{"id":72420,"date":"2026-09-30T09:08:22","date_gmt":"2026-09-30T13:08:22","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/us-economic-growth-revised-upward-to-2-2-as-inflation-cools-in-august\/72420\/"},"modified":"2026-09-30T09:08:22","modified_gmt":"2026-09-30T13:08:22","slug":"us-economic-growth-revised-upward-to-2-2-as-inflation-cools-in-august","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/us-economic-growth-revised-upward-to-2-2-as-inflation-cools-in-august\/72420\/","title":{"rendered":"US Economic Growth Revised Upward to 2.2% as Inflation Cools in August"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>US Q2 GDP growth was finalized at 2.2%<\/strong>, a significant upward revision from the previous 1.5% estimate, driven by robust consumer spending and business investment.<\/li>\n<li><strong>Core PCE inflation cooled to 3.0% year-over-year in August<\/strong>, coming in below analyst expectations and providing the Federal Reserve with more room to maneuver on interest rates.<\/li>\n<li><strong>Private sector hiring rebounded in September with 90,000 new jobs<\/strong>, according to the ADP National Employment Report, surpassing the consensus estimate of 75,000.<\/li>\n<li><strong>Volkswagen (<a href=\"\/stock\/VOW3\">VOW3<\/a>) announced plans to terminate several collective bargaining agreements<\/strong> by year-end, signaling a major labor confrontation as the automaker seeks to slash costs in Germany.<\/li>\n<li><strong>Eli Lilly (<a href=\"\/stock\/LLY\">LLY<\/a>) reported positive Phase 3b results for Ebglyss<\/strong>, with the drug meeting all primary and secondary endpoints for treating moderate-to-severe hand and foot atopic dermatitis.<\/li>\n<\/ul>\n<h2>US Economic Resilience Confirmed by Final Q2 GDP Revision<\/h2>\n<p>The <strong>U.S. Bureau of Economic Analysis (BEA)<\/strong> reported on Wednesday that the American economy grew at an annualized rate of <strong>2.2% in the second quarter of 2026<\/strong>. This final revision is a notable jump from the <strong>1.5%<\/strong> figure reported in the second estimate, reflecting stronger-than-anticipated <strong>consumer spending (3.8%)<\/strong> and <strong>business investment (9.0%)<\/strong>.<\/p>\n<p>Despite ongoing regional conflicts and energy price volatility, the underlying demand remains firm. <strong>Real final sales to private domestic purchasers<\/strong>, a key metric for domestic demand, rose by <strong>4.6%<\/strong>, suggesting that the private sector continues to drive expansion even as government spending and trade fluctuations create headwinds.<\/p>\n<h2>Inflation Eases as Core PCE Hits 3.0%<\/h2>\n<p>The <strong>Core Personal Consumption Expenditures (PCE) Price Index<\/strong>, the Federal Reserve&#39;s preferred inflation gauge, rose <strong>0.2% month-over-month in August<\/strong>. On an annual basis, core inflation slowed to <strong>3.0%<\/strong>, down from <strong>3.3%<\/strong> in July and better than the <strong>3.3%<\/strong> forecast by economists.<\/p>\n<p>Headline inflation also showed signs of moderation, with the <strong>PCE Price Index<\/strong> rising <strong>0.3% for the month<\/strong> and <strong>3.4% annually<\/strong>. Following the report, market participants began to <strong>pare bets on an October interest rate hike<\/strong>, as the data suggests the disinflationary trend remains intact despite higher energy costs linked to Middle Eastern tensions.<\/p>\n<h2>Labor Market Rebound and Corporate Developments<\/h2>\n<p>The labor market showed renewed strength as <strong>ADP reported 90,000 private-sector jobs<\/strong> added in September. This follows a weak August reading of <strong>36,000 (revised down from 38,000)<\/strong> and was led by gains in education, health services, and hospitality. <em>While hiring accelerated, pay growth remained stable, with base pay for job-stayers rising 3.0% year-over-year.<\/em><\/p>\n<p>In the corporate sector, <strong>Volkswagen (<a href=\"\/stock\/VOW3\">VOW3<\/a>)<\/strong> is preparing for a &quot;heated confrontation&quot; with unions after invoking a review clause to terminate collective agreements covering roughly <strong>100,000 workers<\/strong>. Meanwhile, <strong>Eli Lilly (<a href=\"\/stock\/LLY\">LLY<\/a>)<\/strong> shares remained in focus after its drug <strong>Ebglyss<\/strong> achieved <strong>53% skin clearance<\/strong> in patients with hand and foot eczema, compared to <strong>27% for the placebo group<\/strong>, paving the way for a potential FDA label update.<\/p>\n<h2>Geopolitical and Trade Outlook<\/h2>\n<p>On the international front, <strong>Qatari mediators<\/strong> have reportedly conveyed a new proposal to the <strong>U.S. and Iran<\/strong> in an effort to end the eight-month-old conflict. While <strong>Iranian Foreign Minister Abbas Araghchi<\/strong> confirmed receiving a response from Washington, sources indicate a &quot;diplomatic stalemate&quot; persists, with both sides remaining far apart on nuclear concessions and the reopening of the <strong>Strait of Hormuz<\/strong>.<\/p>\n<p>In trade, the <strong>EU and Canada<\/strong> are exploring deeper technology and energy links, highlighted by <strong>LNG Canada&#39;s final investment decision<\/strong> on its <strong>$33 billion Phase 2 expansion<\/strong>. This project is expected to double export capacity to <strong>28 million metric tons per year<\/strong>, providing a critical alternative energy source for European allies looking to diversify away from Middle Eastern supplies.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways US Q2 GDP growth was finalized at 2.2%, a significant upward revision from the previous 1.5% estimate, driven 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