Economy

Fed Chair Kevin Warsh used his August 28 Jackson Hole speech to identify above-target inflation as the Fed's primary concern, citing a 12-month PCE of 3.7% and a six-month reading of 4.1%, while explicitly declining to signal a rate move or timeline for the September 15-16 FOMC meeting. Warsh argued against mechanical forward guidance, stating the Fed's understanding is not precise enough for a Taylor-rule-style reaction function. Markets responded with Treasury yields rising and rate-hike odds for September climbing from roughly 35% to above 55%, though no Fed decision was established.

The University of Michigan's final August 2026 consumer sentiment index landed at 51.7, down 11.2% from August 2025 and 6.3% from July, with declines recorded across all political and demographic groups. Year-ahead inflation expectations eased slightly to 4.0% from July's 4.2% but remain above every 2024 reading, while long-run expectations held at 3.3% for a third straight month. The steepest sentiment drops were concentrated among Republicans, older consumers, and households without stock holdings, groups the survey characterizes as least able to absorb rising living costs.

The Bureau of Labor Statistics released its preliminary benchmark revision on August 28, 2026, finding total nonfarm employment for March 2026 overstated by 79,000 jobs, with private sector payrolls revised down by 178,000. The revision reduces average monthly job growth over the prior 12 months from roughly 17,600 to approximately 11,000. Official published employment data will remain unadjusted until the final benchmark is incorporated into the January 2027 Employment Situation report in February 2027.

Canada's real GDP expanded 0.8% quarter-over-quarter in Q2 2026, a 3.3% annualized rate, with exports rising 3.6% — the largest quarterly increase since Q1 2023 — and household consumption up 0.8%. Growth held despite a $17 billion inventory drawdown that subtracted 1.3 percentage points from the headline figure. Real GDP per capita also rose 1.0% as Canada's population declined for a third consecutive quarter, and disposable income grew faster than spending, pushing the household saving rate to 3.7%.

Bank of England Governor Andrew Bailey said on August 28 that second-round inflation effects in the UK remain subdued, crediting a softening labour market with limiting wage bargaining pressure, and indicated the Bank can monitor conditions rather than act immediately. The MPC, which voted 6–3 to hold Bank Rate at 3.75% in July, faces its next decision on September 17, with CPI already ticking up to 2.9% in July and key labour and inflation data due on September 15 and 16. Those two data releases will give policymakers their last substantive read on wages and prices before the vote.