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Jun 18 - 09:55 AM

CIBC: Disappointing US May Retail Sales Print Confirms September Fed Rate Cut

By eFXdata  —  Jun 18 - 09:03 AM


CIBC interprets the latest US retail sales data as supportive of their expectation for the Federal Reserve to cut rates in September. The lower-than-expected retail sales growth in May, along with downward revisions for April, signals a cooling consumer demand that aligns with the Fed's goal of rebalancing the economy.

Key Points:

  1. Retail Sales Data:

    • Total retail sales in May rose by only 0.1%, missing the expected 0.3% gain.
    • April's retail sales growth was revised down from -0.2% to -0.4%.
  2. Control Group Performance:

    • The control group, which contributes to non-auto core goods consumption in GDP, increased by 0.4% in May, slightly below the 0.5% expectation.
    • April's control group figure was revised down to -0.5% from an initial estimate of -0.3%.
  3. Consumer Spending Trends:

    • The data indicates that the strong consumer spending observed in the latter half of 2023 is tapering off.
    • This slowdown in consumer spending is a positive development for the Fed, suggesting that economic demand is moderating.
  4. Implications for Fed Policy:

    • The slower pace of consumer spending supports the view that the economy is cooling, aligning with the Fed's objectives for rebalancing.
    • CIBC maintains its expectation for the first Fed rate cut to occur in September, given the evidence of reduced demand pressure in the economy.


The May retail sales data, with its lower-than-expected growth and downward revisions, provides further evidence of a cooling US economy. This aligns with the Federal Reserve's goal of rebalancing demand and supports CIBC's forecast for a Fed rate cut in September. The moderation in consumer spending is seen as a positive indicator for achieving the Fed's economic objectives.

CIBC Research/Market Commentary


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