Breaking down the GDP report as U.S. economy slows
Clip: 7/30/2026 | 7m 32sVideo has Closed Captions
Breaking down the GDP report as U.S. economy slows in 2nd quarter
Breaking down the GDP report as U.S. economy slows
Clip: 7/30/2026 | 7m 32sVideo has Closed Captions
Breaking down the GDP report as U.S. economy slows in 2nd quarter
In a sign that the war in Iran may be weighing on economic growth, the U.S. economy saw a slowdown in the second quarter. That’s according to a new report today from the Commerce Department. It all comes after the Federal Reserve kept interest rates unchanged, despite three dissents arguing in favor of a rate increase. Amna Nawaz discussed more with Greg Ip of The Wall Street Journal
7/30/2026
Problems playing video? | Closed Captioning Feedback
Problems playing video? | Closed Captioning Feedback
Major corporate funding for the PBS News Hour is provided by BDO, BNSF, Consumer Cellular, American Cruise Lines, and Raymond James. Funding for the PBS NewsHour Weekend is provided by
Breaking down the GDP report as U.S. economy slows
Clip: 7/30/2026 | 7m 32sVideo has Closed Captions
In a sign that the war in Iran may be weighing on economic growth, the U.S. economy saw a slowdown in the second quarter. That’s according to a new report today from the Commerce Department. It all comes after the Federal Reserve kept interest rates unchanged, despite three dissents arguing in favor of a rate increase. Amna Nawaz discussed more with Greg Ip of The Wall Street Journal
7/30/2026
Problems playing video? | Closed Captioning Feedback
Genre
- News and Public Affairs
Follow Us
Where to Watch PBS News Hour
PBS News Hour is available to stream on pbs.org and the PBS app
- Download the PBS app
- Check Your Local Broadcast Schedule
Providing Support for PBS.org
Learn Moreabout PBS online sponsorship
Open in new tab
AMNA NAWAZ: Meanwhile, here at home, in a sign that the war may be weighing on economic growth, the U.S
economy saw a slowdown in the second quarter, expanding at a lower-than-expected rate of 1.5 percent
That’s according to a new report today from the Commerce Department
It all comes after the Federal Reserve voted yesterday to keep interest rates unchanged, despite three dissents, all arguing in favor of a rate increase
To help make sense of it all, we’re joined now by Greg Ip
He is chief economics commentator at The Wall Street Journal
So, Greg, I’m going to ask you to just pick up on what we heard from Ian Ralby there when it comes to the impact of the war in Iran on the U.S
economy
If we’re moving from a two-choke point crisis to a three-choke point crisis, more disruptions to oil supplies and global trade, broadly speaking, what’s ahead for the U.S
economy?
GREG IP, The Wall Street Journal: Well, what is surprising is that, despite all the turmoil that the war has created for the U.S
and global economy, including very high gasoline prices and interest rates, is that the American consumer seems to be shrugging it off
Now, we did hear that growth in the second quarter came in low at 1.5 percent
But that actually — if you look under the hood, things were a lot stronger, very, very strong growth in consumer spending, especially on durable goods
The reason growth came in low was that a lot of that spending was on imports and/or came out of inventories
So it didn’t lead to higher domestic production
So that tells us, at least thus far, the impact of higher energy prices has been pretty mild for the consumer
Now, that might be for a couple of reasons
One is that there were a lot of tax refunds in the second quarter
That probably helped
The other is that we have this A.I
boom that’s still going on, and that has lifted the stock market
So people who are wealthy and have a lot of stock market wealth are still spending a lot
Looking ahead, I do think that the pressure of those higher interest rates, the end of tax refunds, and possibly some flattening of the stock market means that the consumer could struggle a bit more
AMNA NAWAZ: In terms of how people can look at this, because there is some confusion, let’s just revisit some of those highlights from the GDP report today
We did say there that the U.S
GDP grew at 1.5 annually in the second quarter, lower than expected, down from 2.1 percent annual growth in the first quarter
At the same time, consumer spending, as you mentioned, ticked up
That’s now 3.2 percent annually
That’s up from just 0.5 percent in the first quarter
There seem to be a lot of mixed signals here
So what do you take away from all of that?
GREG IP: So these numbers can be very confusing, partly because of the fact that, in any given quarter, you can have people spending money, and they might be spending it on stuff that we make here at home, or they may be spending it on stuff that we import or stuff that was already in inventory
And it looks like, in the second quarter, a lot of that spending was on stuff that we imported or was already in inventory
That’s why the GDP number seemed low
The production number seemed low, but spending was very strong
I would expect that some of that spending would start to flow through to domestic production in coming months
So the underlying picture here is still of a resilient economy and a pretty healthy consumer
But, again, we have to look at the fact that going forward with energy prices and interest rates still pretty high, that may not last
AMNA NAWAZ: Well, tell me more about that, because when every time we talk about resilience, we hear from folks who say everyday Americans are experiencing this economy in a different way
You look at some of the big picture numbers here, and 30-year mortgages have climbed back up to their highest rate in a year
Gas is now above $4 a gallon at the national average again
Grocery costs are up 33 percent since 2019
What does all that mean for the average American and how they’re experiencing this economy?
