Retail Sales, Imports Come In Warm Ahead of FOMC Decision

Wednesday, September 16th, 2026

We’ve spent a lot of time ruminating over today’s monetary policy decision from the Federal Open Market Committee (FOMC), even going back to last week. (This is sometimes what happens in-between earnings seasons.) But this morning, we do see a couple key components that offer a snapshot of economic health in the U.S. — and the results are generally a bit warmer than expected.
 

August Retail Sales Reach +1.2%, Imports +0.7%

The advanced look — meaning subject to future revisions — on U.S. Retail Sales for August jumped 40 basis points (bps) from expectations: +1.2%, versus the +0.8% consensus. This is the second-highest notch of the year so far, behind March’s +1.7%. Subtracting bulky auto sales, we see +1.4% — more than double estimates. Ex-autos and gasoline, we’re back to +1.2%: triple the +0.4% anticipated.

Without auto sales, we’re again at the highest point since March, and ex-autos & gas brings us to the strongest retail sales in nearly three years. These figures depict a still-healthy American consumer, which is borne out by near-4% unemployment. For as much as the citizenry is feeling the pain at the gas pump and in the housing market, as of August they’re still paying up for goods and services.

Meanwhile, Import Prices for August also outperformed expectations: +0.7% versus the +0.4% estimate, and a 100 bps rebound from an upwardly revised -0.3% the previous month. Subtracting fuel prices — “ex-Petrol,” in specific parlance — we bump this up to +0.8%, well higher than the +0.3% analysts were looking for. 

Year over year, Imports are now at a four-year high: +7.0%, up +90 bps from a revised-higher July figure of +6.1%. These numbers, obviously, depict a higher cost structure on imported goods, likely brought about by global tariffs and to whatever extent higher oil prices have permeated the core economy.

Export Prices, also for August, were in-line with forecasts at +0.6% month over month, +200 bps higher month over month from a downwardly revised -1.4%. Year over year, we see +8.6% — the first and only of these inflation numbers to come in below expectations, while also +0.5% higher month over month. The clear issue here is our Exports are bringing in less than our Imports are costing; we’ll see how these figures — and their revisions — progress over time.
 

FOMC Rate Hike Odds Currently Higher than +90%

This column yesterday took many pixels to describe the playing field at the FOMC for the ongoing meeting, and you can revisit it here: Gaming the Odds for a Fed Rate Hike You’ll note the caveats we point out to such a high level of consensus over raising rates, and we stand by this statement ahead of today’s decision at 2pm ET.

This will be Fed Chair Kevin Warsh’s first big test in his short tenure as the head of the committee. Despite his rhetoric at Jackson Hole last month that suggested he’d be open to higher interest rates, there remain plausible reasons for holding at +3.50-3.75%. These include a relatively tame and steady headline CPI, and the fact that the Iran war is forcing oil prices higher — a “supply shock” scenario the Fed is trained to see through.

However, as Minneapolis Fed President Neel Kashkari recently pointed out, supply shocks that continue over time — e.g., the Iran war is now in its seventh month — can lead to “entrenched inflation.” Think about how many goods are delivered by diesel trucks, whose fuel prices are now at record highs, for a quick snapshot of what this might mean. Kashkari is on record as being in favor of a 25-bps hike, which he sought at the July meeting. But what he describes would likely take more than one hike over time.

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