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US markets are looking to positive data from the government on Wednesday as they hope strong manufacturing momentum and an increasing global appetite for “Made in America” exports will give the economy a boost.
Analysts are predicting that data from the Federal government’s Bureau of Economic Analysis will show a rebound in the second quarter after a colder-than-normal winter contributed to a slump of 2.9 per cent from January to June.
Economists say that the growth rate will range between 3 and 3.1 per cent for the second quarter, largely due to a mix of falling energy prices, a sturdy job market, rising prices in the housing sector, and a spike in consumer confidence not seen for seven years.
Perceptions of a more favorable job market have in part fuelled consecutive growth in US consumer confidence, the New York-based research group Conference Board said Tuesday in a report.
The Conference Board Consumer Confidence Index jumped to 90.9 in July from 86.4 in June, it said.
Meanwhile, analysts will also be keeping an eye on a meeting of the Federal Reserve’s Open Market Committee on Wednesday for any signs that the Central Bank may address a possible increase in interest rates.
Since May, the Federal Reserve has cited evidence that the US economy pulled out of an economic slowdown nicknamed “the winter chill”, but acknowledged that recovery from recession created by a financial crisis since 2008 is slow.
In June, Fed chief Janet Yellen said that the economy still required considerable fiscal assistance, pointing to the near-zero interest rate policy.
A month later, she said that interest rate increases may come “sooner and be more rapid than currently envisioned” if unemployment fell to around 5.2 to 5.6 per cent.
The unemployment rate, which has fallen from nearly 8 per cent two years ago to 6.3 per cent in May, fell further to 6.1 per cent in June.
In the meantime, the Fed is likely to announce that it will continue tapering its monthly bond buy-back program (known as quantitative easing – QE) by another $10 billion bringing the fund total to just $25 billion.
The QE program is expected to be fully tapered by the end of this year.