GREG IP: Well, the average American is certainly still not able to get over the fact that prices, as we’re saying, are up 25 to 30 percent from four or five years ago
They keep hoping that prices will go down
It doesn’t happen because typically prices don’t go down
That’s called deflation
It’s very rare
So you have that sort of like level of unhappiness with the inflation that’s been there honestly for quite a few years now, perhaps disappointment that President Trump, who campaigned on a promise to bring prices down, has not succeeded and has in fact presided over a big increase in some key prices, such as for beef and gasoline, some of it his doing, some of it not his doing
And then there’s the fact that you the averages conceal what’s going on beneath the surface
As I was saying, the fact that the stock market has done so well means that people who are very affluent have been able to spend a lot, even though overall incomes aren’t growing up a lot
But that’s not true of most of the typical family who doesn’t have that biggest stock portfolio
So those healthy averages are hiding what I think are probably significant disparities between people at the top and people at the bottom
And the message we’re hearing is that the median consumer is not doing nearly as well as some of those average figures, which are being basically buoyed by stock market wealth, are telling us
AMNA NAWAZ: You mentioned inflation
That brings me to the Federal Reserve and, as we reported earlier, the decision to hold rates steady that was announced yesterday under their new chair, Kevin Warsh, who also we should remind folks came into this role promising a new regime at the Fed, a new way of communicating as well
Here’s part of what he had to say yesterday
Take a listen
KEVIN WARSH, Federal Reserve Chairman: Market participants are learning to play the ball, not the referee
And market prices will continue to respond in the direction and magnitude they see fit
This is, in my view, a change for the better
I understand the desire for rolling forecasts and commentary from this committee
But, for our part, we need to observe market reaction to developments, direct and unfiltered
AMNA NAWAZ: Greg, help us understand what Warsh is saying here and what all this might mean for the next Fed meeting and their decision ahead
GREG IP: What Warsh is basically saying is that he believes that, in the past, Fed officials have commented too much on the data and what it might mean for the change in interest rates in coming months
He believes that interferes with getting a pure, unfiltered view of what the markets think about the data
So when he says play the ball, not the referee, he’s saying have the markets respond just to the data, not try and predict what he, the Fed chairman, is going to do
But there’s a problem with that analogy, which is that he may think that the Fed is a neutral umpire here, but it’s not
It’s a player in the game
It’s the most important player
The Fed sets the short-term interest rate
That is an absolutely central factor in market pricing and in the economy
Bond investors are always trying to figure out not just what the data means, but what does it mean for what the Fed is going to do to short-term interest rates?
That’s why they hope and expect the Fed will give them its own view on what some of this data means
If Warsh is going to stay out of that business and never explain to the market what any of this data means, it’s going to be confusing
So, for example, this week, he said once again, the Fed is absolutely dedicated to getting inflation down, which is right now too high
But he didn’t raise interest rates
And so the markets and investors and the public want to know, well, why?
If you’re serious about that, why didn’t you raise interest rates?
And he didn’t answer that question
And so they’re jumping to conclusions
They’re saying he talks a big talk, but he’s really not that serious about that
And you can see in the markets questions beginning to arise about the credibility of this Fed chair to really get inflation down
AMNA NAWAZ: Greg Ip of The Wall Street Journal, great to speak with you, as always
Thank you
GREG IP: Thanks for having me
New
Blanche vote on hold over anti-weaponization fund opposition
Video has Closed Captions
Blanche’s AG nomination on hold over opposition to DOJ’s ‘anti-weaponization fund’ (5m 55s)
New
How music has helped tell America’s story
Video has Closed Captions
How music has helped tell America’s story from the very beginning (4m 48s)
New
How shipping risks from Ukraine and Iran wars are converging
Video has Closed Captions
How shipping risks from Ukraine and Iran wars are converging (6m 26s)
New
Missouri couple murdered in Guatemala after deportation
Video has Closed Captions
Missouri couple murdered in Guatemala after husband was deported (6m 22s)
New
News Wrap: Russian drone, missile attack kills 10 in Ukraine
Video has Closed Captions
News Wrap: Russian drone and missile attack kills 10 in Ukraine (5m 25s)
New
Scholars urge Congress to adopt proportional representation
Video has Closed Captions
Group urges Congress to adopt proportional representation to end redistricting battles (6m 21s)
New
U.S. and Iran strikes intensify as war opens new fronts
Video has Closed Captions
U.S. and Iran strikes intensify as war opens new fronts (3m 3s)
New
Violence surges in West Bank as settlers escalate attacks
Video has Closed Captions
Violence surges in West Bank as Israeli settlers escalate attacks on Palestinians (6m 43s)
Providing Support for PBS.org
Learn Moreabout PBS online sponsorship
Support for PBS provided by:
Major corporate funding for the PBS News Hour is provided by BDO, BNSF, Consumer Cellular, American Cruise Lines, and Raymond James. Funding for the PBS NewsHour Weekend is provided by
