United States: Labor costs complicate the ride back to 2% inflation
- The U.S. economy expanded at a weaker-than-expected pace in Q1; real GDP grew at a 1.1% annualized rate. The ECI increased a hotter-than-expected 1.2% in Q1, suggesting compensation costs are not cooling as much as the average hourly earnings data indicate.
International: Eurozone avoids recession, Bank of Japan keeps policy unchanged
- The Eurozone’s Q1 GDP data released this week revealed that the economy narrowly avoided recession at the start of the year. The economy expanded 0.1% quarter-over-quarter in Q1 after contracting 0.1% in Q4-2022. Elsewhere, the Bank of Japan (BoJ) held its April monetary policy meeting this week, the first one under its new governor, Kazuo Ueda. The BoJ decided unanimously to keep policy settings unchanged, and while Governor Ueda’s commentary leaned dovish, he did not rule out the possibility of an eventual shift in monetary policy.