Daily Macro Brief

The Consumer Price Index declined 1.41 points month-over-month to 332.568, while the Producer Price Index fell 3.66 points to 286.827. Core PCE, the Federal Reserve's preferred inflation gauge, ticked upward marginally by 0.17 points to 130.266.

The directional agreement across the three measures points to contained inflation without a deflation signal. Producer-level cost relief has not yet fully passed through to consumers, but the trajectory supports central-bank confidence that price pressures are easing.

Quarterly GDP expanded by 609.49 points to 32,475.21 as of 1 April 2026. Retail sales rose 1,617.00 points to 666,056.0 in June, while housing starts increased by 228 units to 1,427.0.

The combination is consistent with broad-based demand and an economy operating near potential without clear signs of overheating.

Unemployment declined to 4.1% as of 1 July 2026. Headline nonfarm payrolls contracted by 23,000 jobs, while private nonfarm payrolls increased by 30,000. The divergence was driven by a 53,000-job decline in government employment, leaving underlying business demand modestly positive.

Initial claims rose 1,000 to 199,000 as of 1 August, and continuing claims increased 24,000 to 1,801,000 as of 25 July. For now, this is a monitoring signal rather than a hard warning: unemployment remains low and private payroll growth is still positive.

The Federal Funds Rate remained unchanged at 3.63% as of 1 July 2026. The Financial Conditions Index stood at -0.529 as of 31 July, only marginally different from -0.530 in the prior period.

Stable policy and accessible credit support continued capital investment and consumer spending. At the same time, the lack of further easing indicates that demand is being supported by organic spending and employment rather than a fresh wave of easy money.

The recession indicator remains at 0 as of 1 July 2026. The 10-year minus 2-year yield spread re-steepened to 0.46% as of 7 August, up from 0.44%. These signals align with normalized credit conditions and reduced recessionary risk.

The main limitation is the Leading Economic Index, whose latest supplied reading is dated February 2020. That reporting lag limits the ability to assess current forward momentum, even though the other available indicators support an expansion narrative.

Lower inflation reduces the perceived need for further monetary tightening, eases input-cost pressure on corporate earnings and improves real purchasing power. A re-steepening yield curve also points to lower refinancing stress and improved access to longer-term capital.

If initial claims remain above the 210,000–220,000 range over the next four to eight weeks and continuing claims accelerate, the data would begin to signal genuine labour-market softening. Until then, the evidence supports an expansion view with selective risk monitoring.