Economic Update
Market Update: August Highlights
August 2025 Economic Overview
The U.S. economy continues to display resilience, with second‑quarter GDP growth outperforming expectations at 3.3% annualized, reflecting solid consumer spending and robust AI‑driven investments. Inflation has moderated—core measures like the PCE index held steady around 2.6–2.9%—bolstering hopes for a Federal Reserve rate cut in September, now viewed by markets as a high probability. At the same time, consumer sentiment edged lower, with surveys like the University of Michigan and Conference Board showing ongoing caution amid labor market unease and tariff‑driven cost pressures.
Equity markets remain on a strong footing—the S&P 500 reached new all‑time highs, closing above 6,500, backed by solid corporate earnings and AI momentum. Year‑to‑date, the benchmarks have gained roughly 8–10%, driven largely by mega-cap tech names. Even as the tech rally cools, analysts see renewed opportunities in value-oriented sectors such as financials, industrials, and small‑caps. Regions like Europe are also drawing attention with relatively attractive valuations. Broad investor sentiment remains upbeat, though voices like those from MarketWatch—citing Ed Yardeni—caution that further Fed easing could risk overstimulating an already healthy economy.
S&P 500 index can not be invested in directly
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