August 2026 Economic Review: Resilient Growth Meets Slowing Momentum

Each month, Kate Ledford takes a closer look at the economic and market forces shaping the financial landscape. In August, the story was less about whether the economy is growing and more about how much momentum it has left.

From inflation and interest rates to consumer spending, AI-driven investment, and rising energy prices, several competing forces are shaping the outlook. Here’s Kate’s take on what happened in August and what it could mean heading into the months ahead.

U.S. Economy Continues to Expand as Momentum Fades

During August 2026, the U.S. economy continued to expand but showed signs of slowing as businesses and consumers faced persistent inflation, elevated interest rates, and growing uncertainty. The labor market remained relatively resilient, with low jobless claims despite weaker hiring momentum, while consumer confidence softened as higher borrowing costs and gas prices weighed on household budgets.

Inflation and Interest Rates Remain Key Economic Concerns

Inflation remained above the Federal Reserve's 2% target, leading policymakers to signal that future interest rate increases could be necessary. Business investment, particularly in artificial intelligence, continued to support economic growth, although a widening trade deficit and slower consumer spending tempered overall momentum.

Rising Energy Prices Add to Economic Uncertainty

Rising geopolitical tensions disrupted global energy markets, contributing to higher energy prices and increasing economic uncertainty. Oil prices are at $86/barrel.

What to Watch as the Economy Heads Into Fall 2026

August reinforced a familiar theme: the economy is still moving forward, but the path ahead is becoming more complicated. Inflation, interest rates, consumer spending, energy prices, and business investment will remain important factors to watch as we move into the fall.

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