US Retail Sales Jump 1.4% While Housing Slumps
August control-group retail sales rose 1.4%. The Atlanta Fed raised its Q3 growth forecast to 5.1%. Housing sentiment fell to 32.
US control-group retail sales increased by 1.4% in August. This followed a 0.4% decline in July. The Atlanta Fed raised its third-quarter economic growth nowcast to 5.1% from 4.4%.
Total retail sales rose 1.2% in August. Gasoline, online retailers, and restaurants posted solid gains. Households continued to spend on everyday needs despite rising mortgage rates.
Housing Sentiment Deteriorates
The National Association of Home Builders’ Housing Market Index fell to 32. Builders cited high mortgage rates and rising costs as primary headwinds. Mortgage Bankers Association data showed applications falling again.
The New York Fed’s survey of services firms slipped back into negative territory in September. This decline contrasts with the strength in hard spending data. Housing demand remains under pressure even as general consumption holds firm.
Policy Implications For Rates
Hard spending data carries more weight than surveys for policymakers. It reflects actual behavior rather than stated intent. The rebound in control-group sales suggests demand remains strong enough to keep inflation from fading quickly.
Investors are pricing in interest rates staying elevated for longer. Rate-sensitive sectors and shorter-term US bonds trade heavily on retail reports. Weaker readings in services and homebuilding have less impact on short-term yields.
Market Data Sources
GN auto markets/housing: mortgage rates provides context for these shifts. The data highlights a two-speed economy. Consumption is robust while credit-sensitive sectors face headwinds.
