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Consumer sentiment in the US continued to improve in August, with The Conference Board's (CB) Consumer Confidence Index rising to 103.3, up from 101.9 (revised from 100.3) in July, much better than 100.3 estimates.

The Present Situation Index increased to 134.4 from 133.1 during the same period, while the Expectations Index rose to 82.5 from 81.1.

As economists and analysts assess Powell's remarks, Stephen Brown at Capital Economics is describing them as "unmistakably dovish."

"The lack of any guidance on the size of the move next month suggests that Powell is keeping his options open," added Brown, the firm's deputy chief North America economist.

"There was little to guide us on the path of policy beyond the next meeting, although the dovish tone today suggests that our forecast of 25 basis points cuts at each meeting is perhaps the least we can expect," Brown also said in a note.

The next jobs report is now more crucial, as Fed Chair Jerome Powell has effectively committed to cutting rates, says Stephen Stanley, chief U.S. economist at Santander. He believes the Fed is "pretty much locked in" to a rate cut in September, regardless of upcoming data. Stanley highlights the importance of the August jobs report, viewing it as even more pivotal than the core CPI reading.

Economist Gerard MacDonell notes that while Powell appears dovish, he's cautious about the pace of cuts. The key takeaway, according to MacDonell, is that the Fed no longer supports further cooling of the labor market.

Chicago Federal Reserve President Austan Goolsbee on Friday indicated he backs reductions in U.S. interest rates and said "we are not just fighting inflation now."

With inflation slowing toward the Fed's 2% annual goal, Goolsbee said interest rates are the most restrictive in decades in an interview with CNBC. That's economic lingo for interest rates being well above the rate of inflation.

The high level of rates, he said, is putting stress in the economy and has created weakness in parts of the jobs market.

"There are concerned warning signs about part of the labor market," he said, referring to a rise in unemployment to 4.3% from 3.4% a year and a half ago.

While Goolsbee would not commit to a specific level for the Fed's benchmark short-term rate, he pointed out the Fed's own forecasts show "multiple cuts" over the next year.

Goolsbee has been the most prominent voice among top Fed officials warning about keeping interest rates too high for too long and potentially jeopardizing the health of the economy.

Yet the economy grew at an above-average speed of 2.8% in the spring and it's on track to expand about 2% in the soon-to-end third quarter.

Goolsbee said the economy still "wide" pockets of strength and he expected the U.S. to keep growing.

By Greg Robb - Federal Reserve Chair Jerome Powell told the Jackson Hole conference that the "direction of travel" for interest rates was clear, meaning multiple interest rates were coming. But one top economist thinks the Fed might soon find it is stuck holding rates steady or even have to reverse policy raising rates.

The reason? The likely policies to be enacted no matter what political party wins the White House, said Adam Posen, the president of the Peterson Institute of International Economics.

Powell's speech focused too much on the short-term and gave no thought of what would happen in six months, Posen said. This was a mistake, he added.

"My view is that if [Vice President Kamala] Harris becomes president, it is 60%-65% likely that you won't see the cuts" that the market has priced in, Posen said. Traders in derivative markets expect 200 basis points in cuts over the next year.

"If [former President Donald] Trump gets in, I put it at 80%-90% they are going to be hiking a year from now," Posen said.

United States new home sales in July increased by 10.6%, significantly higher than the estimated 0.1% and the 0.3% gain recorded in June. With this growth, the housing market saw sales reach an annualized pace of 739,000 units, up from 668,000 units in June.

Atlanta Federal Reserve President Raphael Bostic said on Friday that they are going to have to think hard about what's happening in labor markets, per Reuters.

Key points

"We want a calm, orderly return to normalization."

"We are close to being ready to cut rates."

"Our policy has had its effect, and we can start the pathway back to normal policy posture."

"We can't wait until inflation is back down to 2% to alter policy rate."

"Labor market is a sign that we are getting back to a much more normalized place."

"Number on inflation over the last couple of months has made me more confident it's returning to 2%."

"We still have a ways to go on inflation though, don't assume we are done."

"You can't ignore the data, takes us closer to moving."

"I just want to make sure next couple of data points are consistent with that."

"Jobs revision figures didn't change that much for me."

United States Existing Home Sales rose to a 3.95 million unit pace in July, surpassing the forecast of 3.93 million. This reflects a 1.3% monthly growth following a 5.4% decline in June.

According to S&P Global, the US Services PMI registered at 55.2 in August, surpassing expectations of 54. However, weakness in the manufacturing sector led the Manufacturing PMI to come in below expectations at 48, compared to the anticipated 49.6. Despite the manufacturing slowdown, the strength in the service sector helped the Composite PMI rise to 54.1 in August, exceeding expectations of 53.5.

According to the US Department of Labor, initial claims for state unemployment benefits rose by 4,000 to a seasonally adjusted 232,000 for the week ending August 17, meeting market estimates.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, also increased by 4,000 to a seasonally adjusted 1.863 million during the week ending August 10, up from 1.859 million the previous week, but below the estimated 1.870 million.

Although the number of Americans filing new applications for unemployment benefits rose in the latest week, the overall level still suggests that the labor market is gradually cooling.

The US Bureau of Labor Statistics announced on Wednesday that the preliminary estimate of the benchmark revision indicates an adjustment to March 2024 total nonfarm employment by -818,000 (-0.5%).

"The final benchmark revision will be issued in February 2025 with the publication of the January 2025 Employment Situation news release," the BLS noted in its press release.

The outlook for a soft landing is still in play, and the Leading Economic Index continues to signal otherwise. The LEI declined 0.6% in July, bringing the streak to 29 consecutive months without a gain. At 100.4, the index has now fallen below the prior cycle's low reached in April 2020.