3 Things You Need to Know This Week | Retail Sales, Central Bank Meetings & More (Mar. 17th, 2025)

Transcript

Tim Schluter:

Welcome to 3 Things You Need to Know This Week, our regular series designed to help you sift through the noise across financial media and understand what really matters for markets.

And now, here are the three things you need to know this week.

First up, US and China retail sales.

The US released February retail sales data, while China reported combined figures for January and February. Some are concerned trade tensions and recent market volatility may cause consumers to spend less, potentially contributing to a recession. But consumer spending isn't the big economic driver many think it is. Most household spending goes towards essentials like rent, utilities and healthcare, all of which typically hold pretty steady, regardless of trends in the broader economic environment. For example, US real personal consumption expenditures have steadily grown since the pandemic, despite the many challenges households have faced. Meanwhile, in China, consumers are doing better financially than many people realize. Recent surveys show confidence is improving and people are more willing to spend. Wages have also been growing faster than inflation in the US and China, which should help support future consumer spending.

Next, monetary policy decisions.

This week, we'll see several central bank rate announcements. The Bank of Japan on Tuesday, the US Fed on Wednesday and the Bank of England on Thursday. The Bank of Japan and the Fed are expected to leave rates unchanged, while the Bank of England is expected to cut rates again following its 25 basis point cut in February. Recent market volatility has made many investors uneasy, with some calling for central banks to step in and help the economy by cutting rates. But we think this view overstates the impact central banks have on the economy, and rate changes don't guarantee a particular economic result. For instance, the aggressive rate hikes by the Fed in 2022 and 2023 didn't cause the large recession many feared. So, why would holding rates steady today suddenly weaken the economy? In our view, the last few years demonstrate that central bank rate cuts aren't critical for markets or the economy, though we'll continue to keep an eye on ongoing developments.

Finally, tips for navigating market volatility.

When markets get volatile, it's natural to want to protect your investments. But acting out of fear can often backfire. Timing when to exit and reenter the market during short-term drops is incredibly hard and could cause investors to miss out when the market rebounds. History shows that big stock gains often follow large downturns, and selling after a market drop could mean missing a sharp recovery, which can cost investors in the long run. Staying calm during volatility is crucial. Missing just a few of the market's best days can impact your overall returns. Focus on your long-term goals and try to look beyond short-term swings.

And that's it for this episode.

For more of our thoughts on markets, check out This Week in Review, released every Friday. You can also visit the "Insights" section of fisherinvestments.com. Thanks for tuning in and don't forget to subscribe!