U.S. Economic Growth Slows to 1.5% as Global Debt Risks Rise

The U.S. economy grew at a 1.5% annualized pace in the second quarter, according to the latest government data, missing economist expectations of a 2.1% expansion. The slowdown was primarily attributed to a surge in imports, which subtract from the Gross Domestic Product calculation. Despite the lower headline figure, domestic demand remains robust, suggesting that consumer spending and business investment are still providing a solid foundation for the economy.

Inflation concerns continue to linger, particularly in global centers. In Tokyo, inflation quickened in July, a development that is expected to keep the Bank of Japan on a path toward further interest rate hikes. This global inflationary pressure is complicating the task for central banks as they navigate the balance between cooling price growth and maintaining economic momentum.

Adding to the complexity is a new analysis of the world's $1.8 quadrillion financial balance sheet. While the vast total suggests a wealthy global economy, experts warn of a 'simmering problem' related to the rapid expansion of debt and the potential for asset price bubbles. The report highlights that the post-financial-crisis era of easy money has created pockets of fragility that could be exposed as global interest rates remain higher for longer.