U.S. Economy Faces New Risks From Iran Conflict

The U.S. economy has shown resilience despite facing elevated inflation and global energy shocks, but it's now confronted with new risks from Iran and potential rate increases by the Federal Reserve.

The latest data shows that the economy grew at a 1.5% pace in the second quarter, down from 2.1% in the first three months of the year.

Consumer spending remains strong, climbing at a 3.2% pace, while AI-fueled business spending increased 8.4% in the second quarter.

Hiring has picked up this year, with employers adding an average of 92,000 jobs per month compared to less than 10,000 last year, but renewed fighting in Iran poses a significant threat to inflation and economic growth.

Oil prices have risen due to the conflict, pushing gas prices over $4 per gallon. The prolonged stretch of elevated costs has put stress on household budgets and increased the chances that the Federal Reserve may need to raise interest rates later this year.