Investing.com – After the Federal Reserve (Fed) left interest rates unchanged Wednesday in a widely expected move, market focus was turning towards the publication of the U.S. second quarter (Q2) gross domestic product (GDP) out on Friday.
With the door now closed on the second quarter, the advanced GDP data will measure how the U.S. economy fared in the April-June period. Consensus expected an expansion of 2.6%, up sharply from the first quarter growth of 1.1%.
But analysts had begun to ratchet down their expectations in light of the worse-than-expected durable goods data out on Wednesday.
Both Morgan Stanley (NYSE:MS) and JP Morgan cut their outlook to 2.2%, from the prior 2.3% after the data was released due to the slightly lower outlooks for fixed investment and inventories.
In a similar move based on the same reasoning, the Atlanta Fed reduced its Q2 GDP growth estimate to 2.3%, from the prior 2.4%.
The New York Fed’s last forecast was for growth of 2.2%, but the regional bank had not updated its projection since July 15 because it considered it to be inconsistent with the blackout period in the run-up to the Fed’s policy meeting. Its next update will not occur until after the advance GDP data is released and will most likely focus on projections for the third quarter which had been 2.6%.
In the meantime, Thursday could see another shift in expectations for Q2 GDP with the publication of the June goods trade data at 12:30GMT, or 8:30AM GMT.
Beyond the second quarter growth numbers on Friday, markets will keep a close eye on numbers directly related to the Fed’s dual mandate.
Next week, the Fed’s favorite inflation gauge, the core PCE price index for June, will be released on Tuesday, followed by the July employment report with nonfarm payrolls on Friday.