Economic data released over the past week highlighted mixed signals about the health of the U.S. economy and the financial pressures facing households and businesses. The Commerce Department reported that gross domestic product grew at a 1.5% annual rate from April through June, decelerating from 2.1% growth in the first quarter and falling short of economists’ expectations. Rising imports contributed to the slower expansion, though consumer spending, which represents roughly 70% of economic activity, posted stronger gains at a 3.2% annual pace compared to 0.5% in the prior quarter.
Inflation remains a persistent concern despite some moderation. The Federal Reserve’s preferred inflation gauge slowed last month but continued to exceed the central bank’s 2% target. Meanwhile, borrowing costs climbed higher, with the average 30-year fixed-rate mortgage reaching 6.66%, its highest point in a year, and the 15-year rate rising to 6.04%. These increases marked the fourth consecutive week of mortgage rate gains, adding to headwinds for prospective homebuyers.
Consumer sentiment deteriorated as geopolitical tensions and rising energy costs took their toll. The Conference Board’s consumer confidence index fell to 90.8 in July from 92.2 in June, remaining in the tepid range that has prevailed since early in the year. Gas prices rose to an average of $4.11 per gallon, up from $3.85 a month earlier, driven partly by escalating conflict in the Middle East and rising crude oil prices.
The Federal Reserve held its benchmark interest rate steady at around 3.6% during its latest meeting, the fifth consecutive decision to maintain rates unchanged. Three committee members dissented in favor of higher rates as policymakers grapple with persistently elevated inflation. In the labor market, jobless claims rose to 197,000 in the week ending July 25, though layoffs remain at historically low levels. Business investment outside of housing grew at an 8.4% pace, down from 10.6% in the first quarter but still robust, driven by artificial intelligence spending.
Article Attribution | Read More at Article Source
Article summary produced by Claude AI