Retail sales topped Wall Street estimates in August as investors closely watched signs of a slowdown in consumer spending. The data comes as the Federal Reserve gets underway for a two-day policy meeting in Washington, with the central bank widely expected to cut interest rates as economic growth slows and inflation eases.
Retail sales rose 0.1% in August. Economists had expected a 0.2% decline in spending, according to Bloomberg data. Meanwhile, retail sales were revised up to a 1.1% increase in July, from an earlier reading that showed sales rose 1% in the month, according to Census Bureau data.
August sales, excluding autos and gasoline, rose 0.2%, below consensus estimates for a 0.3% increase. The control group in Tuesday’s release, which strips out several volatile categories and factors in the gross domestic product reading for the quarter, rose 0.3% in August, in line with estimates.
The announcement comes as investors are broadly expecting the Fed to cut rates for the first time since 2020. The next policy decision is scheduled for Wednesday at 2:00 p.m. ET.
Markets have been debating how big a cut the Fed will make. With signs of a slowdown in the labor market and inflation falling toward the Fed’s 2% target, markets have jumped to a 50 basis point cut from the Fed.
Going into retail sales on Tuesday, there was a 67% chance the Fed would cut rates by 50 basis points, compared to a 33% chance the Fed would go for a smaller 25 basis point cut, according to the CME FedWatch Tool.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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