Data Lags, Recession Looms
Retail sales down, rate cuts possibly next
Fed’s Rearview Mirror Driving
Retail sales down, rate cuts possibly next
Happy Friday! Brian Manning here with your weekly market update — let’s get right to it.
Monday: Quiet news day — nothing major to report.
Tuesday: We got May’s retail sales report — and it wasn’t great.
- Sales were down 0.9%, worse than expected.
- April’s data was also revised lower.
This kind of decline is a clear sign the U.S. economy isn’t performing as strongly as hoped.
Looking ahead to next week:
The Federal Reserve will wrap up their two-day meeting. We’ll hear from Jerome Powell, and as always, there’ll be a press conference and Q&A.
He says the Fed is being “forward-looking” in its policy decisions, but I challenge that. The Fed continues to be data dependent, basing decisions on past numbers — which often get revised! It’s like trying to drive a car by only looking in the rearview mirror.
Flashback to COVID:
- Inflation was rising, but the Fed left rates at historic lows too long.
- Now they’re doing the same in reverse — they probably should already be cutting, but they’re waiting.
Today (Friday):
We heard from Fed Governor Waller, a possible future Fed Chair. He said:
“The Fed should begin cutting rates as soon as next month.”
Why? Because monetary policy works on a lag — and if they wait for a recession to show up in the data, they’ll have waited too long to act.
It’s refreshing to hear this forward-thinking stance, but the Fed continues to be split. We’ll have to see what happens next.
I’m available all weekend — 8 a.m. to 8 p.m. — if you have any questions, want to get pre-approved, or just need to talk numbers.
And… happy Summer Solstice!
Enjoy the longest day of the year — flip-flops, sunshine, and all. Because before you know it, we’ll be complaining about the cold again.
Have an amazing weekend!
— Brian Manning
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