AMNA NAWAZ: Meanwhile, here at home, in a sign that the war may be weighing on economic growth, the U.S.

economy saw a slowdown in the second quarter, expanding at a lower-than-expected rate of 1.5 percent.

That's according to a new report today from the Commerce Department.

It all comes after the Federal Reserve voted yesterday to keep interest rates unchanged, despite three dissents, all arguing in favor of a rate increase.

To help make sense of it all, we're joined now by Greg Ip.

He is chief economics commentator at The Wall Street Journal.

So, Greg, I'm going to ask you to just pick up on what we heard from Ian Ralby there when it comes to the impact of the war in Iran on the U.S.

economy.

If we're moving from a two-choke point crisis to a three-choke point crisis, more disruptions to oil supplies and global trade, broadly speaking, what's ahead for the U.S.

economy?

GREG IP, The Wall Street Journal: Well, what is surprising is that, despite all the turmoil that the war has created for the U.S.

and global economy, including very high gasoline prices and interest rates, is that the American consumer seems to be shrugging it off.

Now, we did hear that growth in the second quarter came in low at 1.5 percent.

But that actually -- if you look under the hood, things were a lot stronger, very, very strong growth in consumer spending, especially on durable goods.

The reason growth came in low was that a lot of that spending was on imports and/or came out of inventories.

So it didn't lead to higher domestic production.

So that tells us, at least thus far, the impact of higher energy prices has been pretty mild for the consumer.

Now, that might be for a couple of reasons.

One is that there were a lot of tax refunds in the second quarter.

That probably helped.

The other is that we have this A.I.

boom that's still going on, and that has lifted the stock market.

So people who are wealthy and have a lot of stock market wealth are still spending a lot.

Looking ahead, I do think that the pressure of those higher interest rates, the end of tax refunds, and possibly some flattening of the stock market means that the consumer could struggle a bit more.

AMNA NAWAZ: In terms of how people can look at this, because there is some confusion, let's just revisit some of those highlights from the GDP report today.

We did say there that the U.S.

GDP grew at 1.5 annually in the second quarter, lower than expected, down from 2.1 percent annual growth in the first quarter.

At the same time, consumer spending, as you mentioned, ticked up.

That's now 3.2 percent annually.

That's up from just 0.5 percent in the first quarter.

There seem to be a lot of mixed signals here.

So what do you take away from all of that?

GREG IP: So these numbers can be very confusing, partly because of the fact that, in any given quarter, you can have people spending money, and they might be spending it on stuff that we make here at home, or they may be spending it on stuff that we import or stuff that was already in inventory.

And it looks like, in the second quarter, a lot of that spending was on stuff that we imported or was already in inventory.

That's why the GDP number seemed low.

The production number seemed low, but spending was very strong.

I would expect that some of that spending would start to flow through to domestic production in coming months.

So the underlying picture here is still of a resilient economy and a pretty healthy consumer.

But, again, we have to look at the fact that going forward with energy prices and interest rates still pretty high, that may not last.

AMNA NAWAZ: Well, tell me more about that, because when every time we talk about resilience, we hear from folks who say everyday Americans are experiencing this economy in a different way.

You look at some of the big picture numbers here, and 30-year mortgages have climbed back up to their highest rate in a year.

Gas is now above $4 a gallon at the national average again.

Grocery costs are up 33 percent since 2019.

What does all that mean for the average American and how they're experiencing this economy?

GREG IP: Well, the average American is certainly still not able to get over the fact that prices, as we're saying, are up 25 to 30 percent from four or five years ago.

They keep hoping that prices will go down.

It doesn't happen because typically prices don't go down.

That's called deflation.

It's very rare.

So you have that sort of like level of unhappiness with the inflation that's been there honestly for quite a few years now, perhaps disappointment that President Trump, who campaigned on a promise to bring prices down, has not succeeded and has in fact presided over a big increase in some key prices, such as for beef and gasoline, some of it his doing, some of it not his doing.

And then there's the fact that you the averages conceal what's going on beneath the surface.

As I was saying, the fact that the stock market has done so well means that people who are very affluent have been able to spend a lot, even though overall incomes aren't growing up a lot.

But that's not true of most of the typical family who doesn't have that biggest stock portfolio.

So those healthy averages are hiding what I think are probably significant disparities between people at the top and people at the bottom.

And the message we're hearing is that the median consumer is not doing nearly as well as some of those average figures, which are being basically buoyed by stock market wealth, are telling us.

AMNA NAWAZ: You mentioned inflation.

That brings me to the Federal Reserve and, as we reported earlier, the decision to hold rates steady that was announced yesterday under their new chair, Kevin Warsh, who also we should remind folks came into this role promising a new regime at the Fed, a new way of communicating as well.

Here's part of what he had to say yesterday.

Take a listen.

KEVIN WARSH, Federal Reserve Chairman: Market participants are learning to play the ball, not the referee.

And market prices will continue to respond in the direction and magnitude they see fit.

This is, in my view, a change for the better.

I understand the desire for rolling forecasts and commentary from this committee.

But, for our part, we need to observe market reaction to developments, direct and unfiltered.

AMNA NAWAZ: Greg, help us understand what Warsh is saying here and what all this might mean for the next Fed meeting and their decision ahead.

GREG IP: What Warsh is basically saying is that he believes that, in the past, Fed officials have commented too much on the data and what it might mean for the change in interest rates in coming months.

He believes that interferes with getting a pure, unfiltered view of what the markets think about the data.

So when he says play the ball, not the referee, he's saying have the markets respond just to the data, not try and predict what he, the Fed chairman, is going to do.

But there's a problem with that analogy, which is that he may think that the Fed is a neutral umpire here, but it's not.

It's a player in the game.

It's the most important player.

The Fed sets the short-term interest rate.

That is an absolutely central factor in market pricing and in the economy.

Bond investors are always trying to figure out not just what the data means, but what does it mean for what the Fed is going to do to short-term interest rates?

That's why they hope and expect the Fed will give them its own view on what some of this data means.

If Warsh is going to stay out of that business and never explain to the market what any of this data means, it's going to be confusing.

So, for example, this week, he said once again, the Fed is absolutely dedicated to getting inflation down, which is right now too high.

But he didn't raise interest rates.

And so the markets and investors and the public want to know, well, why?

If you're serious about that, why didn't you raise interest rates?

And he didn't answer that question.

And so they're jumping to conclusions.

They're saying he talks a big talk, but he's really not that serious about that.

And you can see in the markets questions beginning to arise about the credibility of this Fed chair to really get inflation down.

AMNA NAWAZ: Greg Ip of The Wall Street Journal, great to speak with you, as always.

Thank you.

GREG IP: Thanks for having me.