The largest part of the U.S. economy grew in August at its fastest pace in six months. That gain occurred despite higher inflation and a new round of White House tariffs. The data suggests the six-year-old expansion still has room to run.
Service-sector activity, which covers everything from healthcare to finance, drove the acceleration. Business owners reported a steady uptick in new orders and overall demand. The sector’s growth index climbed to its highest level since February.
Trade tensions remain a concern for many companies. Tariffs on imported goods have raised costs for some firms, particularly in manufacturing and retail. So far, those pressures have not triggered a broad slowdown in service industries.
The labor market continues to provide support. Employers are still hiring at a steady clip, and wages are rising moderately. That combination helps consumers keep spending, a key driver of overall economic growth.
Inflation is running above the Federal Reserve’s preferred pace. Higher energy prices and import costs have pushed up the cost of goods and services. The Fed has signaled it will respond with careful, data-driven adjustments to interest rates.
Economists point to several potential trip wires ahead. A prolonged trade dispute could dent business confidence. A sharper-than-expected slowdown in global growth would also weigh on U.S. exports.
Housing remains a weaker spot in the economy. Higher mortgage rates have cooled home sales and construction. Still, analysts do not expect housing weakness to derail the broader expansion.
The overall picture points to resilient growth, but not without risk. Businesses remain optimistic about near-term demand, though many are watching policy and cost developments closely. The coming months will test how much momentum the economy can sustain.
