Elevated Stress
The July 2026 Read
The economy is slowing — but it hasn't broken yet.
Elevated economic stress is emerging from fraying consumer demand and persistent inflation, but employment and credit health are anchoring stability. The Fed's restrictive stance is gradually easing as underlying momentum slackens.
StableElevated StressCrisis
Right now the economy is more strained than 7 of the last 11 months — and nowhere near a 2008- or 2020-style break.
12-month recession risk 31%, vs. a normal of about 15%.
How we score this →
Data through Jul 2026 · Refreshed Jul 28, 2026 · Sources: FRED, BEA, Census
CPI Inflation
3.46%
Down sharply but still 70% above target.
Core PCE
3.41%
Up slightly, still well above Fed goal.
Unemployment
4.2%
Low by historical standards, but rising.
GDP Growth
2.10%
Solid but slowing on latest trend.
Fed Funds Rate
3.75%
Unchanged, holding economy steady.
How is the US economy doing right now?
The latest data, explained like you'd explain it to a friend.
Data through Jul 2026 · Updated Jul 28, 2026
What changed
Inflation fell sharply. Headline CPI dropped 0.7 percentage points to 3.46%, but core inflation ticked up 0.09 points to 3.41%, signaling uneven disinflation.
Job growth stalled. Nonfarm payrolls added just 57,000 jobs, down 72,000 from the prior month, marking the weakest hiring in months.
Unemployment dipped. The jobless rate fell to 4.2%, down 0.1 percentage points, even as job creation weakened across the economy.
What it means for you
Your pay is outpacing prices. Wage growth of 3.52% now exceeds both headline and core inflation, giving your paycheck real purchasing power for the first time in months.
Job market is tightening up. Slower hiring and cooling sentiment suggest fewer opportunities and weaker negotiating power for workers seeking new roles.
Mortgage rates stay elevated. With the Fed holding rates steady at 3.75% and 30-year mortgages at 6.58%, borrowing costs remain a headwind for home buyers and refinancers.
What to watch next
Jul29
GDP release. Current growth stands at 2.10%. A slowdown here combined with weak jobs data could force the Fed to cut rates sooner than expected.
Jul31
PCE Inflation report. Watch for core PCE to confirm whether the uptick to 3.41% reflects a genuine reversal or noise. The Fed targets 2% on this measure.
Aug7
Nonfarm Payrolls report. The 57,000 print was weak. A rebound above 150,000 would ease recession fears; another decline would deepen labor market concerns.
What the data is telling you.
Six areas, each scored 0–100 for economic stress. The biggest problem leads.
6.58%
30-Year Mortgage Rate
High Friction
Mortgage rates and tight inventory are making it harder for most people to buy a home right now.
What's behind it: Higher borrowing costs and scarce affordable inventory are squeezing people out of the housing market at a time when their paychecks are barely keeping up with bills. This matters directly if you are saving for a down payment or planning to move because your buying power is shrinking.
The takeaway: Watch whether real disposable income starts to recover or existing home sales pick up again—either signal would show that the market is becoming less of a strain.
▼Easing off recent stress
Median Home Price $411K
Real Disposable Income YoY 0.02%
Personal Savings Rate 3.0%
See the full Housing breakdown →
4.2%
Unemployment Rate
▼ -0.1pp
Watch Zone
Consumer mood is weakening even as people continue to spend.
What's behind it: Households are spending money they don't have right now, either by drawing down savings or taking on debt. This matters because it's not sustainable—when savings run out or people stop borrowing, spending will drop and economic growth will slow.
The takeaway: Watch retail sales over the next few months: if it starts to decline, it signals that the spending boost from credit and depleted savings is ending.
▼Easing off recent stress
Average Hourly Earnings YoY 3.52%
Consumer Sentiment 44.8
Real Disposable Income YoY 0.02%
See the full Consumer breakdown →
7.59M
JOLTS Job Openings
▲ +0.0
Balanced
Worker bargaining power is weakening as job openings fall and hiring slows.
What's behind it: Companies are hiring fewer people and posting fewer jobs, which means you have less ability to shop around or negotiate for better pay. This matters because a tight job market is what gave workers leverage in recent years, and that leverage is now slipping away.
The takeaway: If job openings keep falling faster than hiring picks back up, it signals employers are regaining control and wage growth could stall.
▲Pushing the economy toward strain
Nonfarm Payroll Change 57
Quits Rate 1.9%
Initial Jobless Claims 187K
See the full Labor breakdown →
76.1%
Capacity Utilization
▼ -0.0pp
Slowing
Manufacturing output is weakening even as factories operate near full capacity.
What's behind it: Factories are running near maximum but producing less year-over-year, which means demand for goods is cooling faster than supply can adjust. If you work in manufacturing, retail, or supply chains, this slowdown could ripple into hiring freezes or wage pressure.
The takeaway: Watch job creation in construction and manufacturing over the next few months—if those numbers roll over, it signals the weakness is spreading beyond the factory floor.
▼Easing off recent stress
Industrial Production YoY 1.14%
GDP Growth 2.10%
Fed Funds Rate 3.75%
See the full Industrial breakdown →
3.75%
Fed Funds Rate
Mildly Restrictive
The Federal Reserve's interest rates are now restrictive enough to cool the economy.
What's behind it: You are paying more to borrow money for a mortgage, car, or business loan, while prices for everyday goods remain stuck above where they were before recent inflation. This squeeze matters because higher rates slow job growth and wage gains, making it harder to improve your financial position.
The takeaway: Watch whether wages start falling in real terms or whether companies begin cutting staff—that would signal the Fed is winning the fight but at a real cost.
—Holding steady vs. last read
Real Policy Rate 0.34%
CPI Inflation 3.46%
Core PCE Inflation 3.41%
See the full Monetary breakdown →
2.79%
HY Credit Spread (OAS)
▲ +0.1pp
Healthy
Credit conditions are strengthening as borrowers pay down debt and corporate bond spreads tighten.
What's behind it: People and companies are managing their debt better right now, with fewer missed payments and lower costs to borrow. This matters because it means less risk of a sudden shock from defaults or a credit freeze that could cost you a job or make a mortgage refinance impossible.
The takeaway: Watch credit card delinquencies over the next few months—if they start rising again, it signals households are running out of runway.
—Holding steady vs. last read
Baa-10Y Credit Spread 1.59%
Credit Card Delinquency Rate 2.92%
Consumer Credit Growth 2.10%
See the full Credit breakdown →
Quick answers.
The questions people actually ask, answered from the data above.
Is the US economy in a recession right now?
As of July 2026 the Macro IQ score is 56/100 (elevated stress) — pressure is not the same as contraction. GDP is growing at 2.10% and unemployment is 4.2%. Our model puts 12-month recession risk at 31%, versus a ~15% historical base rate.
What is the current US inflation rate?
CPI inflation is 3.46% year-over-year as of Jun 2026, and core PCE — the measure the Fed actually targets — is 3.41%. The Fed's goal is 2%.
Will the Fed cut interest rates soon?
The Fed's policy rate stands at 3.75%. Whether cuts come depends on inflation returning toward the 2% target — each CPI and PCE release signals the direction.
What is the Macro IQ score?
A 0–100 stress score built from 31 official indicators (FRED, BEA, Census) across six areas of the economy: housing, consumer, labor, monetary policy, industry, and credit. 0 means stable, 100 means crisis. The current read is 56 — elevated stress.