The Commerce Department's report revealed that the U.S. gross domestic product (GDP) increased by only 1.5% from April to June, falling short of the 1.8% growth anticipated by economists.
This slowdown was attributed mainly to a decline in federal government spending and inventories, despite strong personal spending, which rose by 2.1%, and a robust 3.9% increase in final sales to private domestic purchasers.
On the inflation front, the personal consumption expenditures (PCE) price index showed a slight monthly decrease of 0.1%, but the annual inflation rate remained at 3.7%, well above the Federal Reserve's 2% target. Core PCE, which excludes food and energy, increased by 0.1% monthly and 3.3% annually, aligning with expectations.
The Federal Reserve's recent decision to maintain its benchmark borrowing rate between 3.5% and 3.75% reflects ongoing concerns about inflation, particularly in light of geopolitical tensions affecting energy prices.
Despite the mixed economic signals, stock market futures reacted positively, while Treasury yields rose sharply, indicating investor sentiment may be cautiously optimistic about future growth