Cutting: September 15 – 19

The Federal Reserve made a move and signaled that there is more to come. Here are the five things we learned from U.S. economic data released during the week ending September 19.

The Fed cuts its short-term interest rate target by a quarter point. The statement released following this past week’s Federal Open Market Committee (FOMC) meeting highlighted “moderated” economic growth with “slowed” job gains, an “edged up” unemployment rate, and “somewhat elevated” inflation. Included in its assessment of “elevated” uncertainty in its economic outlook is the judgment “that downside risks to employment have risen.” As a result, the Committee voted to cut the fed funds target rate by a quarter point to 4.00 percent to 4.25 percent. The statement reinforced that it “is strongly committed” to its dual mandate of maximizing employment and two-percent inflation. The vote was not unanimous, as the newest voting member—Stephen Miran—sought a half-point rate cut. Projections issued alongside the policy statement indicate there could be two more quarter-point cuts before the end of 2025 and single quarter-point cuts in 2026 and 2027. 

Retail sales were strong in August. Retail and food services sales rose 0.6 percent to a seasonally adjusted $732.0 billion. The Census Bureau measure was up by 5.0 percent from a year earlier, and sales from June to August were 4.5 percent higher than their 2024 comparable. Sales at both motor vehicle/parts dealers and gas stations rose 0.5 percent. Excluding those, core retail sales jumped 0.7 percent in August, up 5.4 percent compared to a year earlier, and sales from June to August were 4.9 percent above their year-ago levels. Sales increased during the month at retailers focused on apparel (+1.0 percent), sporting goods/hobbies (+0.8 percent), electronics (+0.3 percent), groceries (+0.3 percent), and building materials (+0.1 percent). Restaurant and bar sales rose 0.7 percent. Sales declined at department stores (-0.8 percent), furniture retailers (-0.3 percent), and health/personal care stores (-0.1 percent). 

Manufacturing output edged up in August. The Federal Reserve estimates that manufacturing production rose by a seasonally adjusted 0.2 percent after slipping 0.1 percent in July. Production of durables and nondurables grew by 0.2 percent and 0.3 percent, respectively. Overall industrial production edged up by 0.1 percent, following a 0.4 percent drop in July. Mining output increased by 0.9 percent, while utilities output decreased by 2.0 percent. Over the past year, manufacturing production and total industrial production have both grown at a sluggish 0.9 percent. Manufacturing capacity utilization stood at 76.8 percent (up 0.1 percentage point from July), remaining below the 52-week average of 78.2 percent. 

Forward-looking economic measures point towards a sluggish economy. The Conference Board’s Leading Economic Index (LEI) fell by half a point to 98.4 (2016=100). The LEI has dropped 2.8 percent over the past six months. Only three of ten LEI components—including stock prices and new orders for consumer goods—contributed positively to the index. The Coincident Economic Index (CEI) increased by 0.2 percent during the month and 0.6 percent over the past six months, reaching 115.0. Three of four CEI components contributed positively, with nonfarm payrolls having a neutral effect. The Lagging Economic Index increased slightly by one-ten^th of a percentage point to 120.0 (+0.7 percent over the past six months). The Conference Board does not foresee a recession but expects the U.S. economy to grow by 1.6 percent this year. 

Housing starts declined in August. The Census Bureau reports privately-owned housing starts dropped 8.5 percent to a seasonally adjusted annual rate (SAAR) of 1.307 million units. Starts were 6.0 percent lower than a year earlier. Single-family home starts fell 7.0 percent to 890,000 units, while multi-family starts decreased 11.0 percent to 403,000. Looking ahead, there were an annualized 1.312 million issued building permits, down 3.7 percent for the month and 11.1 percent compared to a year earlier. Single-family permits declined 2.2 percent to 856,000. Housing completions rose 8.2 percent to an annualized 1.608 million, which is 8.4 percent below August 2024. 

Other U.S. economic data released over the past week:

• Jobless Claims (Week ending September 13, 2025, First-Time Claims, seasonally adjusted): 231,000 (-33,000 vs. the previous week, +9,000 vs. the same week a year earlier). 4-week moving average: 240,000 (+5.3% vs. the same week a year earlier).
• Import Prices (August 2025, All Imports, not seasonally adjusted): +0.3% vs. July 2025; Unchanged vs. August 2024. Nonfuel Imports: +0.4% vs. July 2025; +0.9% vs. August 2024.
• Export Prices (August 2025, All Exports, not seasonally adjusted): +0.3% vs. July 2025; +3.4% vs. August 2024. Nonagricultural Exports: +0.3% vs. July 2025; +3.2% vs. August 2024.
• State Employment (August 2025, Nonfarm Payrolls, seasonally adjusted): Increase in 1 state, decreased in the District of Columbia, and steady in 49 states vs. July 2025. Increased in 20 states and steady in 30 states and the District of Columbia vs. August 2024.
• Housing Market Index (September 2025, Index (>50=More Homebuilders View the Housing Market as “Good” than “Poor,” seasonally adjusted): 32 (August 2025: 32; September 2024: 41).
• Business Inventories (August 2025, Manufacturers’ and Trade Inventories, seasonally adjusted): $2.667 trillion (+0.2% vs. June 2025; +1.5% vs. July 2024).
• Treasury International Capital Flows (July 2025, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$78.8 billion (June 2025: +$192.1 billion; July 2024: +$156.7 billion).

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