Today is the first day of the Federal Open Market Committee's (FOMC) two-day monetary policy meeting. The results will be announced in the statement released about 2:15 p.m. ET tomorrow.
I've written a great deal about the fact that the Fed will have to begin walking back rate hike expectations. At this juncture, we'll just have to wait to see what the nuance is in tomorrow's statement.
The Bureau of Economic Analysis (BEA) will release the advance estimate of first-quarter gross domestic product (GDP) at 8:30 a.m. ET tomorrow. The Fed most probably already has that data.
The Fed has consistently been referring to the poor economic figures of the past few quarters as transitory. That is increasingly becoming a hard sell to market participants as the most recent data available continue to deteriorate.
I won't go over all of the most recent economic reports in detail, but I suggest taking a look. The negative pattern is evident.
Employment growth in Texas has gone negative as of the latest available data on jobs through March. The trend looks to be in force and accelerating due to reductions in the oil, gas and mining sectors there.
The Fifth District Survey of Manufacturing Activity from the Federal Reserve Bank of Richmond is also soft, while respondents are hopeful for a pickup over the next six months.
Fifth District Survey of Service Sector Activity was consistent with the manufacturing sector report.
The Johnson Redbook Index, an alternative to the U.S. Census Bureau's reporting on retail sales, has continued to trend along a no-growth path throughout April.
Although the year-over-year growth has increased slightly in the past few weeks, it's still very near a year low after collapsing at the beginning of April.
The Conference Board Consumer Confidence Index for April, released this morning, also came in below expectations and reversed the rise that had occurred in March.
The Expectations Index component also came in below the March figure, indicating a negative outlook by consumers and implying that the April figures are not a one-off.
How this continuing negative pattern is presented in the GDP report tomorrow will be interesting to see.
The Atlanta Federal Reserve Banks GDPNow figure is still showing an expectation for an annualized growth rate of 0.1%, which is about where it's been throughout the month of April.
The consensus expectations by a variety of other aggregators of estimates are still showing much higher figures.
There has been little movement in the traditional expectation surveys even as GDPNow has declined dramatically.
The key figure to watch for in tomorrow's GDP report will again by the deflator, which I will discuss tomorrow after the report is released.
I explained the importance of the deflator last year in the column "Getting a Jump on GDP."
Lastly, as I discussed earlier this month in the column "Are Jobs and Wages Being Overstated?" the Bureau of Labor Statistics (BLS) has supplied revised seasonally adjusted data on wages and employment.
The problem with the corrected figures is that they've been used to replace the old erroneous data, with that data no longer available.
There's also no explanation as to what caused the error or what the impact was on the current or historical national unemployment rates. There's been no change in the rates reported by the BLS for the time period covered.