'I think the market might be saying the broader data that we have is OK, but what Target is saying is a little more forward-looking in terms of what they expect for the holiday season, and that might not be so good.'
The Fed has been raising interest rates in an effort to slow the economy and tame the hottest inflation in decades. Wall Street is worried that it could hit the brakes too hard on economic growth and bring on a recession.
Strong consumer spending is typically a good sign for the economy, but it could make the Fed’s strategy of cooling the economy more difficult. The central bank has already hiked its key overnight rate up to a range of 3.75% to 4% from virtually zero earlier this year. It has said it still plans to hike rates further and then to hold them at that high rate for a while in order to grind down inflation.
He said resilient consumer spending could improve the possibility that the Fed manages to pull off a so-called “soft landing” with its strategy. That would involve taming inflation without throwing the economy into a recession, or at least avoiding a damaging recession. Markets in Europe fell as investors watched developments in Russia’s war against Ukraine. Geopolitical tensions had flared a day earlier after , a NATO member, killing two people. NATO’s chief and the president of Poland said there are no indications that the missile was a deliberate attack, adding that Ukraine likely launched the Soviet-era projectile as it was fending off a Russian air assault.
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