“Successful investing takes time, discipline and patience.”

1. US Retail Sales Rise in Sign of Solid Summer Spending — US retail sales rose in August for a third month in a broad advance, adding to evidence that consumers are still spending for now even as tariffs boost the cost of some goods, sentiment remains subdued and the labor market shows signs of faltering. The value of retail purchases, not adjusted for inflation, increased 0.6% after a similar gain in July, Commerce Department data showed. That beat all estimates in a Bloomberg survey of economists. Excluding cars, sales climbed 0.7%. Nine out of 13 categories posted increases, led by online retailers, clothing stores and sporting goods, likely reflecting back-to-school shopping.
2. Fed Trims Rates by Quarter Point and Sees 2 More Cuts This Year — The Federal Reserve on Wednesday approved a widely anticipated rate cut and signaled that two more are on the way before the end of the year as concerns intensified over the U.S. labor market. In an 11-to-1 vote signaling less dissent than Wall Street had anticipated, the Federal Open Market Committee lowered its benchmark overnight lending rate by a quarter percentage point. The decision puts the overnight funds rate in a range between 4.00%-4.25%.
Newly-installed Governor Stephen Miran was the only policymaker voting against the quarter-point move, instead advocating for a half-point cut. In the post-meeting statement, the committee again characterized economic activity as having “moderated” but added language saying that “job gains have slowed” and noted that inflation “has moved up and remains somewhat elevated.” Lower job growth and higher inflation are in conflict with the Fed’s twin goals of stable prices and full employment.
3. Government Shutdown Looms & Stock Market Performance — If past is prologue, stocks have actually risen in most cases as Washington has deadlocked over spending, taxes or border-security issues. The latest fight is over the exclusion of healthcare money sought by Democrats, and prediction markets see a 56% chance of a shutdown as of Thursday. The below table compiled by Stifel’s chief Washington policy strategist, Brian Gardner, shows six government shutdowns since 1978 that lasted five or more trading days, with the S&P 500 index

4. Democrats Dig In on Shutdown Stance After White House Threatens to Fire Workers — House Republicans are planning to vote by Friday on legislation to avert a shutdown. It would fund the government through Nov. 21 and also includes extra money for lawmakers’ security in the wake of the killing of conservative activist Charlie Kirk last week.
The measure excludes an extension of expanded Affordable Care Act subsidies, and Democrats have threatened to withhold votes over the exclusion. Republican leaders have been open to the idea of keeping the enhanced subsidies but say they need more time to iron out details, according to the Wall Street Journal. The U.S. government is hurtling toward a shutdown in a matter of days with no exit ramp in sight, as Republicans and Democrats latch onto starkly different positions and the White House threatens to lay off more federal workers.

The week ahead — Economic data from Econoday.com:

“There is a time to go long, a time to go short and a time to go fishing.” – Jesse Livermore

1. US Payrolls Marked Down a Record 911,000 in Preliminary Estimate— Annual revisions to nonfarm payrolls data for the year prior to March 2025 showed a drop of 911,000 from the initial estimates, according to a preliminary report from the Bureau of Labor Statistics. The total revision was on the high end of Wall Street expectations, which ranged from a low around 600,000 to as many as a million. The numbers, which are adjusted from data in the quarterly census and reflect updated information on business openings and closings, add to evidence that the employment picture in the U.S. is weakening. Most of the time span for the report came before President Donald Trump took office, indicating the jobs picture was deteriorating before he began levying tariffs against U.S. trading partners. The largest markdowns came in leisure and hospitality (-176,000), professional and business services (-158,000) and retail trade (-126,200). Most sectors saw downward revisions, though transportation and warehousing and utilities had small gains. Almost all the revisions were confined to the private sector; government jobs were adjusted down by 31,000.
2. US Producer Prices Unexpectedly Drop, First Decline Since April — The producer price index decreased 0.1% from a month earlier and July’s figure was revised down, according to a Bureau of Labor Statistics report out Wednesday. From the year before, the PPI rose 2.6%. Goods prices excluding food and energy rose 0.3%. Services costs fell 0.2%. Within services, margins at wholesalers and retailers fell 1.7%, matching the biggest drop in data going back to 2009 and reversing an outsize increase in July. Margins have been volatile from month to month so far this year, underscoring uncertainty around the impact of trade policy on prices and demand.
3. US Core CPI Rises as Expected, Keeping Fed on Track for Rate Cut — The core consumer price index, excluding the often volatile food and energy categories, increased 0.3% from July, according to Bureau of Labor Statistics data out Thursday. When incorporating those components, the overall CPI rose 0.4%, the most since the start of the year. Goods prices, excluding food and energy, accelerated 0.3%, matching the biggest climb since May 2023. That reflected increases in new and used cars, apparel and appliances, which some economists pointed out as possible impacts of tariffs. But analysts were generally divided as to how much of a role the duties played in the report, with others more focused on surges in travel-related services like airfares and hotel stays. Several household expenses also picked up, including groceries, gasoline, electricity and car repairs.
Taken together, the report suggests inflation continues to linger. President Donald Trump’s global tariffs are impacting prices of some goods, while ongoing increases in services costs may present a more persistent pressure to overall inflation.
4. Jobless Claims Rose Sharply Last Week — In the week through Sept. 6, jobless claims filings rose to 263,000, up from 236,000 a week earlier. Economists polled by The Wall Street Journal were forecasting 235,000 claims. Continuing claims, an indicator of the size of the total unemployed population, came in at 1.94 million in the week through Aug. 30, level from a week earlier. The continuing-claims data lag the initial-claims data by a week.The pace of job creation has fallen off significantly over the summer, prolonging workers’ job searches. But so far this year, there hasn’t been much sign of a big increase in layoffs.

The week ahead — Economic data from Econoday.com: