Global Economics Wrap Up July 31, 2026

Economics Research 31 July 2026 | 3:00PM EDT

Global Economics Wrap-Up: July 31, 2026

Global Economics Joseph Briggs | 7/31/26 2:49PM ET Goldman Sachs & Co. LLC

n DM central bank meetings this week: Andrew Tilton | o The FOMC voted 9-3 to hold the policy rate at 3.5-3.75% in an unusually Goldman Sachs (Asia) L.L.C.

uncertain decision leading up to the meeting but in line with our Katya Vashkinskaya | expectations. Goldman Sachs International o The BoE voted 6-3 to hold the Bank Rate unchanged at 3.75%, a vote split Jessica Rindels | that was slightly more hawkish than our and consensus expectations. Goldman Sachs & Co. LLC o The BOJ held the policy rate unchanged at 1%, in line with our and Sarah Dong consensus expectations. | Goldman Sachs & Co. LLC

n Sizing the effects of shifting China trade patterns on global inflation: o China exports to non-US DMs have grown rapidly since the pandemic while Chinese imports from the rest of the world have pulled back amid an increased push for self-sufficiency. o Leveraging a harmonized cross-country trade-inflation panel, we estimate that increased Chinese goods supply has lowered goods prices across non-US DMs by 0.6% since 2024. o We also find that declining China imports have posed an additional 0.1% drag on realized goods prices. o Taken together, our analysis implies a 0.1-0.2pp drag on annual headline and core inflation over the past two years. § We expect these effects to build moving forward, both because realized trade shifts will take time to fully pass through to consumer prices, and because our China economics team expects the current account surplus will continue to widen. n AI adoption rises to 21.5% in July: o AI adoption by US firms rose by 0.9pp to 21.5% in July, with adoption expected to rise to 24.3% in the next six months. § At a detailed subsector level, computing, broadcasting, and web search firms have reported adoption levels at or exceeding 50%. § The adoption gap between firms with 250+ employees and less than 10 employees has widened from 13.2pp to 18.2pp since February

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Goldman Sachs Global Economics Wrap-Up

o AI’s labor market impact remains visible but narrow: § We continue to observe employment drags in specific industries where AI-use cases have been established such as marketing, graphic design, customer service, and some tech occupations. § However, this is offset by construction job growth in data center-exposed categories, which is up 290k since 2022 (relative to broader construction employment trends) and around 14k per month (latest 6m trend).

US Economics 7/31/26 10:36AM ET

n The FOMC left the fed funds rate unchanged at its meeting this week: o Presidents Hammack, Kashkari, and Logan dissented against the Committee’s decision in favor of a 25bp rate hike. § Chairman Warsh made several dovish comments during his press conference. § He appeared to downplay AI-related price pressures. § Asked if the recent rise in interest rates was a signal that the market thought the Fed should hike, he connected it instead to the recent strength of the economy. § He hinted that the rise in market interest rates could substitute for a rate hike. § Asked if the Fed needed to raise interest rates to lower inflation by reducing demand, he suggested that more credibly committing to the inflation target could help to lower inflation by lowering inflation expectations. o The bond market also took this week’s meeting as dovish. § The bond market is now pricing a 60% chance of a rate hike at the next FOMC meeting in September. o We continue to expect that softer core inflation in coming months will keep the Fed on hold for the remainder of 2026. n Real GDP grew 1.5% annualized in the second quarter but the composition of the report was strong: o Consumer spending rose 3.2% likely reflecting tailwinds from supportive fiscal policy in the first half of the year and a boost from World Cup-related spending in June. o Nonresidential fixed investment rose 8.4% and housing investment increased by…