Annual US inflation held at 3.7% in July — the 65th consecutive month above the Federal Reserve's 2% target — with core inflation (stripping out food and energy) running even hotter at 3.3%. That's not a spike, but it's not the steady cooldown the Fed has been signaling either, and it complicates any near-term case for cutting rates.
Second-quarter GDP held roughly steady, while consumer spending decelerated and effectively flatlined once adjusted for inflation. Personal incomes did outpace inflation, which the Bureau of Labor Statistics reads as a possible setup for stronger spending later in the year — a 'wait and see' framing that's doing a lot of work in an otherwise flat report.
The jobs numbers didn't help the mood: nonfarm payrolls fell by 23,000 in July, and unemployment held at 4.1%. Nothing here is a recession signal on its own. Taken together, though, it's a data set that makes the Fed's next move genuinely hard to call.