The US economy remains buoyant, despite a slight increase in the consumer price index, from 3.0 percent in June to 3.2 percent in July and even though core inflation nudged only slightly downward from 4.8 to 4.7 percent during that time. Senior partner Sven Smit and colleagues explain that although consumer spending has contracted compared with the previous year, consumer confidence has reached its highest level since July 2021.
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A vertical bar chart shows positive and negative change in the consumer price index for 4 drivers—food, energy, goods, and services—in the US, Jan 2019 to Aug 2023. From Jan 2019 to Feb 2021, change in the index is between 0.5–2.0%. By Mar 2021, the index begins to increase, peaking at ~9% in June 2022, driven by energy, goods, and services first, then also by food. The index reduced each month thereafter to ~3.2% in Aug 2023, with services as the leading driver.
Source: US Bureau of Labor Statistics; McKinsey Global Economics Intelligence analysis.
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To read the article, see “Global Economics Intelligence executive summary, August 2023,” September 20, 2023.