Economy

Australia's June 2026 CPI data showed headline inflation falling to 3.8% annually, below both the 4.0–4.1% market consensus and the RBA's own forecast of 4.8% for the quarter, while the trimmed mean held at 3.6%, also undershooting expectations. The softer-than-expected result was driven largely by a 10.9% monthly drop in automotive fuel, while housing costs rose 6.8% annually and services inflation remained firm at 4.0%. Markets responded by pricing out further near-term RBA tightening, with most economists now expecting the cash rate to hold at 4.35% at the August 5 board meeting.

Washington Governor Bob Ferguson signed legislation in April 2026 to terminate LEOFF Plan 1, redirect approximately $3.9 billion of its surplus to state budget accounts, and recreate the fund at 110 percent funding. The state actuary calculates this raises the probability of an unfunded liability emerging by 2045 from 5 percent to 40 percent, while Morningstar DBRS flagged the move as a governance risk with negative credit implications. Moody's and Fitch have already revised Washington's general obligation bond outlook to negative, and a federal class action lawsuit filed by LEOFF 1 retirees is pending in the Western District of Washington.

The May 2026 Case-Shiller National Index reached 335.104, a 1.1% year-over-year nominal gain, but with CPI running at 4.2%, real home prices declined for the twelfth consecutive month. Geographic divergence widened sharply: Chicago led with a 6.9% annual gain while Las Vegas, Seattle, and Denver each fell roughly 1.8–1.9%. The FHFA's concurrent report showed a stronger 2.2% annual gain nationally, a difference explained by its narrower conforming-loan sample that excludes cash and jumbo transactions.

A Reuters survey of approximately 500 economists across 50 economies, conducted through July 27, 2026, found that the five-month-old Middle East conflict has pushed oil prices more than 20% above pre-war levels, lifting inflation forecasts for 39 economies while trimming growth projections for 32. The Eurozone saw the sharpest revision among major blocs, with its 2026 GDP forecast nearly halved from 0.9% to 0.5%, while U.S. growth held at 2.2% partly offset by AI-related capital expenditure. The findings place professional forecaster sentiment in a more pessimistic range than the IMF's 3.0% global growth baseline but less severe than the World Bank's 2.5% projection, illustrating the degree of uncertainty still surrounding the conflict's economic duration.