Op-Ed: The week ahead in economic data

This week's economic calendar is packed with key reports and influential Fed speeches — and all eyes will be on the Fed's decision at the Federal Open Market Committee meeting. The committee is expected to hold the federal funds rate at 4.25–4.50%, reflecting a cautious, wait-and-see approach amid persistent inflation pressures and growing economic uncertainty.

1. Weakening Consumer SpendingRetail sales are expected to rebound from last month's contraction, although they may fall short of the somewhat optimistic consensus forecast. Deteriorating labor market opportunities and declining consumer confidence could continue to weigh on spending in the months ahead. The March stock market correction will likely impact retail sales due to a negative wealth effect. Employment and wage growth are also expected to continue heading lower.

2. The Housing Market Remains in a Holding PatternWill buyers and sellers return for this year's home shopping season? Mortgage rates have been on a roller coaster — dropping somewhat from the January highs and improving affordability — but homebuilder confidence remains weak amid tariff uncertainty, soft consumer sentiment, and weak foot traffic, with homes sitting on the market longer. With a large number of homes still under construction, housing starts and permits could continue to decline. February's existing home sales — reflecting homes that went under contract in January, when rates were higher and an unusual winter freeze disrupted activity — are expected to disappoint. Looking ahead, lower mortgage rates could sustain housing demand just enough — barring a shock that causes the labor market to break. Since mid-February, mortgage rates have fallen roughly 30 basis points.

3. The Federal Reserve Interest Rate DecisionThe upcoming Fed statement is expected to reiterate that inflation remains "somewhat elevated" and that labor market conditions are still solid, despite decade-low hiring rates beginning to weigh on consumer confidence. Reserve Chair Jerome Powell's press conference will be crucial as he navigates the balance between persistent inflation and a cooling economy amid heightened policy uncertainty. With private-sector activity showing signs of slowing, the Fed faces a tough challenge. Research by Bloom (2009) and Baker, Bloom, and Davis (2016) suggests that policy uncertainty can reduce business investment by 2–3 percentage points and slow GDP growth by 0.5–1%. Historically, the Fed has prioritized employment over inflation, but further labor market cooling could prompt more rate cuts than previously forecasted.

Looking AheadA stock market correction in March could lead to a further slowdown in consumer spending. For every dollar of lost market value, spending typically drops by 2–5 cents, and March data is expected to show that the U.S. economy may have stalled in the first quarter.