Retail sales data came in stronger than expected, suggesting resilient consumer spending and signaling a strong economy in the third quarter despite lingering macroeconomic worries. RBC Capital Markets US economist Mike Reid sits down with Market Domination Hosts Julie Hyman and Josh Lipton to break down the latest retail data and what it means for the Federal Reserve’s November meeting.

“In terms of inflation, we continue to see price pressures move lower. So that's encouraging,” Reid says, noting, “In our thesis, the consumer is going to hold up because labor continues to hang in there. And what we mean by that is we saw some weakness over the summer. We got some pretty weak jobs reports in July and August. But the most recent report showed perhaps that that was due to some seasonal effects. So taken all together, as long as consumers continue to have jobs and confidence they'll have income, they're going to continue to spend.”

Reid says “We're heading into a period where base effects are really important, and really what that means is what happened in the prior month. Last year we saw some really low prints…. So it puts the fed in a tight spot just given how people perceive that year-over-year pace.”

The economist outlines his expectations for the Fed’s rate cuts. “We're looking for the Fed to cut 25 basis points both in November and December. We're also looking for one more cut of 25 basis points in January. But that's where we think they stop, and that's a result of the economy.”

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This post was written by Naomi Buchanan.