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US inflation remains elevated as GDP growth outlook brightens
Yahoo Finance • • business
Key Points:
- U.S. annual inflation remained steady at 3.7% in July, well above the Federal Reserve's 2% target for the 65th consecutive month, potentially intensifying debates on interest rate hikes.
- Consumer spending slowed slightly in July but personal incomes rose faster than inflation, suggesting possible increased consumption later in the year.
- Orders for major capital goods, especially transportation equipment, rebounded, indicating strong business investment, particularly in artificial intelligence, alongside a significant rise in corporate profits.
- The data signals an acceleration in third-quarter economic growth, with GDP growth potentially doubling from the previous quarter, maintaining the Fed's focus on controlling inflation.
- Ongoing geopolitical tensions and new tariffs, including recent U.S.-Canada trade disputes, continue to cloud the inflation outlook and complicate the Fed's policy decisions.
