The stock market was heavily influenced last week by new labor market data, which continued to show signs of cooling and bolstered expectations of a Federal Reserve interest rate cut later this month. Markets began the week weaker but ended strong, with the S&P 500 and Nasdaq closing at record highs on Friday, powered by big tech. Treasury yields fell sharply, reaching their lowest level in five months, while gold advanced and oil prices slid.
Last Week’s Economic News
- As expected, the Federal Open Market Committee cut the federal funds rate by 25 basis points, bringing the range to 4.00%-4.25%. This reduction is the first since December and was nearly unanimous, with newly appointed Governor Stephen Miran favoring a 50-basis-point decrease. In reaching its decision, the Fed noted that growth of economic activity moderated in the first half of the year, while job gains have slowed and the unemployment rate edged up but remained low. Inflation remained somewhat elevated. The Committee indicated that uncertainty about the economic outlook remained heightened, while the downside risks to employment have risen. The Fed expects to lower interest rates by another 50 basis points by the end of 2025 and by 25 basis points in 2026, slightly more than projected in June.
- Estimates of U.S. retail and food services sales for August rose from the previous month and climbed 5.0% from August 2024. Retail trade sales were up from July 2025 and 4.8% from last year. Nonstore (online) retailer sales were up in August from the previous month and 10.1% from last year. Sales at food services and drinking places increased last month and 6.5% from August 2024.
- Both import and export prices exceeded expectations last month. U.S. import prices advanced in August following an increase in July. Prices for U.S. exports increased 0.3% in August after rising 0.3% the previous month. Higher prices for nonagricultural exports drove the increase. U.S. export prices rose over the 12-month period ended in August.
- Industrial production (IP) ticked up in August after decreasing in July. Manufacturing output rose last month after edging down in July. Mining moved up, while utilities decreased. Over the last 12 months, total industrial production has risen 0.9%.
- The number of residential building permits issued in August was 3.7% less than the July estimate and 11.1% below the August 2024 rate. Issued building permits for single-family homes fell 2.2% in August from the prior month. Residential housing starts in August were 8.5% below the July estimate and 6.0% less than the August 2024 rate. Single-family housing starts in August were 7.0% under the July figure. Residential housing completions in August were 8.4% above the July estimate but 8.4% below the August 2024 rate. Single-family housing completions in August were 6.7% above the July estimate.
- The national average retail price for regular gasoline was $3.168 per gallon on September 15, less than a year ago.
- For the week ended September 13, there were 231,000 new claims for unemployment insurance, a decrease.
Eye on the Week Ahead
There’s plenty of economic data available this week covering several sectors. The latest information on sales of existing and new homes is out this week. The final estimate for the second quarter gross domestic product is also available later in the week. Data on inflation closes out the week with the release of the personal consumption expenditures price index for August.
Have a nice week!
Sincerely,
Robert G. Carpenter