With June’s advance retail and food service sales hitting $720.1 billion—a 0.6% uptick from May and surpassing expectations—the latest economic headlines have the tone of unexpected celebration. These upbeat numbers, along with improving trends elsewhere in the economy, are beginning to reshape the near-term outlook from pessimism to cautious optimism.
Just a few months ago, recession fears dominated economic forecasts. “We’ve been surprised again and again by consumers,” Jonathan Millar, senior U.S. economist at Barclays, told the Wall Street Journal. Back then, Millar believed the country was headed for a downturn; now he expects slow but steady growth. If this resilience continues, it may prompt the Federal Reserve to ease up on interest rates—a move eagerly awaited by many in commercial real estate.
Still, the jury is out on whether these positive shifts mark the start of a lasting trend. Not all indicators are in agreement, and looming flashpoints—like the growing tension between the White House and the Federal Reserve—could trouble this new optimism.
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Much of the earlier gloom had been sparked by a mix of trade policy uncertainty, tariffs and fear of consumer price hikes, all of which pointed toward rising inflation. Yet, equities have been on a strong run. The S&P 500 sits at record highs, while the Nasdaq and Dow Jones Industrial Average are also thriving, according to S&P Global Market Intelligence. The University of Michigan’s consumer sentiment index, which had dropped to a near three-year low in April, has begun rising again.
Even so, any celebration comes with caveats. As of July 2025, the University of Michigan’s consumer sentiment remains 6.9% below its year-ago level, and consumer expectations lag nearly 15% behind where they were a year earlier. The surging consumer spending numbers are also complicated by analysis from Moody’s, based on Federal Reserve data, which shows that nearly half of all spending is generated by the top 10% of earners. However, sentiment in this high-wealth group is still down 17% from December 2024, suggesting that even those most able to invest are in no rush to unleash their buys.
At the same time, the brewing confrontation between President Trump and Fed Chair Jerome Powell hangs over these figures. Trump's repeated attacks on Powell as a strategy to push for lower interest rates add a layer of uncertainty. GovFacts explains that, under the Federal Reserve Act, the president could remove a Fed chair “for cause”—Trump has hinted he might allege fraud related to the cost of the central bank headquarters renovations, though such a move would almost certainly trigger a protracted legal battle.
Even if removal were possible, the chair does not act alone. Redirection of policy would still require a majority vote from the Federal Open Market Committee, including seven governors and five of the twelve regional bank presidents, as The Wall Street Journal points out. Trump might, as the Journal also reports, an attempt of a broader overhaul by seeking to replace several Fed governors to “stack” the board in his favor.
Such maneuvers threaten to rattle financial markets, regardless of the ultimate outcome. As analysts at Piper Sandler said in the WSJ, “No matter who gets the job, markets will have doubts about his independence.” The Piper Sandler team underscored what’s at stake: “The politicization of the Fed we are witnessing is a monumental development.”
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