The latest batch of economic data suggests that the US economy remains in remarkably good shape. Domestic demand is strong, and the labor market continues to show resilience.
Inflation isn't as picture-perfect. While June's PCED report provided some welcome relief, recent inflation shocks may spread in coming months. They include another round of tariffs, the AI building boom, high energy prices, and supply-chain disruptions. They will likely keep inflation above the Fed's 2% y/y target.
Let's review the recent batch of economic indicators:
(1) GDP. The US economy expanded at a 1.5% annualized rate in Q2-2026, down from 2.1% in Q1 (chart). At first glance, the slower growth rate suggests that the economy lost some momentum during the quarter. A closer look suggests otherwise.
