NEW YORK: A new report on retail sales will be the centerpiece of US economic updates in the week ahead, with additional insight expected from the Federal Reserve's most recent meeting and a fresh measure of how consumers are feeling.
The data arrives at a tense moment for the economy. The latest figures show inflation remains hot, and high prices on everything from groceries to clothing and gasoline have squeezed millions of Americans. Democrats swept Congress in the midterm elections, and for many voters the cost of living was the top issue.
Economists expect the retail report to show that activity slowed last month, with an overall increase of 0.2%. That would mark a step down from growth of 0.8% in September and 1.3% in August.
Even as overall retail sales cool, spending at gas stations has surged amid persistently higher fuel costs tied to the US war with Iran. The conflict disrupted shipping traffic through the Strait of Hormuz, cutting global oil supplies and pushing prices higher. That has made gasoline more expensive and has indirectly raised the cost of anything that gets shipped.
The pullback in consumer spending comes just as retailers enter the crucial holiday shopping season. The pressure from stubborn inflation is expected to continue as long as the war limits global oil supplies and tariffs from the US trade war with much of the world keep weighing on prices.
On Wednesday, the Federal Reserve will release details from its latest policy meeting. The minutes could offer more clarity on how central bank officials are weighing their options as they try to cool inflation. The Fed held interest rates steady at its October meeting, following its first rate hike in three years in September. Raising the benchmark rate can slow growth and ease inflation by making borrowing more expensive, but it can also stunt job growth at a time when the labor market, while strong, is showing some signs of weakening.
Inflation has held stubbornly above 3%, well beyond the Fed's 2% target. The central bank is expected to raise rates again at its December meeting, and anxiety over persistent inflation likely means more hikes will follow in 2027.
Thursday brings the latest weekly update on unemployment claims, a proxy for layoffs that economists watch closely for signs of where the job market is heading. Claims have stayed at historically low levels, and the resilient labor market has made it easier for the Fed to concentrate on raising rates. The last broad employment report showed employers added a surprising 165,000 jobs in October as the unemployment rate dipped to 4.1%. Still, hiring has averaged a modest 86,000 jobs a month this year, leaving the job market solid but unspectacular.
The week closes on Friday with the University of Michigan's updated November consumer sentiment survey, which is expected to hold steady from its initial reading and continue showing pessimistic consumers under pressure from inflation. Other gauges tell a similar story: the Conference Board's consumer confidence index improved somewhat in October but remains on an overall downward trend, with respondents repeatedly citing the high costs of gas, goods and services.
