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The Week Ahead


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THE WEEK AHEAD

FOMC MEETING

Tuesday, May 20 -- The Federal Reserve Board's Federal Open Market Committee

will meet to set monetary policy for the next six weeks. According to a survey

by MMS International, one of The McGraw-Hill Companies, 60% of economists

polled expect a quarter-point hike in the federal funds rate, currently at

5.5%. The MMS report said that many analysts believe that "Tight labor market

conditions and the underlying momentum of the economy...will keep the Fed on

its preemptive course." The Fed lifted the funds rate by a quarter-point on

Mar. 25. Since then, the data show that the unemployment rate in April fell to

4.9%, a 23-year low.

INTERNATIONAL TRADE

Wednesday, May 21, 8:30 a.m.EDT -- The foreign trade deficit of goods and

services was probably little changed in March, after the gap narrowed sharply

in February to $10.4 billion from January's record $12.3 billion. Both exports

and imports are expected to have increased slightly in March. In February,

exports jumped 4%, and imports rose 1.1%, the fourth consecutive gain. Foreign

trade was a big drag on economic growth in the first quarter, shaving almost

two percentage points off the increase in real gross domestic product. Strong

domestic demand in the U.S. continues to attract a record amount of imports,

while economies elsewhere are not expanding fast enough to accelerate U.S.

export growth.

FEDERAL BUDGET

Wednesday, May 21, 2 p.m.EDT -- The MMS survey expects the Treasury Dept. to

report a huge surplus of $95 billion for April, far surpassing last year's

windfall of $72.4 billion, which currently is the record surplus for April.

Rising personal income tax receipts, inflated by capital gains from the stock

market, are responsible for the windfall. The April surplus would mean that

Washington is well on its way to posting its first fiscal deficit below $100

billion since 1981. The deficit in fiscal 1996, which ended in September,

totaled $107 billion.


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