Retail sales and Fed minutes in focus next week

The latest economic data showed that inflation remains hot, with high prices on everything from groceries to clothing and gas squeezing millions of Americans and casting a shadow over the broader economy. Democrats swept Congress in midterm elections, with the cost of living being the top issue for many voters.

Retail sales outlook

Retail activity may have slowed last month, with economists expecting a 0.2% overall increase, easing back from 0.8% in September and 1.3% in August. At the same time, spending at gas stations has surged amid persistently higher fuel costs due to the U.S. war with Iran, which disrupted shipping traffic through the Strait of Hormuz, slashing global oil supplies and raising prices.

Shoppers have been pulling back on spending just as retailers head into the vital holiday shopping season. The squeeze from stubbornly high inflation is expected to persist as long as the war stifles global oil supplies and tariffs from the U.S. trade war with much of the world keep putting pressure on prices.

Fed policy focus

Details from the Federal Reserve's latest policy meeting will be released Wednesday. The minutes from that meeting could shed more light on the central bank's decision-making process as it tries to cool inflation. It held rates steady at its October meeting following the first rate hike in three years at its September meeting.

Higher interest rates, though, could also stunt job growth, which has been strong but is showing some signs of weakening. Supporting the labor market is also part of the Fed's mandate along with taming inflation, and taking action to support one can often be detrimental to the other.

Labor market trends

The latest weekly update on unemployment claims will be released Thursday. Economists watch them closely because they can provide signs of where the job market is headed. Claims have remained at historically low levels amid a broader jobs market that has remained a strong point in an economy pressured by rising inflation.

The last broad employment update for October showed that U.S. employers created a surprising 165,000 new jobs and the unemployment rate dipped to 4.1%. The reports have shown that the job market remains solid, but unspectacular. Employers have added an average of 86,000 jobs a month throughout the year, which is modest by historic standards.

Consumer sentiment

The University of Michigan on Friday will release an update to its November consumer sentiment survey. It is expected to remain unchanged from its initial reading, which continued to show that consumers remain pessimistic as they deal with pressure from inflation on household budgets.

Other reports on consumer confidence revealed similar concerns about inflation. The Conference Board's consumer confidence index for October showed some improvement in confidence levels, but they still remain on an overall downward trend. Responses to that survey continued to echo worries about the high costs of gas, goods and services.