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New economic data on slowing economy, persistent inflation
The Commerce Department released key reports Thursday on economic growth and inflation, as the Federal Reserve remains focused on achieving its 2% inflation target amid persistent challenges.
Supervising Producer
WASHINGTON —
The Commerce Department released key economic reports Thursday, offering insights into U.S. economic growth and inflation trends.
The U.S. economy grew slightly in the second quarter, but inflation continues to exceed the Federal Reserve’s annual 2% target.
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The reports include the Personal Consumption Expenditures Price Index, which is the Federal Reserve’s preferred measure of inflation, and the GDP report for the second quarter. The report reveals how the economy grew or shrank from April to June.
PCE price index core inflation, which does not include fluctuations in food and energy prices, is up 3.3% since last year. Core inflation grew 0.3% in June.
The report also shows there has been 1.5% GDP growth in the second quarter, which is slower than the first three months of the year. That reading falls on the lower end of economists’ expectations.
This follows the Federal Reserve’s decision Wednesday to keep interest rates steady at around 3.6% in an effort to control inflation. Despite some signs of cooling, inflation remains roughly double the Fed’s 2% target.
“Inflation remains elevated relative to the committee’s 2% goal. The committee remains resolute. You’ve heard this before, but we will deliver price stability,” Federal Reserve Chair Kevin Warsh said.
Adding to the uncertainty in the economy is the ongoing war in Iran, which has driven up energy costs. Many analysts are predicting the Federal Reserve will hike interest rates in September. The board does not meet in August.
The board mentioned that the conflict in the Middle East, and particularly oil prices, is contributing to economic uncertainty.
On Monday, oil prices started around $92 per barrel and fell to $83 on Tuesday as news suggested negotiations may be moving forward.
Since Iran started firing on American targets and the U.S. retaliated, prices have risen back up to above $92 per barrel Thursday morning.
To put things into perspective, oil prices peaked around $114 per barrel in May and were about $73 per barrel before the war began.
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