Labor and Inflation
Why this is rated elevated
CPI inflation for the 12 months ending August 2026 was 3.4%, triggering the elevated band (>=3%). The unemployment rate was 4.1% in August, within the stable band (<5.5%). The most severe triggered level governs, so overall status is elevated. Real GDP growth was +1.5% annualized in Q2 2026, down from +2.1% in Q1.
Elevated: Some indicators are outside normal ranges or a known risk is developing. Core functions are unaffected. Methodology
What is this?
This tracks jobs and how fast prices go up.
How it's doing: Still working, but something is a little off.
About this area
Prices and jobs are the two parts of the Fed's mandate and the most direct measures of household economic conditions. In August 2026 the all-items CPI rose 0.4% seasonally adjusted after 0.1% in July, and was up 3.4% over 12 months, matching the July pace. Core CPI (less food and energy) rose 2.4% over the year. Energy prices were a major driver, with gasoline up 27.4% year over year. On the labor side, nonfarm payrolls increased 162,000 in August, above the prior 12-month average monthly gain of 31,000, and the unemployment rate held at 4.1% with about 7.0 million unemployed. The labor force participation rate edged up to 61.6% but is down 0.5 point since January. Real GDP grew at a 1.5% annual rate in Q2 2026, slower than the 2.1% recorded in Q1.
Indicators
Latest readings. Changes are shown without judgment of whether up or down is better.
| Indicator | Latest |
|---|---|
CPI inflation (12-month) All-items CPI-U rose 3.4% over the 12 months ending August 2026, the same as the 12 months ending July. Source: U.S. Bureau of Labor Statistics | 3.4% |
Unemployment rate The unemployment rate was unchanged at 4.1% in August 2026; the number of unemployed people changed little at 7.0 million. Source: U.S. Bureau of Labor Statistics | 4.1% |
Nonfarm payrolls (monthly change) Total nonfarm payroll employment rose 162,000 in August 2026, above the prior 12-month average monthly gain of 31,000. July was revised from -23,000 to +21,000 and June from +20,000 to +31,000. Source: U.S. Bureau of Labor Statistics | 162K jobs |
Real GDP growth (annualized) Real GDP increased at an annual rate of 1.5% in Q2 2026 (second estimate), following 2.1% growth in Q1 2026. Source: U.S. Bureau of Economic Analysis | 1.5% |
Charts
Timeline of developments
August CPI rises 0.4% month over month, 3.4% over the year (opens original release)
The all-items CPI-U increased 0.4% seasonally adjusted in August after 0.1% in July. Gasoline rose 3.9% and energy rose 2.1% over the month. Shelter rose 0.3%. Over 12 months, all items rose 3.4% and core rose 2.4%.
Source: U.S. Bureau of Labor StatisticsPayrolls rise 162,000 in August; unemployment holds at 4.1% (opens original release)
Employers added 162,000 jobs in August, above the prior 12-month average of 31,000 per month. Food services and drinking places added 59,000 and local government education added 42,000; the information industry lost 23,000. June and July payrolls were revised up by a combined 55,000.
Source: U.S. Bureau of Labor StatisticsQ2 2026 real GDP growth revised to 1.5% annualized (opens original release)
BEA's second estimate put Q2 2026 real GDP growth at a 1.5% annual rate, down from 2.1% in Q1. Consumer spending, exports, and investment contributed to the increase, partly offset by a decrease in government spending.
Source: U.S. Bureau of Economic Analysis
Sources and citationsWhere this info comes from
- 1.Consumer Price Index news release
U.S. Bureau of Labor Statistics. Accessed Sep 27, 2026.
- 2.Employment Situation news release
U.S. Bureau of Labor Statistics. Accessed Sep 27, 2026.
- 3.Gross Domestic Product
U.S. Bureau of Economic Analysis. Accessed Sep 27, 2026.
See something that looks wrong? Report an inaccuracy