Markets Up, Economy Mixed

It’s been a strong start to September on Wall Street, but the bigger economic picture is less clear. Consumers are still spending, the Fed has shifted gears with its first rate cut in nine months, and industrial production is holding up. At the same time, housing continues to struggle and manufacturing gains are narrowly focused. Here’s where things stand.

Markets Keep Climbing

September is usually a tough month for stocks, but not this year. All three major indexes closed at record highs on Friday, with the Nasdaq leading the way.

• Dow Jones: 46,315 (+0.37%)
• S&P 500: 6,664 (+0.49%)
• Nasdaq: 22,631 (+0.72%)

Even better, each index logged gains for the week: Dow (+1.05%), S&P (+1.2%), and Nasdaq (+2.2%). A standout was FedEx, up 2.3% after beating earnings expectations.

Manufacturing: Not All That Glitters

Industrial production edged up 0.1% in August and manufacturing rose 0.2%. That sounds encouraging, but the strength is concentrated in a handful of industries.

• Doing well: Computers, electronics, chemicals, aerospace, and petroleum
• Showing momentum: Autos and parts — output has climbed for nine straight months
• Big picture: Manufacturing overall is still less than 1% higher than a year ago

Tariffs remain a drag, and with the issue headed to the Supreme Court, there’s little clarity for manufacturers.

Consumers: Spending, But Mostly Paying More

Retail sales were up 0.6% in August, but higher prices explain a lot of that increase. Adjusted for inflation, sales were only up 0.2%.

• Online shopping was strong (+2%), extending its winning streak to 11 out of the past 12 months.
• Auto sales ticked up another 0.5%, partly because buyers want to get ahead of tariffs.
• Consumer goods prices rose 0.5% in August, which means people spent more but didn’t necessarily get more.

Consumers remain resilient, but with job growth slowing, spending could start to cool.

Fed: First Cut in Nine Months

The Federal Reserve lowered rates by 25 basis points, bringing the federal funds rate down to 4.0%–4.25%. It’s the first cut in nearly a year and signals the Fed is shifting focus toward supporting the labor market.

• 2025: Two more cuts expected, ending near 3.625%
• 2026: One additional cut to 3.375%
• Long-term “neutral” rate: ~3.0–3.25%

The message is clear: the Fed sees job risks outweighing inflation risks for now.

Housing: Still the Weak Spot

Housing continues to look weak, and August’s data didn’t help:

• Housing starts fell 8.5% to 1.307M (SAAR)
• Single-family starts dropped 7%
• Multi-family starts plunged 11.7%, the lowest since 2021
• Building permits fell 3.7% — the fifth monthly drop in a row

Lower mortgage rates (6.26%, an 11-month low) could help, but affordability remains a major barrier.

What’s Coming This Week

We’ll get a fresh look at several key indicators:

• Home sales: Both new and existing sales likely moved lower in August
• Durable goods orders: Expected +0.6%, but weaker if you strip out transportation
• Consumer spending & inflation: Real spending projected +0.2%; inflation +0.3%

The Bottom Line

Markets are riding high, but the economy underneath is more complicated. Manufacturing is narrow, housing is weak, and consumer spending is increasingly driven by prices. The Fed’s rate cut is a clear sign that job market concerns are front and center.

At FTR, we understand how challenging it is to make confident decisions when markets are being pulled in different directions by tariffs, inflation, and shifting Fed policy. Our Freight•cast methodology is designed to cut through the noise, turning complex data into clear, actionable intelligence. Whether it’s understanding how housing trends affect freight demand, or how policy changes ripple through supply chains, FTR equips companies with the insights they need to plan strategically instead of reacting to uncertainty.

In uncertain times, trusted intelligence makes all the difference—and that’s where FTR helps you stay ahead.  Click here to learn more.