The big American engine

If there’s one truism about the US economy these last few years, it’s that the consumer—perhaps America’s biggest economic engine—keeps on spending. As the pandemic recession gave way to a labor market roaring back to life, and then half-century records, it’s been Americans clicking “purchase” or swiping credit cards that’s kept growth solid. Now, with a Federal Reserve interest-rate cut in the cards for next month, recent economic data shows inflation continued to slow in July and spending stayed robust despite higher borrowing costs—all the makings of Fed Chair Jerome Powell’s soft landing. Still (and there’s always a still), income growth is much more sluggish, the job market softer and the savings rate slower. These points arguably raise questions about the durability of consumer spending, but it’s been a rough three years for Team Recession and their fellow travelers. The numbers right now look more favorable to Powell declaring final victory.

Another piece of this puzzle is arriving soon in the form of the monthly jobs report, the final comprehensive look at the US labor market before the Fed’s policy meeting. Over in Europe, which is already ahead of the Fed as far as lowering rates is concerned, another European Central Bank cut got fresh reinforcement as euro-area inflation in August plunged to the lowest level since mid-2021. While the Fed’s power has been on display in this cycle, and indeed over the past few decades, Allison Schrager writes in Bloomberg Opinion that it’s time for the US government to spend more on growing the economy so the central bank isn’t “the only game in town.”

The wars in the Middle East and Ukraine keep expanding: Israel launched a large-scale military operation in the West Bank days after it sent 100 planes over neighboring Lebanon in what it called a preemptive attack on Hezbollah rocket launchers. Fears of a full-scale regional war remain high, though Israel, Iran and its proxies, which include Hezbollah and Hamas, still have reasons to avoid one. Russia has moved some 30,000 troops to its Kursk region, Ukraine said, to push back Ukrainian forces who have invaded Russia. The Ukraine operation is ultimately aimed at making Russia accept a “fair peace,” Ukrainian President Volodymyr Zelenskiy said, though there are no signs of that. Russia, which has killed tens of thousands of Ukrainians since its full-scale invasion in 2022, fired more than 100 missiles and as many drones in a massive attack against Ukraine’s electrical infrastructure.

US Vice President Kamala Harris sat for her first interview as the Democratic presidential nominee. Though sometimes avoiding specifics, she promised to defend the middle class, hewed largely to President Joe Biden’s agenda and brushed off a question about Donald Trump’s racist and misogynist insults. “Same old, tired playbook,” Harris, 59, said of the 78-year-old Republican’s attacks. As for her measured, prosecutorial tone during the interview, Nia-Malika Henderson wrote in Bloomberg Opinion that “often, in politics, boring is good.” Trump meanwhile had another grim week (and is again making noises about avoiding facing Harris in a debate). Special Counsel Jack Smith filed a new indictment in Trump’s prosecution for allegedly attempting to block the transfer of executive power for the first time in American history. As polls show Harris beginning to surpass him, Trump has faced a new firestorm for staging a photo op in front of the graves of soldiers buried at Arlington National Cemetery. And this just days after he said the Congressional Medal of Honor, the military’s highest combat decoration, wasn’t as good as a civilian award he gave to the wife of one of his biggest campaign donors.

Telegram Chief Executive Officer Pavel Durov was charged in France for complicity in the spread of sexual images of children and other crimes, a rare example of a tech leader being held liable for what users post on platforms. The platform is used by protesters and those who want a free space to criticize authoritarian regimes—but it’s also become a hub for conspiracy theorists and extremists. Another tech CEO, Mark Zuckerberg, alleged that Meta was “pressured” by the Biden administration to pull some Covid content from Facebook, a decision he says he now regrets. Social media platforms were overwhelmed with false and misleading information about vaccines and masks during the pandemic, which killed millions across the globe.

Apple, Microsoft and Nvidia are in talks to invest in OpenAI, and if the discussions move forward, it would mean the three most valuable tech companies are all backing the maker of the groundbreaking ChatGPT chatbot. It’s part of a funding round led by Thrive Capital that would value the AI startup at more than $100 billion. Speaking of valuations: Warren Buffett’s Berkshire Hathaway became the first US company outside of the tech sector to surpass $1 trillion in market value.

The coolest European swimming destination this summer isn’t a beach—it’s the bank of a urban river with a famous name or the waterfront of a city’s harbor. A new luxury butcher in Manhattan sold out of nearly 1,000 pounds of A5 Japanese wagyu in just 10 days. And just how cold should beer be?

From artificial intelligence-powered cars to crypto and OpenAI’s ChatGPT, tiny Nvidia chips are increasingly playing a role in our lives. But before it became the world’s most valuable chipmaker, now worth more than $3 trillion, the company had the more humble calling of manufacturing graphics cards for video game consoles. In this Bloomberg Originals mini-documentary, we explore how Nvidia will try to further harness the power of its earliest innovation with advanced AI.

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