{"id":81825,"date":"2025-08-18T10:37:00","date_gmt":"2025-08-18T17:37:00","guid":{"rendered":"https:\/\/www.redfin.com\/news\/?p=81825"},"modified":"2025-08-18T11:50:48","modified_gmt":"2025-08-18T18:50:48","slug":"weekly-economics-update-august-18","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/weekly-economics-update-august-18\/","title":{"rendered":"Redfin Economists&#8217; Weekly Take: Markets Bet on September Rate Cut Ahead of Powell\u2019s Jackson Hole Speech"},"content":{"rendered":"<h4><b>Last Week In A Nutshell<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Mortgage rates fell and markets got excited last week after a fairly benign CPI report drove expectations of rate cuts from the Fed, perhaps even outsized ones. Fed speakers, the PPI report, and retail sales all rained on that parade, however, suggesting no need for a cut larger than 25 bps in September\u2014and even that is not totally written in stone.<\/span><\/li>\n<\/ul>\n<h4><b>This Week\u2019s Attractions<\/b><\/h4>\n<ul>\n<li aria-level=\"1\"><b>Fed:<\/b><\/li>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><i><span style=\"font-weight: 400;\">Speeches from Governor Bowman (Tuesday) and Waller (Wednesday); FOMC Minutes (Wednesday):<\/span><\/i><span style=\"font-weight: 400;\"> Both Bowman and Waller dissented against the last Fed decision in favor of more cutting.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><i><span style=\"font-weight: 400;\">Jackson Hole speech (Friday):<\/span><\/i><span style=\"font-weight: 400;\"> This is the main event of the week where the question will be whether Chair Powell sets the stage for a September 17 rate cut. Since a cut is largely priced in, the Fed pushing back against a rate cut would cause mortgage rates to increase.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><b>Housing data:<\/b>\n<ul>\n<li aria-level=\"1\"><i><span style=\"font-weight: 400;\">NAHB Housing Market Index (Monday):<\/span><\/i><span style=\"font-weight: 400;\"> Ticked down to 32 from 33 last month against expectations of a small increase.<\/span><\/li>\n<li aria-level=\"1\"><i><span style=\"font-weight: 400;\">Building Permits, Housing Starts (Tuesday):<\/span><\/i><span style=\"font-weight: 400;\"> Both are expected to decline slightly.<\/span><\/li>\n<li aria-level=\"1\"><i><span style=\"font-weight: 400;\">NAR Existing Home Sales (Thursday):<\/span><\/i><span style=\"font-weight: 400;\"> Consensus expects this to fall slightly from June, but Redfin sees a small uptick possible from June\u2019s lower-than-expected number.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h4><b>Last Week\u2019s Highlights<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><strong><i>CPI:<\/i><\/strong> <a href=\"https:\/\/www.redfin.com\/news\/september-rate-cut-likely-after-as-expected-july-inflation-report\/\"><span style=\"font-weight: 400;\">Core CPI<\/span><\/a><span style=\"font-weight: 400;\"> came in largely as expected, clearing a hurdle for the Fed to resume cutting rates. While tariffs clearly nudged some categories up, others that should be affected by tariffs showed no impact. Relieved traders piled into bets that the Fed will cut on September 17, with some wagering on an outsized cut.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><strong><i>Bessent interview:<\/i><\/strong><span style=\"font-weight: 400;\"> Treasury Secretary Bessent used an appearance on <\/span><a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2025-08-13\/bessent-says-rates-should-likely-be-150-175-basis-points-lower\"><span style=\"font-weight: 400;\">Bloomberg<\/span><\/a><span style=\"font-weight: 400;\"> to pour gasoline on the fire, calling for rates to be 150 bps lower and causing traders to pour even more money into bets for a 50 bps cut.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><strong><i>PPI:<\/i><\/strong><span style=\"font-weight: 400;\"> The Producer Price Index (the second, much smaller and much noisier piece of the inflation puzzle) came in like a wet blanket, much higher than expected. CPI and PPI together imply that core PCE (the Fed\u2019s preferred gauge for inflation) will come in around 0.3% month over month and 2.9% year over year for July, a small increase from June.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><strong><i>Retail Sales:<\/i><\/strong><span style=\"font-weight: 400;\"> Core retail sales came in a little higher than expected with upward revisions for prior months, indicating continued strong spending from consumers.