Resilient Retail Sales Boost GDP Outlook Amid Fed Caution and Rising Credit Concerns

On the economic front, September retail sales beat expectations, rising 0.4%, compared to a slight 0.1% increase in August. Core sales, which exclude the most volatile items, rose 0.7%. This strong data reinforces the resilience of consumption in the U.S. economy, which has led the Federal Reserve Bank of Atlanta's GDPNow model to project GDP growth of 3.4% by the third quarter of 2024.

Despite these signs of economic strength, Federal Reserve Governor Christopher Waller warned that the central bank should proceed with caution regarding rate cuts. Waller noted that while the data suggest a gradual adjustment toward a more neutral policy, factors such as hurricanes and strikes could affect October payrolls, with a possible loss of up to 100,000 jobs.

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