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The June 26 week closes out the second quarter 2023 with little economic data likely to cause any surprise in the days leading up to what will be for many the long Independence Day weekend (Saturday, July 1 through Tuesday, July 4). The reports on the calendar will probably only affirm what is already known.<\/p>\n\n\n\n
There should be nothing to freshen the outlook for Fed monetary policy after Chair Jerome Powell\u2019s two-day appearance for the semi-annual monetary policy testimony (House Financial Services Committee on June 21, Senate Banking Committee on June 22). Between the holiday next week and the start of the communications blackout period around the July 25-26 FOMC that begins at midnight on July 15, there\u2019s only a small window which Fed officials could use to update their thinking. However, Powell\u2019s characterization of the FOMC\u2019s current meeting-by-meeting approach to monetary is likely to stand. Forward guidance isn\u2019t likely to emerge any time soon.<\/p>\n\n\n\n
On a side note, it will be interesting to see how quickly the Senate Banking Committee makes its recommendations on Board of Governor nominations for which it held hearings on June 21, and how soon after that the nominees receive a vote. Governor Philip Jefferson has gotten the Biden Administration\u2019s nod to become Vice Chair. Governor Lisa Cook is currently a governor with a term set to expire on January 31, 2024. She has been renominated for a full 14-year term. Finally, Adriana Kugler has been nominated to fill an unexpired term ending January 31, 2026. None of these are controversial nominations, although it is possible that politics will make it more difficult to confirm. Also, the search for new president at the Kansas City Fed has not yet resulted in an announcement of a choice.<\/p>\n\n\n\n
The third and final estimate of first quarter GDP is set for release at 8:30 ET on Thursday. The second estimate put growth at 1.3 percent, and probably won\u2019t see much, if any, revision. The pace of expansion was below trend, as Powell likes to say, but somewhat of an upside surprise given the headwinds to the US economy. The Fed district bank GDP Nowcasts are pointing to another soft reading in the second quarter, but the data are too incomplete to make a reliable prediction. Likely the most important conclusion is that at least so far, with the aid of a strong labor market, the US economy is sufficiently resilient to remain out of recession despite the aggressive series of rate hikes begun in March 2022 to fight inflation.<\/p>\n\n\n\n