US GDP Growth Hits 2.2% as Inflation Cools

The United States government reported a revised third estimate for Q2 GDP growth of 2.2%, up from a previous 1.5%, driven by increases in government spending, consumer spending, and investment. Recent data from the U.S. Department of Commerce shows consumer prices rose 3.4% in August, falling below economist expectations of 3.7%. Core inflation, the Federal Reserve's preferred gauge, rose 3% year-on-year for August, while monthly prices climbed 0.3%.

Despite the cooling annual figures, inflation remains above the Federal Reserve's 2% target. Governor Michael Barr noted that tariffs and the conflict with Iran have hindered progress toward that goal. In response to these tensions, Donald Trump stated he has no intention of easing sanctions on Iran and suggested the possibility of renewed strikes following the November mid-term elections.

Labor markets showed resilience with ADP private jobs growing by 90,000, exceeding expectations. While the Federal Reserve raised interest rates two weeks prior—the first such increase in three years—investors reacted to the latest inflation and growth data with gains in the S&P 500 and Nasdaq 100, speculating that the central bank might delay further hikes.