Read the highlights of this week’s commentary from Helios:
- The Federal Reserve lowered interest rates by 25 basis points, bringing the federal funds rate to 4.0-4.25%. Chair Powell called it a “risk management cut,” responding to growing employment risks rather than an economic downturn, with officials signaling two more cuts likely this year. This marks a pivot toward supporting employment amid a softening labor market, potentially boosting business investment and consumer spending while keeping inflation concerns in check.
- Retail sales rose 0.6% in August, beating expectations of just 0.2% growth. Back-to-school shopping drove strong gains in clothing, electronics, and online shopping, while restaurant sales climbed 0.7%. Despite rising unemployment, tariff-driven inflation, and economic uncertainty, consumers, particularly higher-income households, continue spending robustly, suggesting the economy may have more underlying strength than recent labor market weakness implies.
- The Philadelphia Fed Manufacturing Index surged to 23.2 in September from -0.3 in August, the highest reading since January, signaling a significant revival in regional manufacturing activity. This dramatic turnaround suggests manufacturing may be stabilizing after months of contraction, providing hope for broader economic resilience.
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