Retail Sales Are the Last Big Economic News Before Fed Rate Decision

Tuesday’s retail sales report could be the scrap of evidence that tips the balance as Federal Reserve officials decide how much to cut interest rates on Wednesday.

It is practically a given that the central bank will reduce rates. Inflation has fallen to its lowest point since February 2021, giving the Fed more flexibility to focus on the second component of its dual mandate—achieving maximum employment. Although the labor market remains resilient, the most recent two jobs reports have been weaker than expected, putting some pressure on the Fed to loosen monetary policy.

The question now is by how much rates will fall—0.5 percentage point, or 0.25 point? The indications from interest-rate futures are split , recently favoring the more aggressive half-percentage-point decrease.

Andrew Hollenhorst, an economist at Citi , leans toward the likelihood the Fed is more cautious on Wednesday, cutting rates by 0.25 percentage points. But he notes that it it is a close call that depends on the dynamics of the bank’s rate-setting committee and the strength or weakness of Tuesday’s retail sales report.

A positive surprise would suggest that both consumers and the labor market remain resilient, paving the way for a more modest cut. If the report comes in well below expectations, however, Fed officials may grow concerned that a weaker labor market is weighing on consumer spending, which could lead to a bigger cut, Hollenhorst added.

Louis Navellier, founder and chief investment officer of the money-management firm Navellier agrees. “In theory, if the August retail sales report is horrible, then a 0.5% Fed key interest rate cut may be forthcoming on Wednesday,” he said.

Economists are expecting retail sales will decline by 0.2% in August from July, according to FactSet. They jumped by a surprising 1% in July .

Lower gasoline prices and car sales will likely drag the headline number lower. Indeed, stripping out car and gas sales, retail sales are projected to increase by about 0.3% month over month.

Yet there is growing concern that even excluding autos and gas sales, the sales figure will be soft. While spending was remarkably strong in July, the Fed’s latest Beige Book flagged that consumer spending ticked down in August, points out Bill Adams, chief economist for Comerica Bank . Many retailers, particularly those catering to lower-income shoppers, have warned that Americans are being cautious and exceedingly choosy about what they are buying and where.

The impact of the retail sales report will likely extend beyond the immediate rate cut. The insights it contains about U.S. consumers will also factor into the Fed’s quarterly update to its Summary of Economic Projections, containing officials’ latest forecasts for the U.S. economy, inflation, and near-term interest rates.

The so-called dot plot , which charts the individual interest-rate projections of the seven members of the Fed’s board of governors and the 12 regional Fed presidents, is always closely watched as investors try to chart the Fed’s future actions.

Hollenhorst believes the median dot showing where rates will be at the end of 2024 should show “at least” 0.75 percentage-point of cuts, factoring in 0.25 point at each meeting through the end of the year. But it is likely that officials will leave the door open for more cuts in case data on the job market or consumer spending sour faster than expected.

Mother’s Day has quietly evolved. It’s no longer about last-minute flowers or safe department store buys. Instead, there’s a noticeable shift towards gifts that feel considered, personal and, increasingly, lasting.

This year’s edit leans into that idea, bringing together pieces that balance design, purpose and a sense of story.

At the more elevated end of beauty, Australian-founded skincare label Bon Elliot offers a future-facing approach grounded in dermatology.

Its Hydrating Performance Serum, priced at $220, is designed to support the skin’s natural balance, working across the microbiome, barrier and repair response for a more refined, luminous finish.

It’s the kind of gift that feels indulgent, but also quietly practical.

For something less expected, there’s a playful turn in the form of Tinned Candle’s handcrafted pieces.

Inspired by tinned fish, the Atlanta-based studio has created candles that are as much design objects as they are functional.

Importantly, they smell nothing like sardines, leaning instead into ocean breeze or champagne notes, depending on the piece . It’s a small, clever way to bring personality into a space.

There’s also a growing appetite for gifts that give something back.

Coral adoption programs offer a more meaningful alternative, allowing you to adopt a coral in your mother’s name while supporting fragile marine ecosystems under threat from climate change.

It’s less about the object and more about the gesture, which, in many ways, feels more aligned with the moment.

Homewares continue to hold their place, particularly when craftsmanship is at the centre.

Tanora’s collection, handcrafted in Madagascar, blends traditional techniques with a modern coastal aesthetic, spanning everything from woven totes to placemats and cushions.

These are pieces that don’t just decorate a home, they add texture and narrative to it.

For something more personal, Australian lingerie label Cloud Blvd offers soft, wearable luxury in the form of robes and camisoles.

With options designed for comfort as much as elegance, they strike that rare balance between everyday use and quiet indulgence.

And for the mother who loves to host, Mesa Collections delivers a playful yet polished take on the table.

Think colourful linens, sculptural silverware and small details that turn a simple meal into something more considered.

What ties all of this together is a shift in mindset.

The best gifts this Mother’s Day aren’t necessarily the most expensive or the most obvious. They’re the ones that show thought, whether that’s through design, craftsmanship or meaning.

Which, if you think about it, is exactly the point.

Retail Sales Are the Last Big Economic News Before Fed Rate Decision

From elevated skincare to handcrafted home pieces, this year’s most thoughtful gifts go beyond the expected.