Catching Up on the US Economy

The US economy is showing resilience despite the Iran war, with GDP growth at 2% and a stabilizing labor market. This environment likely keeps the Federal Reserve on hold until 2027 as core inflation remains contained.

Key Takeaways

• 1.The US economy shows resilient growth (~2%) despite the impact of the ongoing Iran war, which has primarily affected headline inflation rather than core metrics.
• 2.The Federal Reserve is expected to maintain an extended hold on interest rates into 2027, as core inflation remains relatively contained below 3%.
• 3.Consumer spending remains supported by a 'cushion' of higher tax refunds (~$50bn more than in 2025), which offsets the spike in nominal gasoline prices.

Table of Contents

• Labour market shows further signs of stabilisation
• Consumers continuing to spend
• GDP bounces back despite downside surprise
• Inflation
• Conclusion
• Macro Research advanced tools
• Red Mount Analytics

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