US Economy Is Fine & The Fed Should Be Turning More Hawkish

I. Macro

The economy's two most important engines of economic growth, consumer spending and business investment, are booming. In Q2-2026 real GDP, consumption expenditures increased 3.3% (saar) and nonresidential fixed investments jumped 8.4%. The headline and core GDP deflators, the most comprehensive measures of economy-wide inflation, rose 4.3% y/y and 3.8% (chart). Fed officials should be turning hawkish.