Retail Sales Preview: One Last Miss Before The Rate Cut, But Will It Be Big Enough For 50

As discussed earlier today, on Wednesday the Fed will cut rates for the first time since March 2020, and the only question is whether Powell & Co. do a ho-hum 25, or go all the way with a 50 basis point cut. However, if the FOMC hasn't made up their mind already , tomorrow's final macro print ahead of the Wednesday announcement - the August Retail Sales report - won't give "team 25" much hope. That's because according to Bank of America's real-time debit and credit card spending data, the August retail sales print will be a big disappointment to consensus expectations.

As BofA economist Aditya Bhave writes, even though total card spending as measured by BofA's aggregate card spending, was up 0.9% in August, this was largely due to the early Labor Day holiday in 2024 (Sept 2) vs 2023 (Sept 4) which means more Labor Day related spending took place in August.