The last week of August ended with the U.S. stock market taking a small step back. After a short climb midweek, things cooled off on Friday just before the long holiday weekend. The S&P 500—one of the main indicators of how stocks are doing—briefly crossed a big round number (6,500 points), but it couldn’t hold onto that level.
Prices and the Fed: What’s Going On With Inflation?
A key measure used by the Federal Reserve (America’s central bank) showed that prices are still rising, but not by a lot. The cost of everyday items (excluding gas and food) went up at a 2.9% annual rate in July, the highest in five months. Including gas and food, the rate was a little lower, at 2.6%.
Even with this bump, most experts still believe the Fed will lower interest rates at their next meeting in mid-September. That’s important, because when interest rates drop, it usually helps people borrow more easily, which can support the economy.
The Economy Is Growing—But With Some Caution
The U.S. economy grew more than expected this spring. A revised report showed a 3.3% increase in economic activity from April through June. That’s an improvement from earlier estimates and a positive sign after a weaker start to the year.
However, not all signs are strong. Fewer new homes are being sold, and prices for houses are no longer rising as quickly. Mortgage rates have come down a bit, which may help buyers, but overall the housing market seems a bit shaky.
The job market is another area to watch. Recent reports showed fewer new jobs being added, and earlier numbers were revised lower. This Friday, the government will release a new jobs report for August, which could have a big impact on what happens next.
How Are Businesses Doing?
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