The fed's staff economists have updated this year’s outlook.
In addition, economists are closely watching to see if banks pull back on lending in the wake of the collapse of two large banks last month. Many smaller banks have lost deposits to larger competitors, which could force them to offer fewer loans to consumers and businesses That could further weaken growth.
Last month, sales fell 3% at gas stations, a drop mostly driven by lower prices. Sales increased by a strong 1.9% at online stores, and ticked up 0.1% at restaurants and bars. On Wednesday, minutes of the Federal Reserve’s March 21-22 meeting revealed that the central bank’s staff economists are now forecasting a “mild recession” later this year, in large part because the potential for a reduction in lending weigh on growth.
Still, consumers could rebound in coming months as businesses are adding jobs and wages have been rising at a historically rapid pace. Economists at Bank of America have calculated that smaller tax refunds in March likely held back spending last month. In an analysis of card spending by its customers, Bank of America found that spending in many areas rebounded in late March, including for airline tickets, entertainment, dining out, and groceries.
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