US inflation remains sticky in July; 2nd-quarter GDP unrevised at 1.5%

In July, U.S. inflation remained stubbornly high, staying above the Federal Reserve's 2% target for the 65th consecutive month. The steady inflation is likely to fuel debate within the central bank about whether interest rates should be increased or maintained. Simultaneously, consumer spending showed a slight deceleration, while personal incomes increased faster than inflation, potentially signaling a rise in consumption in the coming months.

On the production side, orders for major capital goods rose, particularly for transportation equipment, while durable goods shipments outside defense and aerospace sectors indicated continued robust business investment in artificial intelligence. Corporate profits surged at the second-fastest pace on record in the second quarter.

These reports collectively indicate a potential acceleration in economic growth in the third quarter, with economists predicting a real GDP growth rate of at least 3% in Q3, more than double the 1.5% annualized growth rate of the previous quarter. The data, released just before Federal Reserve Chair Kevin Warsh's keynote speech at the Kansas City Fed's economic symposium in Jackson Hole, Wyoming, underscores the central bank's focus on controlling inflation.

Fed Chairman Kevin Warsh will deliver his first keynote address at the Kansas City Fed's annual economic symposium in Jackson Hole, Wyoming, a gathering of global investors keenly awaiting insights, particularly from an inflation-conscious government bond market.