Wall Street Hunts for Consumer Clarity as Data Gets Delayed. Here’s What Banks Are Seeing.

The federal government’s shutdown, now in its third week, has halted key economic releases, including the monthly retail sales report. This has left Wall Street with limited visibility into consumer health. For a data-dependent Federal Reserve, the absence of official metrics adds uncertainty ahead of its next policy decisions.

Speaking Tuesday at the National Association for Business Economics, Fed Chair Jerome Powell said the central bank is closely monitoring a mix of public and private-sector data sources during the blackout. Based on what’s available, Powell said the Fed’s broader outlook hasn’t shifted significantly since September.

“Based on the data that we do have, it is fair to say that the outlook for employment and inflation does not appear to have changed much since our September meeting four weeks ago,” he said. However, Powell noted that economic growth may be “on a somewhat firmer trajectory than expected.”

Chicago Fed Estimates Growth Despite Gaps

In the absence of Census Bureau data, the Chicago Fed’s advance retail trade summary has filled part of the void. The regional bank projects retail sales excluding autos and parts rose 0.5% in September, or 0.2% after inflation, which is a modest gain that still points to underlying consumer activity.

Moreover, the reading suggests a slight cooldown from August’s 0.7% growth in core retail sales, according to the government’s last release. Analysts say that the data points to continued strength in consumer spending, but momentum may be easing, particularly among younger and lower-income consumers.

Ivan Holman, a consumer specialist at Bernstein (AB), wrote that conditions remain “relatively sanguine on an absolute level,” even as late-summer softness begins to emerge.

Bank of America Tracks Spending Pullback

Bank of America’s (BAC) internal card data also shows a mixed picture. Year-over-year consumer spending rose 2% in September, while month-over-month growth was just 0.2%. Economist Aditya Bhave described the trend as “modest,” pointing to declines across categories such as online retail, furniture, and department stores.

However, Bhave cautioned that the slowdown could be tied to seasonal adjustment noise rather than an actual pullback. He also emphasized that spending was strong from June through August, suggesting broader resilience in consumer behavior.

“Even if the September retail sales report is as soft as we are projecting, we’d caution against jumping to the conclusion that spending is starting to feel the effects of a weaker labor market,” he said in a note.

Wells Fargo Sees Spending Stability

Despite the noise in the data, bank executives continue to signal confidence in consumer health. On Tuesday’s earnings call, Wells Fargo (WFC) CFO Mike Santomassimo said third-quarter trends show consumers remain active and financially stable.

“You see strong consumer spend and stable deposits and those things just kind of paint a picture of a consistently strong consumer,” he said. “Even though what you read about is—it would lead you to believe that they’re being more cautious, our results just say that there’s a high degree of consistency there without any real pockets of slowing.”

JPMorgan Warns of Labor Risk Ahead

JPMorgan (JPM) CFO Jeremy Barnum echoed the same theme: solid consumer performance, low delinquencies, and ongoing spending. However, he issued a warning that current strength might not last if the labor market weakens.

“There are risks and that the fact that things are fine now doesn’t mean they’re guaranteed to be great forever,” Barnum said. While current delinquency rates remain below expectations, tighter job conditions could shift that picture quickly.

Key Takeaway

With official data still unavailable, Wall Street is leaning on imperfect but steady signals. Consumer spending appears to be holding up for now, though the pace is starting to cool. Risks tied to a weakening labor market are beginning to build. Until the government reopens, these alternative data points may be the only insight available to both the market and the Fed.

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