Recent economic developments highlight the pressing issues of inflation and economic growth and their implications for Americans. Rising grocery and gasoline costs have put financial strain on households and shaped business decisions.
US Economy Growth Rate
The U.S. economy rose at a modest 1.5% from April through June, influenced by increased imports. Consumer spending saw significant growth, while the Federal Reserve’s preferred inflation measure slowed but remained above the 2% target. The Commerce Department reported a deceleration in GDP growth from 2.1% earlier this year, falling short of economists’ predictions. Despite this, consumer spending increased at a robust 3.2% annual rate, climbing from 0.5% in the first quarter. Business investment, outside of housing, grew 8.4%, reflecting an interest in artificial intelligence.
Mortgage Rates Rise
Recent hikes in mortgage rates are a setback for prospective homebuyers. The 30-year fixed-rate mortgage reached 6.66%, its highest in a year, from 6.58% the previous week. The 15-year fixed-rate mortgage also increased to 6.04% this week. A year ago, rates stood at 6.72% and 5.85% respectively. These rising borrowing costs impact those looking to refinance.
Consumer Confidence Slips
July saw a drop in consumer confidence due to rising gas prices linked to U.S.-Iran tensions. The Conference Board’s consumer confidence index fell to 90.8 from 92.2 in June. This dip reflects similar trends from earlier this year, with confidence readings previously over 100 during late 2024 and early 2025. Gas prices had dropped to $3.70 per gallon, but the conflict pushed costs up to $4.11 per gallon.
Stock Market Volatility
The stock market experienced fluctuations, ending the week with gains. Amazon’s stock surged while Apple’s declined, and inflation worries grew amid rising oil prices. Brent crude oil rose to $88.68 per barrel, impacting gasoline prices. The AAA reports the average gas price is now $4.11 per gallon, up from $3.85 a month prior.
Federal Reserve Decision
The Federal Reserve maintained its interest rate at 3.6%, with some officials favoring higher rates due to ongoing inflation challenges. Despite predictions of a rate increase, holding steady may offer slight relief. Yet, credit card rates near 20% and high mortgage rates persist.
Unemployment Filing Trends
Unemployment benefit filings increased last week, signifying potential layoffs. The Labor Department announced a rise to 197,000 for the week ending July 25, up 9,000 from the previous week. Despite this rise, figures are still within historically healthy ranges, with forecasts predicting 207,000 new applications.