Last week, the US economy impressed with remarkable resilience. Retail sales, industrial production, and jobless claims all pointed to its red hot performance. Guardian photo by Adnan Mohamed ] Stronger than expected retail sales point to a resilient consumer in the economy, and industrial production was stronger than expected. A surprise jump in weekly jobless claims offered a more mixed set of economic signals.
Consumer spending retail sales grew well beyond expectations, a sign that consumers are still spending strong. Unmistakably, this bright shot of growth means that American consumers remain the engine powering economic growth, even with rising global uncertainty and inflationary pressures. Additionally, industrial production posted a surprising upward advance, indicating robust manufacturing sector strength. Collectively, these indicators tell the story of an economy that continues to thrive against the odds.
The increase in weekly jobless claims triggered alarm bells with analysts’ concerns. Although the increase was larger than expected, it probably does not indicate the start of a consistent trend. Economists will be glued to the screens watching these numbers. For one, they want to know if this is a flash in the pan or an indication that the labor market is undergoing more fundamental changes.
Inflation figures are beginning to reflect the immediate impact of tariffs. Here’s a look at how economists are trying to understand how these changes could affect the rest of the economy. The mixed economic indicators and the emerging effects of tariffs have led markets to reassess their expectations for interest rate cuts. Nonetheless, plenty continue to see a cut in September as baseline scenario. The uncertainty over whether it needs to happen was heightened by the strong economic data released last week.
The financial markets took a bull run after the combined retail & industrial production data came out as good as it gets. The USD significantly appreciated against almost all developed and emerging market peers last week, echoing their confidence that the US economy will prove more resilient than expected. The dance between robust consumer spending and the impending tariff effects will be a key factor shaping upcoming monetary policy deliberations.