What's next for the "remarkably good" economy

What they're saying: "The recent performance of our economy has been remarkably good, by far the best of any major economy in the world," Federal Reserve chair Jerome Powell said in a speech Thursday in Dallas.

• "The economy is not sending any signals that we need to be in a hurry to lower rates," he added.

Driving the news: New consumer spending data supports Powell's message. Retail sales increased 0.4% in October, the Commerce Department said Friday, with strong spending at auto shops, electronics stores and restaurants.

• Revisions to September data showed retail sales rose 0.8% — twice as much as initially estimated.
• The retail sales "control group," which excludes volatile categories like auto sales and feeds into the calculation of GDP, fell 0.1% in October. But the previous month got even better: revised up to 1.2% from 0.7%.
• Separately, industrial production fell 0.3% in October, the Fed said Friday morning, reflecting in part the impact of the Boeing strike.

The big picture: There's been a shift in the narrative about the consumer in recent weeks, in large part because of revisions to previous years' data that showed stronger growth in incomes and spending.

• For instance, the revised data showed the personal saving rate — how much consumers have left over after spending — was 5.2% in the second quarter, nearly 2 full percentage points higher than initially thought.
• "Growth in consumer spending has remained strong, supported by increases in disposable income and solid household balance sheets," Powell said Thursday.

Between the lines: In recent weeks, Powell has said lowering interest rates was a "recalibration" of monetary policy set when the Fed was in inflation-fighting mode.

• "The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully," Powell said in Thursday's speech.

Zoom in: Between Powell's hawkish tone and Friday morning's strong retail sales numbers, markets are getting the message.

• The market-priced odds of a rate cut next month have fallen from 72% Thursday to 62% as of 11am ET Friday, per the CME FedWatch tool.

The Fed wants to move rates to a neutral setting, one that neither boosts the economy nor restrains it. But no one knows where that level is — an idea that further clouds the path of rate cuts.

• In other words, there is uncertainty around both where policy is headed and how fast it should try to get there.

State of play: In a speech earlier this week, Dallas Fed president Lorie Logan suggested the Fed may be closer to this "neutral" level than many think.

• "I see substantial signs that the neutral rate has increased in recent years, and some hints that it could be very close to where the fed funds rate is now," Logan said.

In an interview Wednesday, Minneapolis Fed president Neel Kashkari made a similar case. "It's really uncertain, in my mind, where we're going to end up landing," Kashkari told Axios reporters and editors.

• "How do I reconcile a five-plus percent federal funds rate for a year with a labor market that has stayed resilient, while GDP has been strong? Consumer spending that has been strong?"
• "The only way I can reconcile that in my head is that at least temporarily, the neutral rate has been elevated. And so while I thought we were putting two feet on the brakes, maybe we were only putting one foot on the brakes of the economy."

The bottom line: The summer growth scare is over, and the economy looks solid. Nobody is exactly sure how the new Trump administration's policies will affect the economy. Against that backdrop, the Fed will be moving gingerly.