Fed speaks tomorrow (Wednesday) on what economic data will tell the rest of us on Thursday

04/26/2011 6:37 pm EST


Jim Jubak

Founder and Editor, JubakPicks.com

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. A mere slowdown in growth to 1.7%, especially since this number is notoriously subject to revision (fourth quarter GDP growth, for example, got revised upwards to 3.1% from 2.8% in the most recent data release), isn’t likely to change Fed policy.

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