The Treasury Borrowing Advisory Committee released an economic assessment noting a resilient U.S. economy driven by robust business investment and steady consumption, with energy price shocks from the Iran conflict mitigated by record domestic oil production. The statement highlights strong private domestic demand and an improving labor market.

Key points:
- Real GDP: 1.5% annualized in Q2 2026; private domestic final purchases surged 3.9%, fastest in over three years
- Personal Consumption: Accelerated to 3.2% (from 0.5%), adding 2.1 pp, led by goods and services
- Business Fixed Investment: rose 8.4%; equipment investment +15.2% (industrial, transportation, IT); intellectual property +8.8%; data centers continued double-digit growth
- Residential Investment: rose 1.5%, first increase in six quarters, reflecting single-family structures and brokers’ commissions
- Net Exports: subtracted 1.0 pp; petroleum exports surged while capital goods imports remained strong
- Labor Markets: 334K net jobs added in Q2; 111K/month average; unemployment stable at 4.3% (4.2% in June); job openings rose to 7.6M, vacancies per unemployed at 1.0
- Wages: average hourly earnings +3.5% y/y; real AHE +0.1%; median usual weekly earnings +4.4%; 25th percentile +5.5%; Employment Cost Index +3.3% y/y
- Inflation: headline CPI 3.5% y/y in June, but monthly average slowed to 0.2% in Q2; energy prices spiked then retreated post-ceasefire; core CPI 2.6% y/y; core PCE 3.3%
- Energy Resilience: US crude production +350K bpd in 2025, further gains in 2026; world’s largest producer and net exporter of oil and natural gas, buffering Hormuz disruptions
- Productivity & AI: nonfarm business productivity +2.8% y/y through Q1; AI investment accounted for ~30% of GDP growth in 2025 and sustained in 2026
- Fiscal Policy: Working Family Tax Cuts spurred BFI through full expensing, bonus depreciation, interest deductibility; estimated to lift GDP 4.6–4.9% over four years
- Risks: geopolitical/inflation uncertainty, low job turnover amplifying shocks; recession probability fell to 25% in WSJ survey