The stronger 0.5% m/m rise in underlying retail sales in May, along with upward revisions to previous months’ gains, suggests that real consumption growth will accelerate to almost 4% annualised in the second quarter. We continue to expect that a sharper slowdown in economic growth over the coming months will convince the Fed to cut interest rates, but the retail sales data reinforce our view that officials are likely to wait until the September FOMC meeting before pulling the trigger.
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