerns about the nation’s food supply, Andrew Restuccia and Jacob Bunge report.
U.S. consumer confidence posted its largest monthly decline on record in April. The Conference Board’s index showed consumers especially downbeat about current conditions. But they appear to see the country starting to emerge from the coronavirus pandemic relatively soon—a measure of expectations for the next six months improved.
A similar dynamic emerged in a recent quarterly poll of CEOs: A measure of current conditions hit a record low, but expectations improved.
The European Commission Wednesday said its Economic Sentiment Indicator—an aggregate measure of business and consumer confidence—”crashed” to 67.0 from 94.2, the largest drop in a single month since the series began in 1985. Only once has sentiment been weaker, and that was in March 2009, when the scale of the economic damage caused by the global financial crisis was becoming clear, Paul Hannon reports.
European governments are preparing to unlock the continent’s economy by introducing rules and guidelines that amount to a sweeping reconfiguration of everyday life, from subway seating to classroom size. Governments from Paris to Madrid are looking for ways to revive their economies without triggering a surge in infections. The reopening will be gradual, stretching into the summer, and highly targeted to first benefit regions with fewer infections. Overall, the rules mean an era of European confinement will not end once national lockdowns begin to officially lift in May, Stacy Meichtry and Giovanni Legorano report.
Something Not About Coronavirus, Please
The share of Americans getting married has fallen to its lowest level on record, suggesting that economic insecurity and changing norms are eroding the institution.
Something Else Not About Coronavirus
Melissa Dell, a Harvard University professor who studies the role of governments and other institutions in shaping long-term economic outcomes, is this year’s recipient of the most prestigious award for young economists. The American Economic Association awarded Ms. Dell the John Bates Clark Medal honoring economists under 40 who have made significant contributions to the field. In its citation, the AEA said she had “given a new energy and direction to the entire field of political economy and development.”
Research highlights: Consequences of forced labor in Peruvian silver mines from 1573 to 1812 are still visible today in lower household consumption and stunted growth in children. A U.S. military algorithm that determined bombing targets in Vietnam helps show that, “Bombing increased [Viet Cong] military and political activity, weakened local government administration, and lowered noncommunist civic engagement.”
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