Economy

The Chicago Fed National Activity Index fell to –0.04 in August 2026, pulled down by weaker production and sales contributions, signaling growth slightly below the historical trend rate. The more reliable three-month moving average rose to +0.01, remaining well above the –0.70 threshold the Chicago Fed associates with recession. The data suggest a soft month rather than a broader deterioration in economic momentum.

Austan Goolsbee, a non-voting alternate member of the FOMC, said on September 21, 2026, that elevated service-sector inflation and AI data-center construction spilling beyond its own sector are possible signs of demand overheating that would leave the Fed no policy ambiguity. The FOMC's September 16 statement, which unanimously raised the federal funds rate to 3.75–4%, acknowledged elevated inflation and resilient activity but did not adopt Goolsbee's specific AI-demand framing. Forecasters have pushed their expected inflation peak date from late 2025 to sometime in 2027, a pattern Goolsbee said undermines the case for treating current price pressures as temporary supply shocks.

The People's Bank of China kept both benchmark lending rates unchanged on September 20, with all 21 Reuters survey participants having anticipated no movement. The over-five-year rate at 3.50% leaves the mortgage-linked benchmark flat while targeted fiscal interest subsidies and locally tailored property measures remain the active policy levers. PBOC Governor Pan Gongsheng separately signaled a structural shift away from quantitative lending targets, describing slower but higher-quality credit growth as a likely new normal through the 2026–30 Five-Year Plan period.

UK public-sector net borrowing reached £18.3 billion in August 2026, driven by central-government spending that exceeded the OBR's monthly forecast by £3.5 billion. For the financial year to August, borrowing totalled £77.3 billion, running £8.1 billion ahead of the OBR's profile, even as the figure came in 2.7% below the same period a year earlier. Public-sector net debt stood at £2,985.5 billion, or 93.8% of GDP, while an annual pension-data update reduced net financial liabilities for the year ending March 2026 by £39.5 billion.

UN DESA's September 2026 update lifts its global growth projections to 2.6% for 2026 and 2.9% for 2027, each up 0.1 percentage points from May, though both remain below or level with January expectations. Western Asia received the sharpest downward revision, with its 2026 forecast cut 3.3 percentage points from January due to conflict-driven disruptions to energy production and trade, while India saw the largest upgrade at 1.4 percentage points above May. The update does not publish numerical inflation or trade-volume forecasts, limiting direct comparison with the IMF, which projects notably higher global growth of 3.0% in 2026 using an explicit conflict-resolution timeline UN DESA does not adopt.