The U.S. economy expanded at a sluggish 1.5% pace from April through June as rising imports weighed on growth, while the Federal Reserve left its key interest rate unchanged Wednesday and mortgage rates climbed to their highest level in a year.
Who Pays for the Slowdown
Consumer spending rose, but the people doing the spending are still getting squeezed at every turn. The Commerce Department said growth in U.S. gross domestic product, the nation’s output of goods and services, decelerated from 2.1% in the first three months of 2026 and came in below economists’ expectations. Consumer spending, which accounts for about 70% of U.S. economic activity, increased at a 3.2% annual clip, up from 0.5% in the January-March period. Business investment, excluding housing, rose at an 8.4% pace, down from 10.6% from January through March but still strong, reflecting a surge in investment in artificial intelligence.
The numbers tell a familiar story. The apparatus keeps moving, but ordinary people absorb the shocks. Rising imports weighed on growth, and the central bank’s favored measure of inflation grew more slowly last month, but remained above the central bank’s 2% target. That means the pressure keeps landing where it always does: on households trying to buy food, gas, and shelter without any say in the machinery setting the terms.
Housing, Fuel, and the Price of Waiting
The average long-term U.S. mortgage rate rose for the fourth consecutive week to its highest level in a year, another setback for prospective homebuyers hoping for a break from elevated home loan borrowing costs. The benchmark 30-year fixed-rate mortgage rose to 6.66% from 6.58% last week, mortgage buyer Freddie Mac said Thursday. One year ago, the average rate was 6.72%. Borrowing costs on 15-year fixed-rate mortgages, often sought by borrowers refinancing a home loan, also rose this week. That average rate increased to 6.04% from 5.96% last week. A year ago, it was 5.85%, Freddie Mac said.
Trips to the grocery store and gas station were more painful than they were last year, and rising costs were affecting the decisions of both households and businesses. Americans’ confidence in the economy fell this month as gas prices ticked up along with the fighting between the U.S. and Iran. The Conference Board said Tuesday that its consumer confidence index fell to 90.8 in July from 92.2 in June. That was essentially the same tepid range it had been in since the beginning of the year. In late 2024 and early 2025 the readings were well above 100.
Consumer attitudes had improved modestly in June as gas prices came down to around $3.70 a gallon from more than $4.50 a gallon in late April and early May. But as fighting in the Middle East escalated, the average price for a gallon of regular gas in the U.S. started to rise again. Prices ticked up again overnight to $4.11 per gallon, according to AAA.
The U.S. stock market swung wildly but ended the week with gains. Amazon leapt, Apple sank, and rising oil prices added to worries about inflation already squeezing the bond market. The price for a barrel of Brent crude rose 2.1% to $88.68 after careening between $72 and $102 earlier in July. Higher oil prices pushed the cost for a gallon of regular gasoline to an average of nearly $4.11 across the United States, up from $3.85 a month ago, according to AAA.
What the Central Bank Calls Stability
The Federal Reserve left its key interest rate unchanged Wednesday, although three officials dissented in favor of higher rates as the central bank wrestled with how to deal with persistently high inflation. The Fed’s rate-setting committee reached its decision after two days of deliberations, marking the fifth straight meeting at which the benchmark rate was kept at around 3.6%. Some economists and Wall Street analysts had predicted the Fed would hike its rate by a quarter point. But while the decision to stand pat could be seen as good news for consumers, they might not feel much relief with the average credit card rate still near 20% and mortgage rates the highest since last August.
That’s the trap in plain sight. The people at the top debate fractions of a point over two days, while the people below face nearly 20% credit card rates and home loans that keep climbing out of reach. The committee’s choice may satisfy the language of restraint, but it doesn’t erase the costs already baked into daily life.
Jobs, Layoffs, and the Real-Time Measure of Pressure
U.S. filings for jobless aid in the week ending July 25 rose by 9,000 to 197,000, the Labor Department reported Thursday. The previous week’s figure was revised up by 1,000 to 188,000 but remained the lowest in more than 50 years. Analysts surveyed by FactSet forecast 207,000 new applications. Weekly filings for unemployment benefits are considered representative of layoffs and are close to a real-time indicator of the health of the U.S. job market.
So the official story runs on two tracks at once. Growth slowed, inflation stayed above target, mortgage rates hit a year-high, gas prices climbed again, and jobless claims rose. The institutions keep issuing their numbers, but the burden lands on workers, renters, borrowers, and anyone trying to keep a household afloat while the bosses, the central bank, and the market treat survival like a spreadsheet.