US macroeconomic performance has remained solid since the onset of the shock, as illustrated in particular by Q2 growth of +3.8% and +9% (annualized quarterly rate) in consumer spending and private nonresidential investment, respectively.
In the manufacturing sector, business sentiment has gained momentum despite the shock, while the impact of this shock on the services sector has remained very limited. The immediate reaction of household confidence was, however, more negative before beginning to improve, which was nevertheless interrupted in August (latest available data for households’ sentiment on their future personal financial situation). The University of Michigan’s composite indicator continued to deteriorate in September, due to the sharp rise in fuel prices. But declining confidence still does not translate into reduced spending - at least not at the aggregate level.
On the inflation front, the spike immediately following the outbreak of the conflict in Iran was more pronounced than in the months following Russia’s invasion of Ukraine. The decline in June still left inflation at a high level, but its stability in July and August was notable (3.4% y/y), as was the latest - the third consecutive - slight decline in inflation excluding energy in August (2.5% y/y, same rate as in February). Given the existing inflationary pressures, however, inflation is highly likely to resume its upward trend in September.
