Global Data Watch

Research evidence excerpt

J P M O R G A N

Global Economic Research

14 August 2026

Global Data Watch

Consumer reliance has sustained the expansion, now jobs need to pick up

Soft July data reduce odds of Fed Sep hike, still see hike by year-end

Solid 2Q GDP in Western Europe with firming surveys for 3Q

Economic and Policy Research

Next week: G4 Aug flash PMIs, China Jul activity, Riksbank hold

Bruce Kasman

Whooaa, we’re half way there

Incoming 2Q26 GDP reports highlight remarkable consumer strength through the

energy shock (Figure 1). Over the prior year, Western European and US households

have responded to little in real income gains by lowering personal savings rates.

We estimate that G4 saving rates have fallen roughly 1.6%-pts since mid-2025,

sustaining consumer spending growth of equal magnitude. Last quarter’s 2%ar

DM consumption gain was particularly impressive in the face of an energy price

shock that compressed real incomes by 0.8%ar. This resilience has boosted DM

nominal GDP by roughly 5% over the past four quarters, which in turn is generating

a surge in corporate profits and reinforcing supportive financial conditions. The

resulting impulse to business spending and sentiment at midyear bolsters

confidence in our above-potential 2H26 global growth forecast. We look for this

view to be supported by a consolidation in next week’s August flash PMIs which

would align with above-potential DM growth.

Although the latest disappointing data from the US are a reminder that expansions

do not move in a straight line, we maintain our outlook for a cyclical lift to abovetrend growth. Central to this call is a broadening in business spending to include

a pickup in hiring. Consumers have spent on wealth gains and hope that the income

slide will be reversed. Notwithstanding the disappointing US July employment and

retail sales reports, a tentative pickup in DM job growth is underway (Figure 2).

Our forecast looks for a rebound in business sentiment to lift job growth towards

a 1%ar and stabilize wage inflation in 2H26.

Combined with the fading energy shock that lowers inflation, DM household

purchasing power should accelerate from a 1%ar contraction last quarter to a

…