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

By Sabrina Escobar
Tue, Sep 17, 2024 10:22amGrey Clock 2 min

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.



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Property of the week: Pecan Manor Farm at 204 Tooheys Mill Rd, Nashua

A rural retreat with a side hustle opportunity, Pecan Manor Farm near Byron is an idyllic slice of the tree change pie.

By Kirsten Craze
Fri, Feb 7, 2025 2 min

High in Byron Bay’s coveted hinterland there is a hidden estate with more than just a charming homestead on offer. Pecan Manor Farm is a 40ha parcel of lush rolling grounds with expansive grazing lands, a dam with a private pontoon – and a thriving pecan plantation.

The original homestead was first built and owned by the Toohey brothers, who later went on to establish the iconic Tooheys Beer Company. In 2013, the property was sold to the Hogan family, who significantly renovated the home. It changed hands again in 2021, with the current owners further transforming the property.

With sandstone features, manicured hedges and a meandering driveway through established trees, Pecan Manor Farm is, in a nut shell, an enviable tree change property only half an hour from one of Australia’s hottest beach getaways.

Listed with McGrath Byron Bay Agents Tezu Harrison and Nick Dunn, the unique property at 204 Tooheys Mills Rd, Nashua is on the market with price expectations of $8 million.

“It’s a beautiful pecan estate that is so private. You drive in through a pecan forest almost and arrive up to the top of the property to discover a completely renovated old school Federation home. It’s probably one of the most beautiful 99 acres I’ve ever seen, because there are so many different aspects to it,” Mr Harrison said.

Framed by some of the region’s most impressive scenery, the grand Nashua landholding is near Tintenbar, and is 18kms to Lennox Head or 25kms to the popular beaches of Byron.

Inside the large family-friendly home, the main wing houses a choice of everyday living spaces including an open plan dining and family room, the contemporary kitchen and a separate lounge or media room.

At the heart of the footprint, the kitchen has a suite of NEFF appliances and a freestanding island bench. Both the dining and lounge areas spill out onto a full-width deck, taking in the sweeping district views and pool.

While one bedroom has an ensuite and personal deck, it’s the main bedroom that is a retreat in every sense of the word. Separated via a gallery-style hallway, the primary suite is its own wing with a large deck, a bath ensuite overlooking the lush landscape, and a walk-in wardrobe.

Thanks to the multiple alfresco spaces, there is a place for everyone in all seasons, especially by the pool either on the timber sun deck or in the cosy cabana complete with its own fireplace.

Guests can stay with plenty of privacy in the freestanding barn, or the extra self-contained space could be used as a short term rental or office generating additional income. Aptly named The Barn, this bonus accommodation features a full kitchen with breakfast bar, a bathroom, living area and separate bedroom.

Throughout the home there are high ceilings, timber floors, intricate chandeliers, ducted air-conditioning. The property also has six large machinery sheds, offering ample scope for further agricultural pursuits.

Flowing along the property’s edge, Skinners Creek further sets the scene, while the location delivers the best of both worlds – Tintenbar General Store and local school are just 10 minutes away, while the popular Harvest Newrybar café is a 15-minute drive with Lennox Head and Ballina/Byron Airport also easily accessible.

Pecan Manor Estate is listed with Tezu Harrison on 0448 000 234 and Nick Dunn on 0448 301 111 of McGrath Estate Agents Byron Bay and is on the market with a price guide of $8 million.

MOST POPULAR
11 ACRES ROAD, KELLYVILLE, NSW

This stylish family home combines a classic palette and finishes with a flexible floorplan

35 North Street Windsor

Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.

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