Retail sales beat Wall Street estimates in August

Retail sales beat Wall Street estimates in August as investors keenly watch for any sign of a slowdown in consumer spending. The data comes as the Federal Reserve’s two-day policy meeting begins in Washington, with the central bank widely expected to cut interest rates as data on economic growth slows and inflation eases.

Retail sales rose 0.1% in August. Economists had expected a 0.2 percent drop in spending, according to Bloomberg data. Meanwhile, retail sales in July were revised up to a 1.1 percent increase from an earlier reading that showed sales rose 1 percent in the month, according to Census Bureau data.

“Stronger-than-expected retail sales data for August suggest that, buoyed by rapid wealth gains and lower energy prices, consumers continue to spend freely despite a slowdown in the labor market,” wrote Capital Economics North America economist Olivia Cross in a note to clients on Tuesday. .

August sales, excluding autos and gasoline, rose 0.2 percent, below consensus estimates for a 0.3 percent increase. The control group in Tuesday’s release, which excludes several categories and volatile factors in the gross domestic product reading for the quarter, rose 0.3 percent in August, in line with estimates.

In the report, convenience store retailers were the biggest gainers, with sales up 1.7 percent, while a 1.2 percent decline in gas station sales weighed down the overall number.

“With consumption still very healthy, recession fears seem overblown for now,” Cross added.

The announcement comes as investors widely expect the Fed to cut interest rates for the first time since 2020 when the next policy decision is announced at 2 pm ET on Wednesday.

“I don’t think it really changes anything,” BofA Securities senior U.S. economist Stephen Juneau told Yahoo Finance. “It’s kind of a non-event.”

Markets have debated how much of a cut the Fed will adopt. As signs of a labor market slowdown emerged and inflation eased toward the Fed’s 2 percent target, markets moved to price a 50 basis point discount from the Fed, and August retail sales data done little to change that thinking.

On Tuesday morning, markets assessed a 67 percent chance the Fed would cut interest rates by 50 basis points, compared with a 33 percent chance seen that the Fed opts for a cut of less than 25 basis points, according to CME’s FedWatch tool .

Josh Schafer is a reporter for Yahoo Finance. Follow X @_joshschafer.

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