America In Focus: key inflation gauge remains high; Fed's Warsh signals rate hikes may be needed

The economy, inflation and how those forces could impact the lives of Americans were front and center over the past week. Trips to the grocery store and gas station are more painful than they were last year, and rising costs are impacting the decisions of both households and businesses.

Here's a snapshot of prominent economic data and news that occurred over the past week and what it potentially means for you.

An inflation measure closely watched by the Federal Reserve stayed elevated last month in the latest sign that many Americans are still struggling with higher costs .

The Commerce Department's Wednesday report showed that prices rose 3.7% in July compared with a year earlier, the same as June. Inflation has worsened since the U.S. and Israel attacked Iran in late February, when it stood at 2.9%. It's noticeably above the Fed's target of 2%.

Wednesday's figures are from the personal consumption expenditures price index, a separate gauge from the more widely followed consumer price index, which was reported earlier this month. The PCE index is running hotter than the CPI, partly because it puts much less weight on rental costs, which have been cooling steadily in recent months.

Fed Chair Warsh signals rate hikes may be needed

Federal Reserve Chair Kevin Warsh said Friday that inflation is still too high and suggested the central bank may have to raise interest rates in the coming months to bring it down, a clearer signal than he had sent previously about his economic outlook.

In his first high-profile speech at the Fed's annual conference at Jackson Hole, Wyoming, Warsh acknowledged that recent U.S. data show inflation has cooled a bit , but "they do not tell me that underlying trends have meaningfully improved."

"We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed," Warsh said. "Otherwise, we have work to do."

The Fed next meets September 15-16, and Warsh's remarks don't necessarily signal the central bank will raise rates then. But his speech indicated that rates may not be high enough to bring inflation down to the Fed's 2% target.

US consumer confidence falls to lowest level in 7 months

Americans' confidence in the economy declined again this month as the ongoing conflict in Iran continued to push U.S. gasoline prices above $4 per gallon.

The Conference Board said Tuesday that its consumer confidence index dipped to 89.4 in August from 90.2 in July. That was the lowest level in seven months but was essentially within the same lukewarm range it has been in since the beginning of the year. In late 2024 and early 2025, readings were consistently above 100.