{"id":244675,"date":"2026-06-22T10:46:29","date_gmt":"2026-06-22T14:46:29","guid":{"rendered":"https:\/\/ibkrcampus.com\/campus\/?p=244675"},"modified":"2026-06-23T05:05:03","modified_gmt":"2026-06-23T09:05:03","slug":"economic-update-week-of-june-22-2026","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/economic-update-week-of-june-22-2026\/","title":{"rendered":"Economic Update: Week of June 22, 2026"},"content":{"rendered":"\n

Growth<\/h2>\n\n\n\n

The U.S. economy grew 1.6% SAAR in 1Q26 as a slowdown in consumer spending was offset by stronger business fixed investment. Consumer spending rose 1.4% while business fixed investment rose 10.4% as spending on equipment and IP products surged due to the AI buildout. Increased business spending also caused imports to spike, and net exports removed 1.3ppts from growth. Government spending rose 4.4% off a low base due to the government shutdown. Real final sales to private domestic purchasers rose 2.4% after a 1.8% gain in 4Q25, suggesting that underlying economic momentum held strong despite challenges materializing late in the quarter.<\/p>\n\n\n\n

Jobs<\/h2>\n\n\n\n

The May Jobs Report was solid. Payrolls rose +172k, above the +105k consensus expectation, and the prior two months were revised up by a combined +122k, making three straight months of solid job growth. The government added an outsized +52k, almost all of it local in categories like public works and parks. Hiring was reasonably broad, but leisure and hospitality and health care did most of the lifting. Even with the increase in hiring activity, wage growth was tame at +0.3% over the month and +3.4% for the year. Overall, the report leads us to believe the labor market is improving without stoking wage inflation.<\/p>\n\n\n\n

Profits<\/h2>\n\n\n\n

The 1Q26 earnings season is coming to a close. With 95% of market cap reporting, consensus is currently projecting EPS growth of 26.9% y\/y, up from the quarter-end estimate of 12.1%. Looking at sectors, technology is the largest contributor, on track to drive 52% of this quarter’s y\/y EPS growth. However, the health care sector is a meaningful drag as companies continue to contend with cost inflation. Despite the conflict in Iran, estimates for the full year have moved higher, driven by AI and the boost to energy earnings from higher oil prices.<\/p>\n\n\n\n

Inflation<\/h2>\n\n\n\n

May CPI re-accelerated, with headline inflation up 0.5% m\/m and 4.2% y\/y, driven largely by energy. The energy index rose 3.9% m\/m and accounted for over 60% of the monthly increase, led by higher gasoline prices though electricity inflation cooled versus April. Food rose 0.2% m\/m and shelter rose 0.3% m\/m, with shelter cooling from April as hotel costs normalized. Motor vehicle insurance fell 1.7%, a notable pocket of disinflation. Looking ahead, if gasoline prices ease and shelter inflation remains modest, inflation should move back onto a path toward 2%.<\/p>\n\n\n\n

NEW THIS WEEK<\/p>\n\n\n\n

Rates<\/h2>\n\n\n\n

At the June FOMC meeting, the FOMC voted to hold the federal funds rate steady at a range of 3.5% to 3.75%. In his first meeting as Chair, Kevin Warsh delivered a unanimous decision and a materially shorter statement that stripped out the prior reaction function and forward guidance while fully removing the easing-bias language on \u201cthe extent and timing of additional adjustment.\u201d During the press conference, Warsh announced five task forces, most notably on the frequency and type of Fed communication, while reiterating he does not foresee any change to the Fed\u2019s 2% inflation target. Moving forward, the Fed is likely to remain on hold as the committee appears comfortable remaining patient despite inflation still running above target. However, the type and frequency of communication from the Fed could immediately change under Warsh as Chair.<\/p>\n\n\n\n

Risks<\/h2>\n\n\n\n