This week will produce much for investors to digest. The FOMC meets, with no expectation for any change in current monetary policy. The key will be what the Fed says in its statement about the current condition of the economy. Past statements refer to the weak first half of the year as “transitory”, with expectations that growth will be much stronger in the second half of this year than the first quarter. The Fed has said they expect inflation to reach their target of 2% in the intermediate term, even as it is well below that target in the first half. The Advance report for second quarter Real GDP is expected to be much better than the 1.4% growth reported for the first quarter.

The consensus expects 2.6% to be reported on Friday. The Advance report is subject to large revisions when more complete data is available. For the past two years, those revisions have been large with an upward bias. This report will also have the benchmark revisions for the past three years. Any major changes to past data could also impact financial markets. These revisions usually only change the timing of the business cycle and do not change the overall magnitude of growth. The key component of the report will be personal consumption expenditures…

ProBank Austin Advisor – July 24, 2017