Fed speaks tomorrow (Wednesday) on what economic data will tell the rest of us on Thursday
Call it Backwards Week for U.S. economic data and the Federal Reserve. (Backwards Week is not to be confused with Opposite Day as fans of SpongeBob know.)
On Thursday, before the New York markets open, we’ll get the advance report on first quarter economic growth. The consensus among economists, according to Briefing.com, calls for 1.7% GDP growth in the quarter. That would be a significant drop from the final report on fourth quarter growth of 3.1%.
Will the data change the Federal Reserve’s mind about ending its program of buying Treasuries, known as QE2, in June?
Well, we’ll know the day before—Wednesday–when the Fed’s Open Market Committee meets on interest rates—no change from the current 0% to 0.25% target is expected—and issues its usual cryptic account of economic conditions as the Fed sees them.
Whatever the Fed says on Wednesday will take account of what will be publicly reported on Thursday (Got that?) because the Fed sees economic data before its public release.
Right now the consensus on Wall Street is that it will take a real disaster—GDP growth going negative, for instance—to make the Fed change course on ending QE2. Read more
Crucial news is on the calendar this week for those who believe in a stronger than expected U.S. economy in 2011
Major events this week for those investors—and I put myself in the number—who believe that the U.S. economy will beat expectations this year—and take U.S. stocks upward with it.
The Federal Reserve meets for the first time in 2011 on Tuesday and Wednesday of this week with its usual statement on its view of the U.S. economy due out Wednesday afternoon. If I can judge from recent statements by Fed members, the statement is likely to express a guarded optimism about 2011 that would be, in Fed terms, an endorsement of the belief that the recovery is headed toward self-sustaining status. I don’t expect anything as straightforward as an upgrade in the Fed’s projection for U.S. growth in 2011 but I do think we’ll see some kind of shift in language that suggests the Fed is more optimistic.
If you want hard numbers, you’ll have to wait for Friday when we get fourth quarter GDP data. Read more
Wednesday brings the final read on Q3 GDP–economists are looking for an increase to 2.8% growth
No holiday from economic data this week.
Wednesday brings what’s called the final revision of third quarter U.S. GDP growth estimates. (We’ll get the final, final figure in 2011.)
The previous estimated came in at 2.5% growth, itself an increase from the first estimate. Economists project that Wednesday’s revision will bring the growth rate up to 2.8% for the quarter that ended in September.
Why are the practitioners of the dismal science confident of an increase in the growth rate? Read more
Another day, another GDP revision: I don’t think new numbers on the 3rd quarter will tell investors much tomorrow
Stocks and the U.S. dollar rallied today, December 21, on a belief that U.S. economic growth will be so strong in 2010 that even a Federal Reserve interest rate hike around mid-year won’t be enough to derail a recovery.
Tomorrow the market gets a little dose of reality in the form of a second revision of third quarter GDP numbers for the U.S. economy. Last time around, in the first revision, government statisticians revised third quarter growth down to an annual rate of 2.8% from an earlier read of 3.5%.
The consensus on the eve of the report is that this revision will leave the number unchanged. That, of course, leaves the market open to a surprise or a disappointment depending on the direction of any revision.
My best guess? Read more
Three very cautious cheers for the GDP numbers
U.S. GDP grew by 3.5% in the third quarter of 2009. That was a bigger increase from the third quarter of 2008 than the 3.2% that the majority of economists had been expecting. This marks the first time that the economy has grown after four straight quarters of contraction.
The number is probably—probably—strong enough to give new impetus to the rally that began on March 9 and that has been going through a very modest correction in the last week and a half. If you’re a bull who believes that the economy has entered a sustainable recovery, this report will give you reason for renewed confidence in that scenario.
But the report won’t quiet those—myself included—who worry about the “sustainable” part of that recovery scenario. Too much of the growth in the third quarter came from government stimulus to make me confident that the economy would keep rolling once that stimulus ends.
Now on to the numbers. Read more
