What’s going on with the US economy?

Recent reports from federal agencies paint a conflicting story of how the US economy is doing.

On one hand: the economy is still growing, consumer spending remains strong despite higher gas prices, and the stock market continues climbing.

On the other hand: hiring has slowed, more Americans are filing for unemployment benefits, mortgage rates hit a recent high, and inflation continues to remain above the Federal Reserve's 2.0% target.

A rundown

GDP: The US economy grew by 1.5% in Q2 2026, below economists’ estimates (+1.8%) and lower than the 2.1% GDP growth seen the previous quarter, per federal data published yesterday. Officials say Q2 GDP calculations were weighed down by strong imports to fuel the AI and data center boom, while consumer spending picked up in Q2 even as gas prices surged (+3.2%, up from +0.5% in Q1).

Jobs: The latest federal jobs report shows employers pulled back slightly on hiring in June, adding 57,000 jobs compared to 129,000 in the previous month, while the unemployment rate dipped to 4.2% from 4.3% in May.

Meanwhile, US unemployment claims rose by ~9,000 last week, up slightly from 188,000 claims the previous week—which was the lowest such figure in 50+ years.

Inflation: Consumer prices fell a seasonally adjusted 0.4% month-over-month in June compared to a rise of 0.5% in May, bringing the annual inflation rate down to 3.5% according to the June Consumer Price Index.

• It marks the largest one month decrease since April 2020, though inflation still remains above the Fed’s long-term target of 2.0%.
• Core inflation, which excludes the often-volatile categories of food and energy, was flat for the month of June at a 3.3% annual rate.
• Overall, June’s inflation report found month-over-month increases for food (0.2%) and shelter (0.1%), and a drop for energy (-5.7%) and commodities (-0.1%).

Stocks: All three major US stock indexes are trading near all-time highs as another strong earnings season reinforces investor optimism, though recent sessions have seen notable swings in either direction.

So far in Q2, 86% of S&P 500 companies that have reported quarterly results have beaten Wall Street's earnings expectations, putting the index on track for its 10th straight quarter of year-over-year profit growth.

Interest rates: The Federal Reserve held baseline US interest rates steady this week at a range of 3.5%–3.75%, with new Fed Chair Kevin Warsh ending the practice of “forward guidance” and declining to provide details about where rates could go in the future. Meanwhile, average 30-year mortgage rates climbed to 6.66% this week, their highest level since July 2025.

Looking ahead…The July jobs report, which will shed more light on the health of the US economy, is set to be released next Friday.

📊 Flash poll: To all working professionals: would you consider the growth outlook in your industry/sector of the economy to be positive or negative over the next 12 months?

• Positive
• Negative
• Unsure/other