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The back-to-school shopping season has just ended. In a blink, we'll be shopping for the holidays. That's should add up to a lot of shopping - but we'll see how secure consumers are feeling about their finances. Shopping patterns offer great insight into the state of consumers, who are the backbone of the U.S. economy (accounting for two-thirds of GDP). It's still a little early for some of the bigger industry groups to put out their holiday estimates, but we do have some data points to consider. Overall, the National Retail Federation expects retail sales to increase 2.5%-3.5% for the entire year. Stastista expects a 4% increase in holiday sales for 2024 compared to 2023. eMarketer forecasts a healthy 4.8% rise in holiday sales compared to last year. Salesforce predicts a 2% increase in 2024 holiday sales, which is still growing but at a slower pace than the 3% logged last year. In sum, consumer spending growth could be between 2%-5% this holiday period. Meanwhile, Forbes notes the following particulars about this upcoming holiday season: 1) it is shortened, with only 27 days between Thanksgiving and Christmas; 2) past presidential election years have shown a dip in spending leading up to and following the election; and 3) Walmart and Amazon account for roughly 38% of total retail growth, presenting a challenge for other retailers. The following is a list of BUY-rated stocks in Argus' Universe of Coverage. These represent companies that are leaders in the retail industry. Some of these stocks are also in various Argus portfolios.

Dollar General, based in Goodlettsville, Tennessee, operates 20,000 discount stores across the United States and in Mexico. It generated $38.7 billion in sales in the fiscal year ended February 3, 2024. More than 80% of DG stores are in communities with populations of less than 20,000. Three quarters of the U.S. population lives within three miles of a Dollar General store. Total selling space is approximately 151 million square feet. DG is expanding its traditional store from 7,400 square feet to 8,500 or 9,500 to accommodate more refrigerators and a wider assortment. Sales were $263 per square foot in FY24. Stores sell everyday necessities that drive frequent visits. DG generates about 80% of sales from consumables such as cleaning supplies and over-the-counter medicines, and 10% of sales from seasonal products including toys. About 6% of sales come from home products such as light bulbs and storage containers and 4% from apparel. Most products are priced at $10 or less. The company's fiscal year ends on the Friday closest to January 31. The current year, which we call FY25, is a 52-week year ending on January 31, 2024. The company has about 170,000 employees.

Monday Tee Up: Closing in on Fed Day Investor focus swings back to inflation this week. The incoming CPI report is one of the last key reports before the Fed's highly anticipated rate meeting next week. Meanwhile, the swan song of earnings is out this week by way of Oracle, considered by many to be an early indicator for the next earnings cycle. Last week, the Dow Jones Industrial Average was down 2.9%, the S&P 500 shed 4.3%, and the Nasdaq plunged by 5.8%. Year to date, the DJIA is higher by 7%, the S&P by 13%, and the Nasdaq by 11%. On the economic calendar, the highlight of this week is the CPI report on Wednesday. In July, CPI posted at 2.9%. We see it sliding to 2.6% for August. Core CPI came in at 3.2% last month. We expect no change this month. On Thursday, more inflation data is due on the wholesale side, this via the Producer Price Index. And on Friday, Consumer Sentiment will be updated. Earnings season is essentially over, but as mentioned above, Oracle reports on Monday. On Tuesday, PetSmart, Petco, GameStop, and Dave & Buster's weight in, and on Thursday, Adobe and Kroger step to the plate. Earnings are 13% higher this quarter than a year ago, which is better than many expected. Information Technology was the winning sector, edging out Financial and Healthcare. All three were up more than 20% for the quarter compared to the same quarter last year. Materials was at the other end, down 6%. Though the overall results were good, many companies did mention that inflation hurt demand. Last week, the August jobs report sent mixed signals on the health of the labor market. Nonfarm Payrolls printed at 142,000 in August, below expectations of 165,000 and compared to a revised-down 89,000 in July. That showed a cooling labor market and was in synch with other jobs data out during the week. Still, the Unemployment Rate ticked down to 4.2% after the surprise jump last month to 4.3. Mortgage rates were flat at 6.35% for the average 30-year fixed-rate mortgage. Gas prices fell seven cents to $3.31 per gallon for the average price of regular gas. That is the fourth consecutive decline, with prices falling 5% for the month. The Atlanta Fed GDPNow indicator is forecasting for 3Q and calls for expansion of 2.1. The Cleveland Fed CPINow indicator is forecasting for September and is at 2.4%, down from its forecast for August. Looking ahead, the next Fed rate decision is on September 18, with odds at 100% for a rate cut. Of that, 70% expect a 25-basis-point (bps) cut and 30% expect a 50 bps cut, this according to the CME FedWatch Tool. There are two more Fed rate meetings this year, on November 7 and December 18. We expect three rate cuts this year for a total of 75 bps. We see two rate cuts in 2025. We forecasts all cuts to be by 25 bps.

The Bureau of Labor Statistics (BLS) reported that the U.S. economy generated 142,000 new jobs in August, above our forecast of 130,000 but below the consensus of 160,000. July's result was revised lower to 89,000 from 114,000. June was revised down by 61,000 to 118,000. August's increase in payrolls and revisions lower to past results took the three-month average to 116,000, below the 12-month average of 202,000, which seems consistent with Fed Chairman Powell's recent description of a job market that is "solid" but slowing. The unemployment rate ticked down to 4.2%, matching consensus. While the jobless rate has risen from 3.8% last August, the four-week average of initial jobless claims is 230,000, well below the 300,000 that would trigger our concerns about a recession. Average hourly earnings increased 14 cents month to month and are 3.8% higher year over year (compared to 3.6% in July). The average workweek ticked up to 34.3 hours in August. Job gains occurred in healthcare, construction and social assistance. Employment showed little or no change in mining, quarrying, and oil and gas extraction; wholesale trade; retail trade; transportation and warehousing; information; financial activities; professional and business services; leisure and hospitality; other services; and government. Employment declined in manufacturing. After this report, stock futures were little changed from pre-release levels and the yield on the 10-year Treasury was little changed at 3.72%. Futures contracts suggested a 49% probability that the Fed will reduce the funds target by 25 basis points from the current 5.25%-5.50% and a 51% chance that it will cut the funds rate by 50 basis points when it meets on September 17 and 18, compared with probabilities of 57% and 43%, respectively, before the release. The probability that the funds target will be 4.25%-4.5% or lower after the December meeting was 94%, up from 85% before the release.