The consumer hasn’t gotten tired of spending — at least not yet. December retail sales, released last Wednesday, were strong and easily exceeded expectations. The latest consumer sentiment number also came out last week, jumping to its highest level in nearly three years.

Now that summer is winding down and we’re beginning to look forward to the fall, the overall mood (and the weather) needs an adjustment. Markets are in a mood and have begun to traffic in rumor and innuendo with the combination of a dismal news cycle, scant data, higher gas prices and stubborn inflation.

Fitch Ratings downgraded the United States’ long-term foreign-currency issuer default rating from AAA to AA+ last Tuesday, removing the “negative” rating watch and assigning a “stable outlook” label instead. (It’s like saying we were a shaky No. 1 but now a solid No. 2.) The downgrade is most likely a result of the most recent debt ceiling standoff and stopped the markets dead in their tracks.

Data released late last week seemed to back up Powell’s statements. The first reading of second-quarter gross domestic product (GDP) was released just after the Fed’s meeting. The U.S. economy grew by 2.4% in the second quarter, up from 2.0% in the first quarter and above expectations of 1.8%. Meanwhile, durable goods orders jumped 4.7% in June.

Last week was a strong one for the market, even though corporate earnings were mixed. (More on this in the next section.) Overall, the Dow Jones Industrial Average (DJIA) closed at new yearly highs on Friday at 35,227.69. The S&P 500 followed suit most of the week, up 18% for the year before sliding off to end the week.

In typical Dr. Jekyll-Mr. Hyde fashion, Federal Reserve Chair Jerome Powell first gave markets hope that after the Fed raised rates at its final meeting of 2022, they might pause to watch what a 4.25% Fed Funds rate would do to inflation and the economy. Predictably, markets soared on the possibility of a pause on rate increases. Then — just as suddenly — he stepped up to the microphone following last week’s meeting and said the Fed still isn’t done.

Everyone seems to believe we are on the brink of a recession, and the debate is about when it will start, how long it will last, and how severe it will be. Anyone who works in any sort of forecasting knows these three pieces of information are vital to formulating a forecast, and right now, we don’t have answers to any of these questions.