Macroeconomic Barometer — August 2026

Factual highlights — July 2026

FOMC — first dissents under Warsh. The Committee held the fed funds range at 3.50–3.75% on July 29 by a 9–3 vote. Beth M. Hammack, Neel Kashkari and Lorie K. Logan voted against, preferring to raise the target range by a quarter point at this meeting. The statement, still in the short format adopted in June, describes economic activity expanding at a solid pace despite elevated uncertainty owing in part to the conflict in the Middle East, strong productivity growth and capital investment, job gains keeping pace with the workforce and an unemployment rate that has changed little. On prices, the statement says inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors including energy, and closes with a commitment: “The Committee will deliver price stability.” No projections (SEP) accompanied this meeting. Source: Federal Reserve Board, statement, July 29, 2026.

ECB — pause after the June hike. The Governing Council decided on July 23 to keep its three key rates unchanged: deposit facility at 2.25%, main refinancing operations at 2.40%, marginal lending facility at 2.65%. The statement says the outlook for energy prices, while highly volatile, currently stands close to the baseline of the June Eurosystem staff projections and well above the levels recorded prior to the conflict in the Middle East; that uncertainty remains high and the full inflationary impact of the energy shock has yet to play out; and that the Council is closely monitoring the intensity and duration of the shock, as well as its indirect and second-round effects. The ECB restates a data-dependent, meeting-by-meeting approach, with no pre-commitment to a rate path. Next decision: September 10, 2026, with new projections. Source: ECB, monetary policy decision, July 23, 2026.

Inflation — the US energy component breaks lower. US CPI for June (released July 14) fell 0.4% on the month in seasonally adjusted terms, after +0.5% in May — the largest monthly decline since April 2020. Over twelve months the all-items index came in at 3.5% (from 4.2% the prior month). The index excluding food and energy was unchanged on the month and is up 2.6% over the year (from 2.9%). Energy fell 5.7% on the month (though still up 15.7% year-over-year), gasoline 9.7% on the month (+26.7% year-over-year). Shelter rose just 0.1% on the month, its smallest monthly change since January 2021. On the PCE side (BEA, July 30), the June price index came in at 3.7% year-over-year with the core measure at 3.3%; the Dallas Fed’s Trimmed Mean PCE stands at 2.2% over twelve months. In the euro area, Eurostat’s July 31 flash estimate lifts HICP to 2.9% in July (from 2.8% in June), with energy back up to 10.0% (from 8.5%) and services at 3.3% (from 3.2%). Source: BLS, Consumer Price Index – June 2026; BEA, Personal Income and Outlays, June 2026; Federal Reserve Bank of Dallas; Eurostat, flash estimate, July 31, 2026.

Growth — US deceleration, euro area acceleration. The BEA’s advance estimate (July 30) puts US Q2 2026 GDP at +1.5% at an annual rate, after +2.1% in Q1. Positive contributions came from consumer spending, investment and exports, partly offset by a decrease in government spending; imports, a subtraction in the calculation of GDP, increased. The gross domestic purchases price index rose 5.7% in Q2 (against 3.6% in Q1); the PCE price index 5.1% (against 4.6%) and its core measure 3.4% (against 4.4%). In the euro area, Eurostat’s July 30 preliminary flash estimate shows +0.4% quarter-over-quarter (+0.5% in the EU) and +1.0% year-over-year, after a stable first quarter. Germany, France and Italy each grew 0.2%, Spain 0.7%, Ireland 3.9%. Source: Bureau of Economic Analysis, GDP (Advance Estimate), Q2 2026; Eurostat, preliminary flash estimate, July 30, 2026.

Employment — sharp deceleration and downward revisions. The June jobs report (released July 2) shows +57,000 payrolls against a Dow Jones consensus of 115,000, roughly in line with the average monthly gain over the prior twelve months (36,000). Revisions were negative: April was cut from +179,000 to +148,000 and May from +172,000 to +129,000, 74,000 fewer jobs than previously reported — a reversal of the prior month’s upward revisions. The unemployment rate fell 0.1 point to 4.2%, but the participation rate lost 0.3 point to 61.5%, its lowest since March 2021, and the household survey recorded 507,000 fewer people at work. Average hourly earnings rose 0.3% on the month to $37.64, up 3.5% year-over-year. By sector: professional and business services +36,000, social assistance +25,000, health care +22,000; leisure and hospitality lost 61,000. Weekly initial claims remain low (197,000 for the week ending July 25). Source: BLS, The Employment Situation – June 2026; U.S. Employment and Training Administration via FRED.

Energy and geopolitics — re-escalation and an oil reversal. The June 19 ceasefire did not hold. US strikes resumed in early July, the naval blockade was reimposed mid-month, and attacks on vessels transiting the Strait of Hormuz were reported in late July. Prices followed: dated Brent (EIA spot) fell to $68.53 on July 2 — its low since the conflict began on February 28 — before climbing to $105.32 on July 23 and ending the month at $96.95 on July 31, 37.6% above its June 30 close ($70.46). Dated WTI followed the same path, at $86.16 on July 31. NB: September futures traded well below dated spot at month-end, the market structure reflecting the physical disruption to flows. Source: U.S. Energy Information Administration via FRED (DCOILBRENTEU, DCOILWTICO); news agencies.