By Dave Morrison, CFP® · Treasure Valley Financial Planning · July 6, 2026 · 5-minute read

The economy has proven more resilient than many feared, business investment has surged, and the new Federal Reserve chair is striking a tone that is harder to read than markets anticipated.

In this update

The conflict in Iran that intensified earlier this year reset the economic conversation for most of 2026. Energy prices spiked, inflation moved back up, and what had looked like a path toward lower interest rates became a genuine question mark.

The surprises have not stopped there. The economy has proven more resilient than many feared, business investment has surged, and the new Federal Reserve chair is striking a tone that is harder to read than markets anticipated. The result is a second half of the year with real opportunity and real uncertainty running side by side, and we want to be straightforward about both.

What’s happening now

The business cycle is still expanding

A survey of manufacturers found that capital expenditure intentions reached their strongest level in five years in June, with more than 60 percent of firms expecting business activity to increase over the next six months. Demand for semiconductors, a reliable early signal of industrial and technology investment, set a new all-time record in June, up more than 70 percent from a year ago.

The banking system is still lending freely

Money is flowing through the economy without the kind of stress that would signal deterioration ahead. Borrowing costs remain elevated, which is a friction point for many households and businesses, but the underlying system is functioning normally.

The central bank offered an encouraging signal—with real caveats

On July 1, the new Fed chair said publicly that inflation expectations and inflation risks have eased in recent weeks. That is genuinely good news. But the committee that sets interest rates is not unified on what comes next, and financial markets currently put meaningful odds on rates going higher before any reductions become possible. We are watching this closely.

The situation in the Middle East remains a genuine risk

The ceasefire arrangement that followed the Iran conflict is fragile and has shown a recurring pattern of flare-ups. Oil prices are currently around $70 per barrel, which is manageable, but a sustained supply disruption would push them higher and complicate the inflation picture. We are not dismissing this.

Looking ahead

The July 14 inflation report will be an important test of the current outlook. Forecasts suggest the reading could come in near flat or slightly negative. If that holds, it would support the case for a more favorable interest rate environment in the months ahead. A hotter-than-expected reading would raise real questions, and we will continue to watch for any material changes.

In response to the shifting environment, we made modest adjustments to portfolio holdings designed to reflect a broadening of economic growth and market opportunity beyond the technology sector, which has led much of the market in recent years. We are positioning to participate in a wider range of industries as the expansion continues.

Bottom line

The economy is holding up well, inflation shows early signs of cooling, and the central bank has acknowledged it. Those are meaningful developments, not small ones. At the same time, interest rate policy remains uncertain, geopolitical risk is real, and the coming months will bring important data that could shift the picture in either direction.

The evidence supports staying invested and positioned for continued growth, and that is exactly what we are doing. As always, you are welcome to reach out to our team with questions about your plan.

Sources

Federal Reserve, “Remarks by the Chair at the ECB Forum on Central Banking,” July 1, 2026.
Korea Customs Service, Semiconductor Export Data, June 2026.
Federal Reserve Bank of Philadelphia, Manufacturing Business Outlook Survey, June 2026.
Federal Reserve Bank of Cleveland, Inflation Nowcasting, July 2026.
U.S. Energy Information Administration, West Texas Intermediate Crude Oil Price, July 2026.

This article is for educational purposes only and does not constitute tax, legal, or investment advice. It is not intended to reflect a complete client suitability profile and does not account for your specific investment objectives, risk tolerance, time horizon, or financial situation. Past performance does not guarantee future results.