Global Economics Wrap Up August 21, 2026

Economics Research 21 August 2026 | 2:57PM EDT

Global Economics Wrap-Up: August 21, 2026

Global Economics Joseph Briggs | 8/21/26 2:10PM ET Goldman Sachs & Co. LLC

n Is AI impacting global labor markets? Andrew Tilton | o After extracting a common signal from 11 cross-country adoption surveys, Goldman Sachs (Asia) L.L.C.

we find that France and the US lead with adoption rates around 20%, while Katya Vashkinskaya | adoption in other DMs fall in the 15-20% range and EMs slightly lag at Goldman Sachs International 10-15%. Jessica Rindels | o Using cross-country labor market data, we find a negative correlation Goldman Sachs & Co. LLC between occupational AI exposure and change in job openings since 2022. Sarah Dong o We also find labor market underperformance in information services and | Goldman Sachs & Co. LLC other highly exposed subindustries in most DMs. o Using more detailed occupation data, we document: § A 10% increase in AI-task exposure is associated with only a 0.1pp drag to annual occupational headcount growth in France, Canada, and the US, with negligible effects elsewhere. § More visible hiring drags for entry-level employees and for occupations more highly at risk of displacement. o Taken together, our analysis confirms that AI is creating global hiring headwinds, but impacts remain confined to a narrow set of industries and workers. n Manufacturing employment rises in Europe in August flash PMIs: o The DM composite flash PMI rose by +0.8pt to 54.1 in August, reflecting a rise in services (+1.2pt to 54.1) but unchanged manufacturing (flat at 53.2). o The manufacturing employment PMI component improved notably in France, Germany, and the UK this month. o Manufacturing suppliers’ delivery times remained elevated across major DMs in August (DM average -0.1pt to 42.1). o The DM input price PMI fell by -1.5pt to 66.4 for manufacturing and by -1.6pt to 61.1 for services; the DM output price PMI fell by -1.2pt to 58.3 for manufacturing and by -1.5pt to 54.9 for services.

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Goldman Sachs Global Economics Wrap-Up

US Economics 8/21/26 1:41PM ET

n We estimate that the core PCE price index rose 0.20% in July and 3.24% over the last year: o Core CPI increased by 0.22% in July and 2.48% over the last year. Software prices—which get a much larger weight in PCE than CPI—increased by less than expected in July. o The PPI components relevant for PCE were softer in July. The domestic airfares component declined by 3.0% and the medical care PPI components that feed into PCE were also soft. § We estimate that the portfolio management component of PCE will increase by a sharp 5.5% in July, contributing 0.1pp to July core PCE. o The international airfares component of the import prices report, which is source data for the foreign travel component of core PCE, declined by 0.7% in July. n The minutes to the July FOMC meeting provided some details on the debate over potential rate hikes and inflation risks: o While “most” participants supported the decision to maintain the target range for the fed funds rate at 3.5-3.75%, “several” participants favored a rate hike at the July meeting. § “A few” of the participants who favored a hike judged that a hike at the July meeting “would likely help forestall the need for a steeper and potentially more costly sequence” of hikes in the future. o Regarding the outlook for monetary policy, “many” participants judged that rate hikes would likely be necessary if inflation did not decline. o While participants judged that inflation risks were skewed to the upside, “most” participants expected inflation to decline over the rest of the year “as the effects of tariffs and earlier energy price increases wane.” § We similarly expect core PCE inflation to slow to 2.9% by December 2026. o We expect the combination of the softer July employment and inflation data and our forecast for benign monthly inflation readings over the next several months to keep the FOMC on hold in 2026.

Europe Economics 8/21/26 2:30PM ET

n UK inflation…