Economy Week Ahead: Trade, Inflation, Layoffs

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Inflation is expected to hit a multidecade high in January as the U.S. economy continues to work through pandemic-related supply and demand imbalances.

Photo:

Richard B. Levine/Zuma Press

By
WSJ staff

Feb. 6, 2022 3:00 pm ET

U.S. inflation data highlight this week’s slate of economic releases.

Tuesday

The U.S. trade deficit could hit a record in December, a sign of strong consumer demand and small improvements in supply-chain bottlenecks that have hindered economic growth and fueled inflation. The deficit was close to a record in November and preliminary data for December showed a new high for goods imports and a pickup in goods exports—both led by autos and consumer products. Tuesday’s Commerce Department report will round out the preliminary figures with more details and new data on trade in services.

Thursday

U.S. inflation is expected to push to a fresh multidecade high in January as the economy continues to work through pandemic-related supply and demand imbalances. The consumer-price index in December rose 7% from a year earlier, the fastest pace since 1982. Economists are forecasting an even higher reading for January, piling pressure on Federal Reserve policy makers to tamp down demand—and inflation—by tightening monetary policy.

Initial filings for unemployment benefits fell for the second consecutive week at the end of January, a sign the labor market is pushing through disruptions related to the Omicron variant of Covid-19. Economists will be watching to see if the recent trend continues in the week ended Feb. 5, offering yet more evidence that employers are reluctant to lay off workers while the number of job openings exceeds the number of unemployed.

Friday

U.K. gross domestic product for the fourth quarter is expected to grow a little over 1% from the previous quarter, though the headline figure could mask a bumpy three-month stretch marked by a December surge in Covid-19 cases. Despite muted growth, the Bank of England last week raised its key interest rate for a second consecutive meeting amid growing concern about soaring inflation.