Weekly economic update for May 16, 2022


Highlights of key economic statistics from last week compiled by Putnam Investments.


economy
  • The Producer Price Index for final demand rose 0.5% in April, according to the Bureau of Labor Statistics.
  • The CPI rose 0.3% and core CPI increased 0.6% in April compared with March, the Bureau of Labor Statistics found.
  • Wholesale inventories rose 2.3% in March, the Census Bureau noted.


Employment
  • Initial jobless claims rose by 1,000 to 203,000 in the week ended May 7, 2022, the Labor Department reported.


Profits
  • As of May 5, 2022, of the 434 S&P 500 Index companies that reported first-quarter earnings, 342 beat analysts’ estimates, according to S&P Dow Jones Indices.


Emotion
  • The NFIB Small Business Optimism Index remained unchanged in April, while the outlook declined to the lowest level in the survey’s history.
  • The University of Michigan’s index of consumer sentiment dropped to 59.1 in May from 65.2 in April.


Europe
  • The ZEW Indicator of Economic Sentiment for Germany increased slightly in May but remained at a negative level.
  • The Office for National Statistics reported GDP fell by 0.1% in March in the United Kingdom.
  • The United Kingdom’s industrial output declined by 0.2% in March compared with February, the Office for National Statistics stated.


Rates
  • The yield on the 10-year Treasury note declined.


Risks
  • Rising energy prices, worsened by the Russia-Ukraine War, increase the risk of stagflation and recession, even as central banks seek monetary policy normalization.
  • Declining liquidity and deteriorating financial conditions, combined with high valuations, are contributing to a substantial uptick in risk asset volatility.
  • Global leverage is at worrisome levels and will eventually need to be paid for, at a time when most developed markets are facing a fiscal drag from the end of post-pandemic stimulus.


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All economic and performance information is historical and does not guarantee future results. The views and opinions expressed are those of Putnam Investments, are subject to change with market conditions, and are not meant as investment advice.