8/29/25: Economic Data Mixed: Growth Up, Housing and Confidence Down

This week provided plenty of economic data for market participants to analyze. Inflation data, second quarter GDP growth, housing data, and consumer sentiment were all on the tape.

The U.S. economy bounced back from the first quarter contraction, according to the BEA on Thursday. Inflation adjusted Gross Domestic Product (GDP) grew at a 3.3% annual rate in the second quarter, up from the initial 3.0% estimate. Personal consumption expenditures and business investments led the upward revisions marking the highest quarterly GDP result since the third quarter of 2023.

July’s inflation data delivered no surprises, with the Personal Consumption Expenditures (PCE) Index matching estimates. Headline PCE rose 0.2% from June and held at 2.6% year-over-year, while core PCE, the Federal Reserve’s preferred gauge, edged up to 2.9% from 2.8% year-over-year. Despite concerns over tariffs, inflation pressures have yet to emerge as durable goods prices declined and services costs drove the modest increase. Muted inflation pressures reinforce the Chandler team’s expectation for a quarter-point rate cut in the near term, followed by another later this year.

Home prices fell for a fourth straight month in June, with the S&P Cotality Case-Shiller 20-City Composite Home Price Index falling 0.25% from May, missing expectations. The decline pulled the annual gain down to 2.1%, the weakest pace since the market turned higher in mid-2023, adding to signs of cooling in the housing market.

Consumer confidence edged lower in August, holding near recent levels as Americans grew more cautious about the labor market. The Conference Board said both its present situation and expectations gauges weakened, with views on current job availability deteriorating for an eighth straight month. Better views of current business conditions helped cushion the decline but concerns about future employment and softer income expectations weighed on sentiment. Still, stronger outlooks for business conditions kept confidence from slipping further.

In other headlines this week, President Trump ordered the removal of Federal Reserve Governor Lisa Cook. The initial market reaction of this decision was muted as the outcome of this action will be determined by the courts.

The U.S. Treasury yield curve steepened this week as investors weighed the prospect of lower short-term rates, a softer dollar, and potential fiscal-policy-driven inflation. The two-year yield fell to 3.62%, while the five-year slipped to 3.69%. The 10-year declined less, ending at 4.22%, widening the 2yr/10yr spread to 60 basis points.

Next week:  S&P Global US Manufacturing PMI, S&P Global US Services PMI, ISM Manufacturing Index, ISM Services Index, JOLTS Report, Factory Orders, Fed Beige Book, ADP Employment Change, Nonfarm Payrolls, Unemployment Rate, Labor Force Participation Rate, Exports/Imports.

© 2025 Chandler Asset Management, Inc. An Independent Registered Investment Adviser. All rights reserved. Data source: Bloomberg, Federal Reserve, and the US Department of Labor. This report is provided for informational purposes only and should not be construed as specific investment or legal advice. The information contained herein was obtained from sources believed to be reliable as of the date of publication, but may become outdated or superseded at any time without notice. Any opinions or views expressed are based on current market conditions and are subject to change. This report may contain forecasts and forward-looking statements which are inherently limited and should not be relied upon as an indicator of future results. Past performance is not indicative of future results. This report is not intended to constitute an offer, solicitation, recommendation, or advice regarding any securities or investment strategy and should not be regarded by recipients as a substitute for the exercise of their own judgment. Fixed income investments are subject to interest rate, credit, and market risk. Interest rate risk: The value of fixed income investments will decline as interest rates rise. Credit risk: the possibility that the borrower may not be able to repay interest and principal. Low-rated bonds generally have to pay higher interest rates to attract investors willing to take on greater risk. Market risk: the bond market, in general, could decline due to economic conditions, especially during periods of rising interest rates. The S&P Cotality Case-Schiller Home Price Index tracks monthly changes in the value of residential real estate and 20 metropolitan regions across the nation.