As we head into the week, several key economic events will shape market expectations and consumer sentiment in the U.S. The Federal Reserve’s policy decision, February retail sales, and crucial housing market data will be closely watched. Here’s what to expect in the coming days.

Federal Reserve Policy Decision (Wednesday)

The highlight of the week will be the Federal Reserve’s policy meeting. After cutting interest rates by 100 basis points (bp) in late 2024, the Fed is widely expected to keep rates unchanged for the second consecutive meeting.

Why is the Fed Holding Steady?

• Inflation remains above target, even though the economy has cooled.
• The job market is still strong, reducing the urgency for further rate cuts.
• Government austerity measures and tariff concerns could become bigger issues later, but for now, the Fed is taking a “wait and see” approach.

Along with the rate decision, the Fed will release updated economic forecasts. We don’t expect any major changes—two 25bp rate cuts later this year remain the central outlook, likely starting in September.

Retail Sales Report (Monday)

Retail sales data for February will be closely monitored, especially after a significant drop in January. Several factors contributed to the weakness, including:

• Cold weather and wildfires in LA, which disrupted spending.
• Declining consumer confidence, as concerns over government spending cuts and potential tariffs weigh on sentiment.

We expect a modest rebound in February’s data, but overall, consumer spending is likely to make only a small contribution to first-quarter GDP growth.

Housing Market Update (Tuesday)

A range of housing-related reports will be released, including existing home sales, building permits, housing starts, and homebuilder sentiment. The sector has been struggling, and we expect the weakness to continue.

What’s Pressuring the Housing Market?

• High home prices and mortgage rates are keeping many buyers on the sidelines.
• Supply-side challenges, such as immigration controls and tariffs, are driving up construction costs, squeezing homebuilders’ profits.

The combination of these factors suggests ongoing sluggishness in the housing market, with affordability concerns remaining a key issue.

Looking Ahead

This week’s data will help shape expectations for the economy and monetary policy in the months ahead. While the Fed is likely to hold rates steady for now, government spending cuts and tariffs could change the outlook later this year. Meanwhile, consumer spending and the housing market remain areas of concern, with both showing signs of continued weakness.

Stay tuned for updates as the week unfolds!