NorthEnd Private Wealth CIO Alex McGrath shares his expectations for the upcoming Federal Reserve meeting and third quarter earnings season.
retail sales September sales exceeded expectations as the U.S. economy continued to show signs of growth in the third quarter.
This was announced by the Department of Commerce's Census Bureau. Retail sales increase In August, it rose by 0.1% before the revision, but last month it rose by 0.4%. Economists compiled by LSEG had expected retail sales to increase by 0.3%. Expectations ranged from no change to a 0.8% increase.
Retail sales, excluding automobiles, gasoline, building materials and food services, rose 0.5% in September, following a 0.3% increase in August before the revision. These so-called core retail sales correspond most closely to the consumer consumption component of gross domestic product (GDP). The growth rate forecast for the third quarter is approximately 3.2% annually. Economic growth in the second quarter was 3%.
Signs of continued economic resilience will likely increase the likelihood that the Fed will elect to cut the benchmark federal funds rate by a modest 25 basis points at its meeting early next month.
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Retail sales in September exceeded expectations. (Christopher Dilts/Bloomberg via Getty Images/Getty Images)
“strong consumption expenditure “September's economic growth suggests that economic growth in the previous quarter was firmly above trend,” said Jeffrey Roach, chief economist at LPL Financial. “We need to monitor for signs that it is becoming more difficult for unemployed people to get paid.” Our baseline remains unchanged: the Fed is likely to cut rates by a quarter of a percentage point in both November and December. ”
The Fed began its rate cutting cycle last month with a larger-than-usual 50 basis points (bp) cut, lowering the benchmark from a 5.25-5.5% range to a new 4.75-5% range.
To combat this problem, policymakers raised the benchmark interest rate from near zero to the highest level in 23 years from 2022 to 2023. rapid inflationreached a 40-year high of 9.1% in June 2022.
Holiday spending is expected to reach a new record this year
Strong consumer spending suggests that overall economic growth will remain strong when third-quarter data is released. (Customer shopping at Barnes & Noble / Getty Images)
Last month's rate cut came amid growing concerns about the labor market, but the September jobs report released earlier this month was higher than expected. 254,000 jobs addedAccording to salary statistics first released by the Department of Labor.
The Federal Reserve's policy-making arm, the Federal Open Market Committee (FOMC), is scheduled to hold its next meeting shortly thereafter, on November 6th and 7th. election day.
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Reuters contributed to this report.
