The uncertainty of 2025 seems to have dissipated slightly, despite the Consumer Price Index rising 4.2% year over year, primarily driven by skyrocketing energy costs (up more than 20% since May 2025). The Conference Board’s Consumer Confidence Index continues to inch up, standing now at 91.2, driven by a rising Expectations Index (consumers' short-term outlook) based on falling oil prices. (WTI Crude is trading around $70 a barrel in July, down from a high of about $100 this spring and up about $5 from the price a year ago.) Consumer confidence is still well below the post-pandemic high mark of summer 2021 but higher than the recent low mark of spring 2025. Meanwhile, the civilian unemployment rate sits at 4.2%, roughly the same as it was a year ago (and has not been below 4.0% since spring 2024).
As for U.S. manufacturing, the ISM’s Purchasing Manufacturing Index has been in expansion mode for half a year now, with new orders also expanding for the sixth month in a row. While industrial production is up only 1.7% year over year, business equipment (up 5.7% YoY) and construction supplies (up 2.3%) remain hot.
Overall, economists are forecasting a slow-growth, sticky-inflation environment. Real GDP grew at an annualized rate of 2.1% in Q1 of 2026, driven by business fixed investment, particularly related to data center construction, information-processing equipment, and AI infrastructure. Real GDP is expected to grow a little over 2% for the entire year, with AI capex offsetting a downcycle in residential housing.
(Updated 7/7/26)
Return to Economic Indicators
