From the Desk - Economic Commentary
Brandon Casey, Member Strategies - 7/30/2026
U.S. equity markets are trading higher this morning, rebounding from Wednesday's sharp selloff following the Federal Reserve's decision to leave interest rates unchanged. The Nasdaq is leading gains, rising roughly 2%, while the S&P 500 is up about 1% and the DJIA is higher by approximately 0.6%. Markets are also digesting the latest economic data, including slower second-quarter GDP growth and June inflation figures. Fed Chair Kevin Warsh said that the Fed will not provide hints on policy but would take necessary steps to ensure the Fed’s 2% inflation goal is met.
The advance estimate for second-quarter 2026 U.S. GDP showed the economy grew at an annualized rate of 1.5%, down from 2.1% in the first quarter and below expectations. Consumer spending, business investment, and exports all contributed positively to growth, while government spending declined and imports increased, which detracted from GDP. Real final sales to private domestic purchasers, a key measure of private-sector demand, increased 3.9%, while consumer spending rebounded strongly.
Inflation data released alongside the GDP report showed additional progress, though inflation remains above the Federal Reserve's target. The June PCE Price Index declined 0.1% for the month but remained 3.7% higher than a year ago, down from 4.1% for the previous annual reading. Core PCE, which excludes food and energy and is the Fed's preferred measure of underlying inflation, increased 0.1% for the month and 3.3% year-over-year, down from 3.4% the previous month.
Consumer spending rose 0.3% in June, matching expectations and falling from 0.7% last month. Personal incomes increased 0.2% for the month, missing expectations of 0.3% and also down from a 0.7% gain last month. The personal savings rate fell to 2.7%, down from 3.0% the previous reading.
Initial jobless claims increased to 197,000 for the week ending July 25, up 9,000 from the prior week's revised level of 188,000. Initial claims had been expected to increase to 200,000. Although claims moved higher from the previous week's nearly 57-year low, they remained below expectations and continue to signal a relatively low level of layoffs. Meanwhile, continuing claims decreased by 7,000 to 1.782 million, the lowest level in more than a month.
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