This article has been updated following the release of the Federal Reserve's latest policy statement.
NEW YORK (TheStreet) -- The most important clue about when the Federal Reserve will raise interest rates wasn't in Wednesday's policy statement but is likely to come from Thursday morning's release of a key economic indicator.
Forecasts for the nation's gross domestic product, released Thursday at 8:30 a.m. EDT, are running at about 2.9%, according to a survey by Econoday, and 2.7%, according to The Wall Street Journal, but with a broad range of estimates ranging from 1.9% to 3.5%.
At the low end, that would be a powerful argument that the economy hasn't had the second-quarter liftoff Federal Reserve Chair Janet Yellen and others have said appears to be happening. And at the high end -- say, at 3% or above -- it would be a clear sign the economy is growing above trend, and likely to keep spitting out enough jobs to push the 5.3% unemployment rate to 5% or below by year-end.
Investors found little to go on when the Fed released its latest policy statement at 2 p.m. Wednesday after a two-day meeting. Although stocks remained near their highs for the day, the markets may have to wait until Thursday morning to get a clearer picture.
So, will a GDP report above 3% prod the Fed to begin raising rates in September rather than December? We posed the question to a half-dozen economists. Most said GDP per se won't be decisive -- but some conceded that a GDP pickup will mean a jobs pickup, which is what the Fed is really looking for. Here's what the economists had to say.
Diane Swonk, chief economist, Mesirow Financial
The pace of growth doesn't matter as long as the labor market is still edging toward full employment and the Fed is confident inflation will make it back to 2%. Neither inflation nor employment have to be at the Fed's goal to lift rates. The first move is still considered pre-emptive, almost symbolic, although disruptive. The Fed really wants the pace of rate hikes to be gradual, and it is easier to ensure that by starting in September or December than now.
Factors that could sideline the Fed in September are more market oriented. If markets are in a tail spin because of something going in China, for instance, it will be difficult for the Fed to add insult to injury.
Ryan Sweet, U.S. economist, Moody's Analytics
If GDP growth exceeds the economy's speed limit, it would be a clear sign that slack continues to diminish. By our calculations, potential GDP growth is south of 2% currently. This is a fairly low bar to overcome. Second-quarter GDP is backward looking and as long as it shows the economy bounced back after a slow start to the year, the Fed will turn its attention to the July employment report.
The July employment report takes on added importance, as it is one of only two to come before the September meeting. Odds are that the underlying trend in the job market won't shift appreciably between now and September, but the Fed will be looking for further evidence of improvement and confirmation that the problems abroad are not having any spillover effect on the U.S. economy.
GDP growth of 3% would strengthen the case for a September rate hike. Also, the Fed is itching to get this process started. The sooner they start the more gradual they can be in tightening monetary policy.