Buffeted by continuing trade and military wars, the economy is showing signs of fatigue. Real GDP rose at a scant 1.5% annual rate in Q2 of 2026, down from its growth of 2.1% in Q1. Much of this stagnation can be attributed to inflation: the Bureau of Labor Statistics announced that core inflation (not including food and energy) jumped 0.3% in August from July, which adjusts to 2.4% on an annual basis. But the overall CPI was up 0.4% from July and 3.4% year over year, with energy prices rising 2.1%. As of mid-September, prices of Brent Crude are above $100, nearing its high-water mark almost two decades ago (adjusted for inflation). Economists don’t see any relief on the horizon, leaving the Federal Reserve on the precipice of its first rate-hike in three years. This is an underlying factor in the moderating levels of the Conference Board’s Consumer Confidence Survey – the August index decreased 0.8 points to 89.4, down from 90.2 in July.
In addition, while the Conference Board’s Present Situation Index – which measures current business conditions – edged up slightly in August, the Expectations Index declined. Meanwhile, manufacturing has proven resilient in the face of headwinds this year, with ISM’s latest Purchasing Managers Index registering 54.6 in August, a percentage point below its July mark but still well into expansion territory. That said, new orders for manufactured goods have been on a roller coaster ride since August 2025, rising 1% of more in five of the months, falling 1% of more in two of the months, and relatively unaltered in the other five months.
(Updated 9/11/26)
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