Exploring Economic Indicators: GDP & the Fed’s Preferred Inflation Gauge

Economic indicators are released every week to provide insight into the overall health and performance of an economy. They serve as essential tools for policymakers, advisors, investors, and businesses. That’s because they allow them to make informed decisions regarding business strategies and financial markets. In the week ending July 25, the SPDR S&P 500 ETF Trust (SPY) fell 2.58%. The Invesco S&P 500® Equal Weight ETF (RSP) was down 1.29%.

This article examines two important economic releases from the past week: Q2 gross domestic product (GDP) and the personal consumption expenditures (PCE) price index. That latter is also known as the Fed’s preferred inflation gauge. These indicators provide insights into the country’s economic landscape. They particularly focus on consumption and its role in economic growth.

Gross Domestic Product (GDP)

The U.S. economy grew at a stronger-than-anticipated rate in the second quarter, according to the advance estimate for Q2 2024 Gross Domestic Product (GDP). The economy expanded at a rate of 2.8%. That’s twice as fast as the 1.4% growth in Q1 and well above the 2.0% growth forecast. The economy has now expanded for two consecutive years as inflation has cooled. That is boosting hopes that a “soft landing” can be achieved.GDP