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1h ago

U.S. Economy Slides Toward Stagflation as Inflation Persists, Hiring Slows

Persistent inflation pressures force the Fed into a difficult trade-off between raising rates to contain prices or risking a further growth slowdown

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A trader reacts near the end of the day on the floor of the New York Stock Exchange in New York
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Overview

  • June PCE inflation rose 2.6% year-over-year, exceeding forecasts and remaining above the Fed’s 2% target.
  • U.S. employers added only 73,000 jobs in July, falling short of the 100,000 economists expected and signaling labor-market weakness.
  • The ISM services price index climbed to 69.9% in July, its highest reading since October 2022 and marking 98 straight months of service-sector inflation.
  • Initial jobless claims jumped to 226,000 in the week ending August 2, topping projections and pointing to rising unemployment risks.
  • Tariffs near Smoot-Hawley levels and stricter immigration enforcement have raised business costs and reduced labor supply, fueling ongoing inflationary pressures.