For all the talk of soft landings and fading inflation pressure, the latest round of data on the U.S. economy still shows some heat.
Why it matters: Demand across the U.S. economy remains solid — a key reason the nation has dodged a recession.
Driving the news: Retail sales rose 0.6% in August — much more than economists expected. That was largely due to higher prices at gasoline stations, where receipts increased by 5.2%.
Between the lines: Even as consumers were squeezed by higher prices at the pump, they didn’t feel the need to pull back on everything else.
What they’re saying: This report “does not look like the last gasp of a consumer that is struggling on the ropes, being pummeled by higher interest rates and weak confidence,” Richard de Chazal, a macro analyst at William Blair, wrote in a note.
Meanwhile, the Producer Price Index, which measures wholesale prices that might eventually get passed on to consumers, rose a more-than-expected 0.7% in August — the biggest monthly spike in over a year.
The bottom line: The economy continues to be more resilient, with strong demand that could make the inflation battle even harder. The question is whether it continues.