- Retail sales were flat in July, down from June’s +0.8% pace
- Federal Reserve officials in July enacted the second straight 0.75% increase in the federal-funds rate
- U.S. existing home sales fell 5.9% in July, the sixth straight monthly drop
Top Three Market Headlines
Retail Sales Unchanged in July: The Department of Commerce reported last week that sales at retail and food service establishments were flat in July compared to the prior month. This was a decline from the 0.8% monthly pace recorded in June. Reported sales in July were suppressed by decreased spending at gasoline stations and car dealers, which fell 1.8% and 1.7%, respectively, from the prior month. Excluding these categories, sales at other establishments increased 0.7% from June. One of the biggest increases in July was seen in non-store retailers, or online shopping, where sales advanced 2.7%.
Fed Minutes Foreshadow Additional Rate Hikes: Minutes released last week of the Federal Reserve's latest meeting in July indicated that the central bank expects to keep raising interest rates to battle inflation. The meeting resulted in the Fed's fourth rate hike in 2022, including a second straight 0.75% increase to the bank's policy rate, the federal-funds rate. At the same time, Fed officials noted that it would likely become appropriate "at some point" to slow the pace of interest rate hikes, acknowledging the risk of overtightening economic conditions in attempting to restore price stability.
Housing Market Indicators Weaken Further: Data released last week revealed further weakening of the U.S. housing market amid rising mortgage rates. Sales of existing homes fell 5.9% in July from the prior month, and were down 20.2% from the prior year. This was the sixth straight month that sales fell, marking the longest such streak in eight years. Beyond the decline in sales, the number of housing starts fell 9.6% in July from June, while the number of building permits issued for new housing units, an indicator of future construction activity, also fell 1.3%.