Market Update: Is The Fed September Rate Cut a Sure Thing?

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Economic Overview

After the recent employment report and subsequent revisions, it was widely believed that The Fed would reduce interest rates at the upcoming September meeting. However, new economic data has introduced uncertainty into this expectation.

Producer Price Index Insights

This week, the Producer Price Index (PPI) showed a 3.3% annualized increase. When excluding soft oil prices, the core PPI rose at a 3.7% annualized rate. These increases surpassed expectations, primarily due to the effects of tariffs on producers.

Consumer Price Index Comparison

In contrast, the Consumer Price Index (CPI) indicated a more modest annualized increase. Over time, the rises observed at the producer level are likely to be passed on to consumers. This dynamic suggests that inflationary pressures may be building.

Retail Sales Performance

Today, preliminary retail sales figures demonstrated strength. Together, these reports indicate a stronger-than-anticipated economy, which could lead to higher future inflation. While the situation remains somewhat unclear and additional data is necessary, these findings challenge the prevailing notion that a rate cut is imminent in September. While a cut may still happen, it is no longer a certainty.

Implications for the Construction Industry

For professionals in the construction and cement industries, these economic indicators are crucial. Understanding the potential for inflation and interest rate changes can inform strategic decisions. It is essential to stay updated on these trends, as they can significantly impact project costs and financing options.

Conclusion

In summary, the latest economic data presents a complex picture. While the expectation of a rate cut was strong, the recent reports suggest that the economy may be more resilient than previously thought. As we move forward, it is vital to monitor these developments closely.

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About The Sullivan Report

The Sullivan Report delivers subscription-based economic forecasts and market updates tailored to the cement, concrete, construction, and aggregates industries. Its flagship publication, the Cement Outlook, is released three times a year and features 5-year forecast projections, expert analysis, and actionable insights to support informed decision-making and long-term strategic planning amid an evolving economic landscape.

Guided by renowned economist Ed Sullivan, The Sullivan Report also offers keynote presentations and customized forecasting services for organizations and regions seeking deeper, data-driven market intelligence. For more information, message us here, visit TheSullivanReport.com, or email us at info@thesullivanreport.com.