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Week In Review


The U.S. economy grew at a 2.6% annualized rate in the second quarter. First quarter growth was revised lower, from 1.4% to 1.2%. A number of GDP components rose including personal consumption (+2.8%), business equipment spending (+8.2%), business structure spending (+4.9%), exports (+4.1%), imports (+2.1%), and government spending (+0.7%). Residential investment fell 6.8%.

Our Take

GDP grew at a 1.9% annualized rate in the first half of 2017, continuing a seemingly never-ending trend of lukewarm growth. It is difficult to identify any catalysts which may drive stronger growth. Today’s report may leave the Fed questioning whether another rate hike in December is a good idea.

FOMC Meeting

On Wednesday, the Federal Reserve Open Market Committee (FOMC) announced its decision to maintain the federal funds rate at the current target of 1% to 1.25%. According to the Fed statement, the labor market continued to strengthen and economic activity has been rising moderately. The committee noted that business investment continues to expand and inflation is running somewhat below the committee’s 2% longer-run objective.

Our Take

There was no surprise to the Fed’s decision to hold rates steady, and it remains committed to “gradual adjustments” in the fed funds rate. The Fed expects to implement its balance sheet normalization program “relatively soon.” This now appears to be the next step in removing accommodation and could come as soon as September.


S&P Global Ratings upgraded four Illinois universities this week after the Illinois legislature passed the fiscal 2018 budget. Governors State University and Southern Illinois University were upgraded one notch to BB+. Northeastern Illinois University and Eastern Illinois University received a one notch upgrade to B+. In addition, three universities were taken off of negative watch by S&P. S&P stated that the universities’ liquidity risk was “mitigated with the recent passage of the fiscal 2018 budget and retroactive payment anticipated for fiscal 2017.”

Our Take

During the budget impasse, Illinois universities waited for funding from the state. As the budget battle continued, many universities were forced to make cuts to course offerings and staff. While the upgrades are good news, the universities continue to feel the effects of the budget impasse.