Catenaa, Friday, August 29, 2025 – US businesses increased spending on equipment in July despite rising costs from tariffs, but consumers’ confidence in the labor market weakened, signaling mixed signals for economic growth.
The Commerce Department reported core capital goods orders, excluding aircraft, rose 1.1%, reversing June’s decline, while shipments of these goods increased 0.7%, the largest gain since April 2023.
Orders were particularly strong for machinery, electrical equipment, appliances, computers, electronics, and fabricated metals.
Economists said higher prices likely inflated both orders and shipments, while business investment slowed in the second quarter after double-digit growth in the first quarter.
Despite these gains, durable goods orders, including long-lasting items and commercial aircraft, fell 2.8%, with Boeing receiving only 31 new aircraft orders in July compared with 116 in June.
Analysts noted that front-loaded orders under past trade policies may have distorted demand patterns.
Consumer sentiment reflected growing concern over jobs and income. The Conference Board reported that 20% of consumers now see jobs as hard to get, the highest since February 2021, while those viewing jobs as plentiful declined slightly.
Inflation worries also persisted, with 12-month expectations rising to 6.2%. Economists said tariffs were increasingly cited in consumers’ concerns about higher prices.
The divergence between resilient business spending and weaker consumer confidence presents a challenge for Federal Reserve policymakers.
Chair Jerome Powell signaled a possible rate cut at the September FOMC meeting while maintaining caution over inflation, leaving the path for monetary policy dependent on incoming data.
