Yahoo Finance

The data that has this economist pricing in a 25bps cut

Bank of America US economist Stephen Juneau joins Morning Brief hosts Seana Smith and Brad Smith to discuss August's retail sales print, which blew past economist expectations, and what it could mean for the Federal Reserve's interest rate moves this Wednesday. Retail sales rose 0.1% above experts' estimates, compared to the expected 0.2% decrease. Juneau tells Yahoo Finance that the increase in consumer spending is "kind of a nonevent," with the economist's expectations for a 25 basis point cut remaining unchanged. "This is part of a normalization process that we're going through. And we've been seeing this for some time now, where you're finally seeing that spending, that consumer basket, really return towards its pre-pandemic basket, where we spend a lot more on services than goods." The latest Bank of America fund managers survey found that 79% of investors are pricing in a soft-landing scenario as the Fed is set to initiate rate cuts. Juneau turns to the labor market for data to support this soft landing optimism: "Certainly we've seen some cooling in job growth, but 115,000 jobs added over the last three months on average is not really typically a worrisome economy." "We still have significant labor demand. We still have significant consumer demand. We're not really seeing investment slow down sharply. So where's that kind of hard landing coming from? We just don't see it kind of in the data right now. We do see some normalization. We see some cooling, but that's a soft landing." This post was written by Naomi Buchanan.