1. US Economy Rebounds With 3% GDP Growth After Trade Reversal — Inflation-adjusted gross domestic product, which measures the value of goods and services produced in the US, increased an annualized 3% after shrinking at a 0.5% rate in the previous period, according to preliminary government reported. Beyond the recent tariff-related swings, second-quarter economic activity was more moderate. Consumer spending — which accounts for two-thirds of GDP — advanced 1.4%, marking the tamest growth in consecutive quarters since the pandemic. Business investment growth cooled. Because swings in trade and inventories have been distorting overall GDP this year, economists have been paying even more attention to final sales to private domestic purchasers, a narrower metric of demand. This measure rose at a 1.2% pace in the second quarter, the slowest since the end of 2022.
2. Trump Hits India With 25% Tariff, Threatens More Over Russia — President Donald Trump said he would impose a tariff rate of 25% on India’s exports to the US starting on Aug. 1 and suggested he would add an additional penalty over the country’s energy purchases from Russia. Trump’s announcement comes ahead of the Aug. 1 deadline he set for imposing new import taxes on dozens of trading partners. The levies dash New Delhi’s hopes of preferential treatment over its Asian peers, who have secured tariffs ranging from 15% to 20%. India had been among the first to engage Washington in talks, following Prime Minister Narendra Modi’s high-profile White House visit in February.
3. Fed Holds Rates Steady, but Two Officials Back a Cut — The Federal Reserve held rates steady for a fifth straight meeting Wednesday but faced rare dissents from two officials seeking an immediate cut. The decision followed a period of intense political pressure on Fed Chair Jerome Powell by the White House to lower interest rates. Officials maintained their benchmark policy rate in a range between 4.25% and 4.5% as they weighed how importers, retailers and consumers will split the costs of higher duties on imports. Powell said the Fed was committed to making sure any one-time increases in prices didn’t lead to more-persistent inflation. “We want to do that efficiently, though—efficiently,” Powell said. “If you move too soon, you wind up maybe not getting inflation all the way fixed and you have to come back [and raise rates]. That’s inefficient. If you move too late, you might do unnecessary damage to the labor market.”
Dissents from two Fed governors and Trump appointees, Michelle Bowman and Christopher Waller, offered limited insight into the Fed’s coming moves. Both favored reducing rates by a quarter-point on Wednesday. Bowman’s dissent marked a notable shift for someone who had been a leading advocate for tighter policy in recent years and who in September supported a smaller rate reduction than her colleagues.
4. Core PCE Inflation Runs a Touch Hot, Dimming Hopes for September Rate Cut — The core personal consumption expenditures price index, which strips out the cost of food and energy, rose 0.3% on the month and 2.8% from a year earlier, the Bureau of Economic Analysis said. That topped FactSet estimates for a 0.29% monthly and 2.7% annual gain. Headline PCE rose 0.3% on the month and 2.6% from a year earlier, leaving the annual metric at its highest level since February. Consensus estimates were for respective rates of 0.23% and 2.5%.
The stronger-than-expected result complicates the Fed’s path to rate cuts. When officials held interest rates steady this week, they said they wanted to see more evidence that inflation is sustainably moving toward the bank’s 2% target. This report could delay that.
5. US Notches Worst Three Months for Jobs Growth Since Pandemic — Payrolls increased 73,000 in July after the prior two months were revised down by nearly 260,000, according to a Bureau of Labor Statistics report out Friday. In the last three months, employment growth has averaged a paltry 35,000 — the worst since the pandemic. The report caps a week of high-profile data that show underlying economic momentum is cooling and inflation progress is stagnating, reasons why the Federal Reserve chose to keep interest rates unchanged again in a divided decision. Chair Jerome Powell maintained that the labor market is solid and the central bank needs to be wary of inflation risks — especially with President Donald Trump’s latest round of tariffs.

The week ahead — Economic data from Econoday.com: