Svmuu News Federal Reserve released a semi-annual report, which noted that the labor market remains generally stable, with “solid” nominal wage growth accompanied by “strong” productivity gains; bank reserves remain in the “ample” range under the Reserve Management Purchase Operation; and long-term inflation expectations are “generally consistent” with the 2% target.Growth in the first quarter of 2026 was driven by high-tech investment and government spending, while labor supply growth slowed due to a decline in immigration and demographic shifts.
In the first half of 2026, external economic activity was sluggish due to headwinds from the Middle East conflict and U.S. tariffs, though this was partially offset by investment in artificial intelligence.Inflation, which had already been strong, accelerated further in the spring. Inflation remained elevated, driven primarily by tariffs, the war in the Middle East, and AI-related factors. The growth rate of the M2 money supply was moderate, broadly in line with typical growth rates of the 2010s, while small businesses and households continued to face a relatively tight credit environment.
The financial system remained “sound and resilient,” with no change in vulnerabilities. Despite high uncertainty stemming from the war in Iran, economic activity continued to expand at a steady pace. Asset values in stocks, corporate debt, and residential real estate were above historical norms. (Jin Shi)