The Week Ahead: Charting Economic Activity

On Monday, the Federal Reserve Bank of Chicago will release its National Activity Index (CFNAI), a monthly index designed to gauge overall economic activity and related inflationary pressure. Last month's release, for March, saw an index increase –0.15 in March from –0.31 in February.

The New York Fed's own Survey of Consumer Expectations indicated lower expectations for economic growth in April. Additionally, the Fed’s survey revealed that consumer expectations of home-price changes remained stable at their recent low level of 3.0% in April, the fifth consecutive reading at this level.

Household income and spending both increased, according to the survey. Median expected household income growth increased slightly from 2.8% in March to 2.9% in April, moving just above its trailing 12-month average of 2.8%. Median household spending growth expectations increased from 3.1% in March to 3.3% in April. Spending growth expectations have been volatile and exhibit seasonality.

Fewer Americans are concerned about unemployment as well. Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—decreased 1.5 percentage points in April, to 35.7%, and is now 4.9 percentage points below its almost five-year high reached in January.

According to the latest Fannie Mae Home Purchase Sentiment Index (HPSI), despite the upbeat economic activity, many are still pessimistic about the housing market.

“While home selling confidence remains strong and more consumers on net expect mortgage rates to decline over the next year, respondents walked back some of their buying optimism from March,” said Doug Duncan, SVP and Chief Economist at Fannie Mae. “Improving perceptions of income gains and a softening home price growth outlook should help support housing demand. However, increasing expectations among consumers that mortgage rates will continue to be favorable for some time will likely gain additional support following last week’s Fed meeting – and may also be reducing their urgency to buy.”

Here's what else is happening in the Week Ahead.

• NAR Existing Home Sales, Tuesday, May 21
• Zillow Home Value Index, Thursday, May 23
• Freddie Mac Primary Mortgage Market Survey, Thursday, May 23