Economic Update | Month Ending September 5, 2026

Economic data released this week continued to show that the U.S. economy remains resilient despite higher costs and ongoing geopolitical uncertainty. The service sector, which represents the largest part of the economy, strengthened considerably in August, with business activity and new orders posting some of their strongest readings in several years. Manufacturing also remained in expansion territory for the eighth consecutive month. Consumer and business demand remain solid, although higher energy prices and other input costs continue to create inflation concerns. Stocks were volatile during the holiday-shortened week and finished lower Friday as investors weighed stronger economic data against the possibility that the Federal Reserve may need to keep monetary policy tighter for longer. Overall, the economy continues to perform better than many had expected, with solid economic activity providing a favorable backdrop as we head into the fall, although inflation remains the biggest uncertainty.

The jobs market showed a significant improvement in August – The August jobs report provided some encouraging news about the strength of the economy. The Bureau of Labor Statistics reported that U.S. employers added 162,000 jobs, the strongest monthly gain in five months and far above economists’ expectations. The unemployment rate remained unchanged at a relatively low 4.1%. Average hourly earnings increased 3.1% from one year ago, slightly higher than the 3.0% annual increase recorded the previous month. There was also some good news in revisions to earlier reports: June and July employment gains were revised upward by a combined 55,000 jobs, with July revised from a previously reported loss of 23,000 jobs to a gain of 21,000. The labor force also grew by 683,000 people in August, while the number of people working part-time because they could not find full-time work declined by 414,000. Overall, the report suggests that the labor market, which had appeared to be slowing considerably, remains more resilient than previously thought. The stronger employment numbers are positive for the overall economy, although they could make the Federal Reserve more cautious about lowering interest rates as it continues to monitor inflation.

Mortgage rates – Every Thursday, Freddie Mac publishes interest rates based on a survey of mortgage lenders throughout the week. The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of September 3, 2026, were as follows: The 30-year fixed mortgage rate was 6.71%, up from 6.66% last week. The 15-year fixed was 6.04%, up from 5.98% last week.

U.S. Treasury Bonds- The 10-year treasury bond closed the week yielding 4.78%, up from 4.73% last week. The 30-year treasury bond yield ended the week at 5.24%, up slightly from 5.22% last week. We watch bond yields because mortgage rates follow bond yields.

Stock markets – The Dow Jones Industrial Average closed the week at 53,414.25, down 0.3% from 53,559.99 last week. It is up 11.1% year-to-date from 48,063.29 on December 31, 2025. The S&P 500 closed the week at 7,718.60, up 1.4% from 7,611.76 last week. The S&P is up 12.8% year-to-date from 6,845.50 on December 31, 2025. The Nasdaq closed the week at 26,506.99, up 0.4% from 26,402.42 last week. It is up 13% year-to-date from 23,241.99 on December 31, 2025.