<\/span><\/li>\n<\/ul>\n<h4><b>Diving a Little Deeper<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><strong><i>Inflation:<\/i><\/strong><span style=\"font-weight: 400;\"> The million dollar question is: why isn\u2019t there more inflation four months after Liberation Day? So far, the data suggests that the answer is fairly nuanced.<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">The CPI data shows that some of the expected inflation is, in fact, showing up in consumer prices.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">But U.S. companies seem to be absorbing the lion\u2019s share (64% as estimated by Goldman Sachs) of the tariff burden. While some have indicated that they will eventually pass it on, it\u2019s far from certain when and if that will happen. Some companies\u2014whose margins increased post-pandemic\u2014may choose to never pass them on in hopes of gaining market share, but not all have that luxury.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">It also appears that there\u2019s actually less to pass on. <\/span><a href=\"https:\/\/www.wsj.com\/economy\/trade\/trump-tariff-inflation-expectations-83d06efa?gaa_at=eafs&amp;gaa_n=ASWzDAhkzDcPnAOwka7ZLJyH_N55lJqyVCcVJsn2VvHcbNqHdIYLPs5F9zTPpzP_M7c%3D&amp;gaa_ts=68a35a54&amp;gaa_sig=DU_JajkXfU4hUfafLjP8sY8ibTfS-cINkaiW6YhKzG0iMqecW6-fVXUb-5vUc9b1eyWZdyzdz3UYmIn5IcnXzQ%3D%3D\"><span style=\"font-weight: 400;\">Effective tariff rates<\/span><\/a><span style=\"font-weight: 400;\"> haven\u2019t been as high as one would expect given the announced tariffs rates. Barclays estimates that less than half of imports have been subject to tariffs due to various exemptions. There are also various frictions that seem to be delaying the actual implementation of the announced tariffs. In addition, companies may be pivoting away from importing from countries with higher tariffs, such as China.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><strong><i>Jackson Hole:<\/i><\/strong><span style=\"font-weight: 400;\"> Should we expect Chair Powell to use his Friday speech to make the clear case for a rate cut at their next meeting? Probably not. He will likely highlight the risk of labor market weakness and leave a cut as a possibility, but he will want to leave himself maximum wiggle room. There is a whole round of data coming between now and the September 17 meeting, with one more jobs report (September 5) and one more PPI\/CPI combo (September 10\/11). While circumstances are not exactly the same, the Fed vividly remembers the events of last August when a shockingly weak jobs report in early August, just days after the July Fed meeting, made the Fed look \u201ctoo slow.\u201d It brought on a dovish Jackson Hole speech followed by a 50 bps \u201ccatchup\u201d cut at the September meeting. Subsequent jobs reports came in stronger, making the September cut look a little too large in hindsight. Notably the unemployment rate is currently at the same level (4.2%) as a year ago. But the Fed\u2019s job is actually harder this time around. They are likely facing both a more significant threat of labor market weakness and rising inflation, both due to the tariffs making their way through the economy.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Last Week In A Nutshell Mortgage rates fell and markets got excited last week after a fairly benign CPI report drove expectations of rate cuts from the Fed, perhaps even outsized ones. Fed speakers, the PPI report, and retail sales all rained on that parade, however, suggesting no need for a cut larger than 25 [&hellip;]<\/p>\n","protected":false},"author":13558,"featured_media":81826,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[632],"tags":[36,623],"dashboard":[],"coauthors":[622],"class_list":["post-81825","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-from-our-economists","tag-economics","tag-national"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.7 (Yoast SEO v27.5) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Markets Weigh September Rate Cut Ahead of Powell\u2019s Jackson Hole Speech<\/title>\n<meta name=\"description\" content=\"Mortgage rates fell and markets got excited last week after a fairly benign CPI report drove expectations of rate cuts from the Fed, perhaps even outsized ones. Fed speakers, the PPI report, and retail sales all rained on that parade, however, suggesting no need for a cut larger than 25 bps in September\u2014and even that is not totally written in stone.