Here are the 5 things to know about the state of the economy this Independence Day

The U.S. economy is in a state of flux this Independence Day, with strong job market figures and persisting inflation and recession concerns.

Inflation – The Good and Bad: One year ago, the U.S. experienced its highest inflation in four decades.
* While overall inflation dropped to 4% in May from 9.1% last June and gasoline prices have fallen, core inflation, which strips out volatile food and energy costs, remains high at 5.3%.
* Consequently, the cost of services like restaurant meals and car repair continue to rise.

Federal Reserve’s Perspective: The Fed’s fight against inflation is ongoing.
* In its efforts to control rising prices, the Fed has already raised its benchmark rate ten times since March of last year, increasing borrowing costs noticeably.
* Despite leaving rates unchanged in their last June meeting, Fed policymakers hinted towards one or two more quarter-point rate hikes by year-end.

Job Market Report: Despite high interest rates, the job market remains strong.
* Employers added more than 4 million jobs in the past year, and the unemployment rate, below 4% for 16 months, marked its longest stretch since the 1960s.
* However, there are signs of cooling demand for workers with a slightly slower pace of job growth in the past six months and a decline in job openings.

Recession Concerns: Although the economy continues to grow, the fear of a recession persists.
* The nation’s GDP grew at a rate of 2% in the first three months of the year, down from 2.6% at the end of last year, contributing to speculations about a potential economic downturn.
* Increasing interest rates dampen industries like housing and manufacturing and affect the broader economy, leading to uncertainty.

Consumer Behavior: While consumer spending helps support the economy, individuals are tightening their belts.
* Spending rose only by one-tenth of one percent in May, displaying a slowdown compared to preceding months.
* Despite this, some believe households will continue to spend at high rates, though with a considerable deterioration in household finances.

View original article on NPR

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