The American economy is perplexed both sides. The successive data seems to favor the first side and then the other. Stock trading for dummy could also be leading the tug of war. But the only thing that is having sharper focus is that the Federal Reserve is likely to stay on hold until it sees where the economy is heading



"Overall, when combined with the strong March employment report, recent data are likely to have reinforced Fed concerns about inflation and may have eased concerns about growth a bit," said Dean Maki, an economist for Barclays Capital, in the weekly outlook. "We think this basic pattern will continue in coming months and ultimately lead to Fed tightening later in the year."

Others look at the same numbers and draw a different conclusion. "While the consumer has borne up in recent quarters, stresses appear to be mounting on several fronts," said Peter Buchanan, an economist for CIBC World Markets.

Experts in the industry believe that the consumer price index will be the most significant number of the week. "We look for one of the sharpest increases in headline CPI in quite some time, led by a whopping 10 percent spike in gasoline prices," said David Greenlaw, an economist for Morgan Stanley in his weekly note.

The CPI is expected to show an increase 0.7 percent as a result of higher food and energy prices. This information is divulged by economists surveyed by MarketWatch. By far, it would be the biggest gain in the CPI since September 2005, during the foray of Hurricane Katrina.

Accordingly, energy prices are likely to increase by 5.7 percent, said Brian Jones, an economist for Citigroup Global Markets. Food prices probably rose 1 percent, he said, which would be the biggest increase in that category since 1990.

The core CPI, which excludes volatile food and energy prices, is expected to rise a much more modest 0.2 percent, although a 0.3 percent gain wouldn't surprise anyone. "A surprise in either way would carry considerable weight in the bond market," said Brian Bethune and Nigel Gault, economists for Global Insight.

But CIBC's Buchanan said the scope for a bullish response from bonds would be limited. "Even a tamer 0.2 percent rise in the core would leave the yearly rate standing at 2.6 percent, not nearly good enough for the Fed to start dropping hints about future rate cuts."