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.redfin.com\/news\/weekly-economics-update-august-18\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Redfin Economists&#039; Weekly Take: Markets Bet on September Rate Cut Ahead of Powell\u2019s Jackson Hole Speech\" \/>\n<meta property=\"og:description\" content=\"Mortgage rates fell and markets got excited last week after a fairly benign CPI report drove expectations of rate cuts from the Fed, perhaps even outsized ones. Fed speakers, the PPI report, and retail sales all rained on that parade, however, suggesting no need for a cut larger than 25 bps in September\u2014and even that is not totally written in stone.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.redfin.com\/news\/weekly-economics-update-august-18\/\" \/>\n<meta property=\"og:site_name\" content=\"Redfin Real Estate News\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/redfin\" \/>\n<meta property=\"article:published_time\" content=\"2025-08-18T17:37:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-08-18T18:50:48+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.redfin.com\/news\/wp-content\/uploads\/2025\/08\/blur-1853262_1280-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"960\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Chen Zhao\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@redfin\" \/>\n<meta name=\"twitter:site\" content=\"@redfin\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Chen Zhao\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.redfin.com/news\\\/weekly-economics-update-august-18\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.redfin.com/news\\\/weekly-economics-update-august-18\\\/\"},\"author\":{\"name\":\"Chen Zhao\",\"@id\":\"https:\\\/\\\/www.redfin.com/news\\\/#\\\/schema\\\/person\\\/a0a62ede97b24e6f17c1cffb6ffdd574\"},\"headline\":\"Redfin Economists&#8217; Weekly Take: Markets Bet on September Rate Cut Ahead of Powell\u2019s Jackson Hole Speech\",\"datePublished\":\"2025-08-18T17:37:00+00:00\",\"dateModified\":\"2025-08-18T18:50:48+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.redfin.com/news\\\/weekly-economics-update-august-18\\\/\"},\"wordCount\":800,\"publisher\":{\"@id\":\"https:\\\/\\\/www.redfin.com/news\\\/#organization\"},\"image\":{\"@id\":\"https:\\\/\\\/www.redfin.com/news\\\/weekly-economics-update-august-18\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.redfin.com/news\\\/wp-content\\\/uploads\\\/2025\\\/08\\\/blur-1853262_1280-1.jpg\",\"keywords\":[\"Economics\",\"national\"],\"articleSection\":[\"From Our Economists\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2025\",\"copyrightHolder\":{\"@id\":\"https:\\\/\\\/www.redfin.com/news\\\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.redfin.com/news\\\/weekly-economics-update-august-18\\\/\",\"url\":\"https:\\\/\\\/www.redfin.com/news\\\/weekly-economics-update-august-18\\\/\",\"name\":\"Markets Weigh September Rate Cut Ahead of Powell\u2019s Jackson Hole Speech\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.redfin.com/news\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/www.redfin.com/news\\\/weekly-economics-update-august-18\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/www.redfin.com/news\\\/weekly-economics-update-august-18\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.redfin.com/news\\\/wp-content\\\/uploads\\\/2025\\\/08\\\/blur-1853262_1280-1.jpg\",\"datePublished\":\"2025-08-18T17:37:00+00:00\",\"dateModified\":\"2025-08-18T18:50:48+00:00\",\"description\":\"Mortgage rates fell and markets got excited last week after a fairly benign CPI report drove expectations of rate cuts from the Fed, perhaps even outsized ones. 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Previously, she was an executive director leading housing finance and financial markets research at the JPMorgan Chase Institute. Prior to joining JPMCI, Chen was an economics consultant at Analysis Group, Inc., where she worked on financial litigation cases and led teams conducting health economics and outcomes research on behalf of pharmaceutical companies. While in graduate school, Chen was with the Center for Economic Studies and the Social Economic and Housing Statistics Division at the US Census Bureau, where she conducted applied microeconomics research using large scale restricted-access linked survey-administrative data. She started her career at the White House Council of Economic Advisers, where she focused on labor and health economics.\",\"url\":\"https:\\\/\\\/www.redfin.com/news\\\/author\\\/chen-zhao\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Markets Weigh September Rate Cut Ahead of Powell\u2019s Jackson Hole Speech","description":"Mortgage rates fell and markets got excited last week after a fairly benign CPI report drove expectations of rate cuts from the Fed, perhaps even outsized ones. 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