The strong back-to-school sales figures reported by Wal-Mart Stores Inc. (NYSE: WMT), Target Corp. (NYSE: TGT) and Saks Inc. (NYSE: SKS), the biggest gains in worker productivity in nearly two years and better-than-expected growth in the service sector may undercut the argument that a Federal Reserve interest rate cut is needed.

This data indicates that despite a lousy housing sector and shaky consumer confidence that the underlying economy remains rather strong. Fed Chairman Ben Bernanke seems to espouse the "if it's not broke don't fix it" philosophy and has thus far resisted calls from Wall Street to cut interest rates.

In an interview with Bloomberg News, Peter Kretzmer, a senior economist at Banc of America summed up the situation well: ``It's still early, but the indications are that for all the slowdowns we're seeing in financial markets and real estate, we're getting good compensating growth in other industries. For the Fed, there may be a presumption that more weakness may be coming, but for now I think the economy is showing a lot of resilience.''

The data released yesterday in the Beige Book provided no clear signal that a rate cut is coming. Bernanke's speech at the recent Fed conference didn't either. Yet, market pundits keep blathering that an interest rate is a foregone conclusion.

Even if a rate cut does come, there's no guarantee that it will be as large as investors expect or have the calming impact on the market that Wall Street wants.

Bernanke has said that he's monitoring the situation closely which has provided some comfort to investors. He doesn't want the Fed to play the role of a well-meaning dad who bails out the market whenever things go sour. Eventually kids need to grow up and learn how to solve their own problems.